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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-28600
CCC INFORMATION SERVICES GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1242469
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
WORLD TRADE CENTER CHICAGO
444 MERCHANDISE MART
CHICAGO, ILLINOIS 60654
(Address of principal executive offices, including zip code)
(312) 222-4636
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes X No __
As of April 28, 2003, 26,225,659 shares of CCC Information Services Group
Inc. common stock, par value $0.10 per share, were outstanding.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Consolidated Interim Statements of Operations 1
Consolidated Interim Balance Sheets 2
Consolidated Interim Statements of Cash Flows 3
Notes to Consolidated Interim Financial Statements 4
Management's Discussion and Analysis of Financial Condition and 10
Item 2. Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
CERTIFICATIONS 19
EXHIBIT INDEX E-1
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------
2003 2002
--------------------
Revenues. . . . . . . . . . . . . . . . . . $ 47,732 $47,500
Expenses:
Production and customer support. . . . . . 7,344 7,146
Commissions, royalties and licenses. . . . 2,417 2,463
Selling, general and administrative. . . . 18,566 19,177
Depreciation and amortization. . . . . . . 1,930 2,418
Product development and programming. . . . 7,696 7,086
--------------------
Total operating expenses. . . . . . . . . . 37,953 38,290
Operating income. . . . . . . . . . . . . . 9,779 9,210
Interest expense. . . . . . . . . . . . . . (222) (228)
Other income, net . . . . . . . . . . . . . 89 217
CCC Capital Trust minority interest expense - (448)
Equity in losses of ChoiceParts investment. (6) (292)
--------------------
Income before income taxes. . . . . . . . . 9,640 8,459
Income tax provision. . . . . . . . . . . . (3,669) (3,243)
--------------------
Net income. . . . . . . . . . . . . . . . . $ 5,971 $ 5,216
====================
PER SHARE DATA:
Income per common share:
Basic. . . . . . . . . . . . . . . . . . . $ 0.23 $ 0.20
====================
Diluted. . . . . . . . . . . . . . . . . . $ 0.22 $ 0.20
====================
Weighted average shares outstanding:
Basic. . . . . . . . . . . . . . . . . . . 26,156 25,699
Diluted. . . . . . . . . . . . . . . . . . 27,741 26,138
The accompanying notes are an integral part of these consolidated financial
statements.
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED INTERIM BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2003 2002
--------------------------
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,033 $ 20,200
Accounts receivable (net of allowances of $2,148 and $2,313 at March 31, 2003
and December 31, 2002, respectively) . . . . . . . . . . . . . . . . . . . . 10,625 10,281
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,808 8,499
--------------------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,466 38,980
Property and equipment (net of accumulated depreciation of $31,671 and
$29,815 at March 31, 2003 and December 31, 2002, respectively) . . . . . . . 11,290 12,407
Intangible assets (net of accumulated amortization of $71 at March 31, 2003) . 2,796 -
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,527 4,896
Deferred income taxes (net of valuation allowance of $11,599 at March 31, 2003
and December 31, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,151 10,454
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 479
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 627
--------------------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 71,070 $ 67,843
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,656 $ 8,424
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,570 25,441
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,690 2,568
Current portion of deferred revenues. . . . . . . . . . . . . . . . . . . . . . 7,609 6,503
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 506 488
--------------------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,031 43,424
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 13
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,985 3,222
--------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,019 46,659
--------------------------
Common stock ($0.10 par value, 40,000,000 shares authorized, 26,216,802 and
26,074,889 shares outstanding at March 31, 2003 and December 31, 2002,
respectively). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,018 3,005
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . 129,550 128,766
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56,907) (62,878)
Notes receivable from officer . . . . . . . . . . . . . . . . . . . . . . . . . (1,407) (1,506)
Treasury stock, at cost (4,094,665 common shares in treasury at
March 31, 2003 and December 31, 2002). . . . . . . . . . . . . . . . . . . . (46,203) (46,203)
--------------------------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . 28,051 21,184
--------------------------
Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . . . . $ 71,070 $ 67,843
==========================
The accompanying notes are an integral part of these consolidated financial
statements.
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
--------------------
2003 2002
--------------------
Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,971 $ 5,216
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net losses of ChoiceParts. . . . . . . . . . . . . . . . . . . . . . . . 6 292
Depreciation and amortization of property and equipment. . . . . . . . . . . . . . 1,859 2,418
Amortization of intangible assets. . . . . . . . . . . . . . . . . . . . . . . . 71 -
CCC Capital Trust minority interest expense. . . . . . . . . . . . . . . . . . . . - 448
Deferred income tax provision (benefit). . . . . . . . . . . . . . . . . . . . . . 303 (36)
Interest on notes receivable from officer. . . . . . . . . . . . . . . . . . . . (23) -
Payment of interest on notes receivable from officer . . . . . . . . . . . . . . 122 -
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 321
Changes in:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777 (188)
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704 (733)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 (39)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (798) (686)
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,871) (5,535)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,263 3,281
Deferred revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (180) (229)
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (105) (6)
--------------------
Net cash provided by operating activities:
Continuing operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,201 4,524
Discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . - (2)
--------------------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . 5,201 4,522
--------------------
Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (653) (2,150)
Investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (275)
Acquisition of Comp-Est, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . (13,230) -
--------------------
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . . (13,883) (2,425)
--------------------
Financing Activities:
Principal repayments on long-term debt . . . . . . . . . . . . . . . . . . . . . - (23,500)
Proceeds from borrowings on long-term debt . . . . . . . . . . . . . . . . . . . - 21,000
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . . . . . . 538 461
Proceeds from employee stock purchase plan . . . . . . . . . . . . . . . . . . . . 92 100
Principal repayments of capital lease obligations . . . . . . . . . . . . . . . (115) (100)
Principal repayments on short term note . . . . . . . . . . . . . . . . . . . . - (58)
--------------------
Net cash provided by (used for) financing activities . . . . . . . . . . . . . . . 515 (2,097)
--------------------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . (8,167) -
Cash and cash equivalents:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,200 766
--------------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,033 $ 766
====================
Supplemental Disclosure:
Cash paid:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 -
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 2
The accompanying notes are an integral part of these consolidated financial
statements.
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS AND ORGANIZATION
- --------------------------------------------------------
CCC Information Services Group Inc. ("CCCG"), incorporated in Delaware in
1983 and headquartered in Chicago, Illinois, is a holding company, which
operates through its wholly-owned subsidiary, CCC Information Services Inc.
("CCC" and together with CCCG, collectively referred to as the "Company" or
"we"). We employed 869 full-time employees at March 31, 2003, compared to 856 at
this time in 2002. We automate the process of evaluating and settling automobile
claims, which allows our customers to integrate estimate information, labor time
and cost, recycled parts and various other calculations derived from our
extensive databases, electronic images, documents and related information into
organized electronic workfiles. We develop, market and supply a variety of
automobile claim products and services which enable customers in the automobile
claims industry, including automobile insurance companies, collision repair
facilities, independent appraisers and automobile dealers, to manage the
automobile claims and vehicle restoration process. Our principal products and
services are Pathways collision estimating software, which provides our
customers with access to various automobile information databases and claims
management software and CCC Valuescope Claim Services (formerly known as our
Total Loss Valuation Service).
As of March 31, 2003, White River Ventures Inc. ("White River") held
approximately 33% of our outstanding common stock. In June 1998, White River
Corporation, the sole shareholder of White River, was acquired by Demeter
Holdings Corporation, which is solely controlled by the President and Fellows of
Harvard College, a Massachusetts educational corporation and title-holding
company for the endowment fund of Harvard University. Charlesbank Capital
Partners LLC serves as the investment manager with respect to the investment of
White River in the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------------
Basis of Presentation
The accompanying consolidated interim financial statements as of and for
the three months ended March 31, 2003 and 2002 are unaudited. We are of the
opinion that all material adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of our interim results of
operations and financial condition have been included. The results of operations
for any interim period should not be regarded as necessarily indicative of
results of operations for any future period. The consolidated interim financial
statements should be read in conjunction with our Annual Report on Form 10-K for
the year ended December 31, 2002 filed with the Securities and Exchange
Commission ("SEC").
Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP"). These accounting principles require that we make certain estimates,
judgments and assumptions. We believe that the estimates, judgments and
assumptions are reasonable based on information available at the time that these
estimates, judgments and assumptions are made. These estimates, judgments and
assumptions can affect the reported amounts of assets and liabilities as of the
date of the consolidated financial statements as well as the reported amounts of
revenue and expenses during the periods presented. To the extent that there are
material differences between these estimates and actual results, our
consolidated financial statements are affected. In many cases, the accounting
treatment of a particular transaction is specifically dictated by GAAP and does
not require our judgment in its application. There are also areas in which our
judgment in selecting any available alternative would not produce a materially
different result.
Earnings Per Share Information
Basic earnings per share ("EPS") excludes the dilutive effect of common
stock equivalents and is computed by dividing net income by the weighted-average
number of shares outstanding during the period. Diluted EPS includes the
dilutive effect of common share equivalents and is computed using the
weighted-average number of common and common stock equivalent shares outstanding
during the period. Common stock equivalents consist of stock options and certain
other equity instruments. Using the treasury method, for the three months ended
March 31, 2003 and March 31, 2002, options and warrants to purchase a weighted
average number of 2,500 and 2,181,956, shares of common stock, respectively,
were not included in the computations of diluted earnings per share because the
options' and warrants' exercise prices were greater than the average market
price of the common shares during the periods. In addition, if we had net
losses, options and warrants to purchase shares are not included in the
computation of diluted earnings per share because the options and warrants, if
included, would be antidilutive.
Stock-Based Compensation
We have elected to determine the value of stock-based compensation
arrangements under the provisions of Accounting Principles Board ("APB") Opinion
No. 25 "Accounting for Stock Issued to Employees" for our fixed stock option
plan and employee stock purchase plan and accordingly, have not recognized
compensation cost in the accompanying consolidated statement of operations.
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock Based Compensation" permits the use of either a fair value based method or
the intrinsic value method to measure the expense associated with stock-based
compensation arrangements.
In accordance with the interim disclosure provisions of SFAS No. 148,
"Accounting for Stock Based Compensation Transition and Disclosure-an Amendment
of SFAS No. 123", the pro forma effect on our net income had compensation
expense been recorded for the first quarter of fiscal 2003 and 2002,
respectively, as determined under the fair value method, is shown below (in
thousands, except per share amounts):
THREE MONTHS ENDED
MARCH 31,
--------------------
2003 2002
--------------------
Net income:
As reported. . . . . . . . . . . . . . $ 5,971 $ 5,216
Pro forma. . . . . . . . . . . . . . . $ 5,513 $ 4,690
Per share net income assuming dilution:
As reported. . . . . . . . . . . . . . $ 0.22 $ 0.20
Pro forma. . . . . . . . . . . . . . . $ 0.20 $ 0.18
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model. The principal determinants of
option pricing are: fair market value of our common stock at the date of grant,
expected volatility, risk-free interest rate, expected option lives and dividend
yields. Weighted average assumptions employed by us were: expected volatility of
74% and 75% for the first quarter of fiscal 2003 and 2002, respectively; and a
risk-free interest rate of 3.0% and 4.3% for the first quarter of fiscal 2003
and 2002, respectively. In addition, we assumed an expected option life of 5.5
years and assumed no dividend yield for both periods.
Goodwill
The excess of purchase price paid over the estimated fair value of
identifiable tangible and intangible net assets of acquired businesses is
capitalized and reviewed for impairment on at least an annual basis. In
addition, when events or changes in circumstances indicate that the carrying
value of such assets may not be recoverable, we perform an analysis of
undiscounted future cash flows to determine whether recorded amounts are
impaired. As of March 31, 2003, no such impairment existed.
The goodwill balance as of March 31, 2003 was $15.5 million. In accordance with
SFAS No. 142 "Goodwill and Other Intangible Assets", effective January 1, 2002,
we ceased the amortization of goodwill associated with the acquisition of CCC
Valuescope. The unamortized balance from the 1988 acquisition that included the
CCC Valuescope service is $4.9 million and is reviewed for impairment on at
least an annual basis. The remaining balance of $10.6 million represents the
goodwill from the acquisition completed during February 2003. See Note 3,
"Acquisition".
Contingencies
In the normal course of business, we are subject to various proceedings,
lawsuits, claims and other matters. We believe the amounts provided in the
consolidated financial statements, as prescribed by GAAP, are adequate in light
of the probable and reasonably estimable liabilities. However, there can be no
assurances that the actual amounts required to discharge alleged liabilities
from various lawsuits, claims, legal proceedings and other matters will not
exceed the amounts reflected in the consolidated financial statements or will
not have a material adverse effect on the consolidated results of operations,
financial condition or cash flows. Any amounts of costs that may be incurred in
excess of those amounts provided as of March 31, 2003 cannot currently be
reasonably determined.
Recent Accounting Pronouncements
In November 2002, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables."
EITF Issue No. 00-21 provides guidance on how to account for arrangements that
involve the delivery or performance of multiple products, services and/or rights
to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. CCC
is currently evaluating the effect that the adoption of EITF Issue No. 00-21
will have on its results of operations and financial condition.
In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation-Transition and
Disclosure-an amendment of FASB Statement No. 123" ("SFAS 148"). The standard
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this Statement amends the disclosure requirements of Statement 123 to
require prominent disclosure in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. We have adopted the new
disclosure requirements, in this quarterly report on Form 10-Q for the quarterly
period ended March 31, 2003.
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities." This standard clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," and addresses
consolidation by business enterprises of variable interest entities (more
commonly known as Special Purpose Entities or SPE's). FIN No. 46 requires
existing unconsolidated variable interest entities to be consolidated by their
primary beneficiaries if the entities do not effectively disperse risk among the
parties involved. FIN No. 46 also enhances the disclosure requirements related
to variable interest entities. This statement is effective for variable
interest entities created or in which an enterprise obtains an interest after
January 31, 2003. The adoption of FIN No. 46 did not have a significant effect
on our results of operations or our financial position.
NOTE 3 - ACQUISITION
- -----------------------
On February 26, 2003, we acquired certain assets and assumed certain
liabilities of Comp-Est, Inc. ("Comp-Est") from the Motor Information Systems
Division of Hearst Business Publishing, Inc. ("Hearst"). Immediately prior to
our acquisition of the assets of Comp-Est from Hearst, Hearst acquired the
selected net assets from Comp-Est pursuant to an Option and Acquisition
Agreement, dated February 6, 1998, by and among Hearst, Comp-Est and the
Comp-Est stockholders named therein. Comp-Est, is based in Columbus, Ohio and
provides automotive estimating software applications to single-location repair
facilities. With the acquisition, we gain the opportunity to serve over 5,000
additional customers in one of the fastest growing segments of the marketplace
and can offer a broader suite of electronic estimating and other tools to all
types of collision-repair businesses.
The results of Comp-Est have been included in the consolidated financial
statements from the date of acquisition. Pro forma results of operations have
not been presented because the effects of the transaction were not material to
our results. The purchase price, including capitalized acquisition costs, of
approximately $13.4 million was paid in cash and was allocated to identifiable
assets and liabilities and to intangible assets at their estimated fair values
at the date of acquisition. The fair values of the intangible assets and
software acquired were based on independent appraisals. We have not finalized
the allocation of purchase price as of March 31, 2003 as certain acquisition
costs were estimated.
The following table summarizes the estimated fair value of the assets
acquired and the liabilities assumed at the acquisition date (in thousands):
FEBRUARY 26,
2003
------------
Current assets. . . . . . $ 320
Property and equipment. . 86
Intangible assets . . . . 2,867
Goodwill. . . . . . . . . 10,631
------------
Total assets acquired . . 13,904
Current liabilities . . . 481
------------
Net . . . . . . . . . . . $ 13,423
============
Intangible assets include $1.9 million for customer relationships and
$0.7 million for acquired software, both of which are being amortized on a
straight-line basis over a period of 3 years. Also included in intangible
assets, is a trademark valued at $0.3 million, that is not being amortized
but will be tested for impairment on at least an annual basis.
NOTE 4- INVESTMENT IN CHOICEPARTS
- -------------------------------------
In 2000, we formed a new independent company, ChoiceParts, LLC
("ChoiceParts"), with ADP and The Reynolds and Reynolds Company. ChoiceParts
operates an electronic parts exchange for the auto parts marketplace for
franchised auto retailers, collision repair facilities and other parts
suppliers. We have a 27.5% equity interest in ChoiceParts, which is accounted
for under the equity method. Approximately $1.7 million of our original $5.5
million commitment was still outstanding as of March 31, 2003, and there are no
specific plans to fund this commitment at this time. Based on the nature of our
investment, we have recorded a deferred income tax benefit on our share of the
losses.
Summary financial information for ChoiceParts for the three months ended
March 31, 2003 and 2002 is as follows (in thousands):
THREE MONTHS ENDED
MARCH 31,
--------------------
2003 2002
--------------------
Revenues . . . . . . . . $ 3,215 $ 3,588
====================
Loss from operations . . $ (20) $(1,031)
====================
Net loss . . . . . . . . $ (45) $(1,020)
====================
NOTE 5 - INCOME TAXES
- -------------------------
During 2002, we filed amended returns to claim research and experimentation
tax credits. Included in other current assets is a refund of $1.1 million of the
expected credit as well as $0.5 million of expected state tax refunds.
MARCH 31, DECEMBER 31,
2003 2002
------------------------
(IN THOUSANDS)
Income tax receivable. . . . . . . . . . . . . . $ 1,662 $ 1,674
Deferred income tax assets . . . . . . . . . . . $ 21,750 $ 22,053
Valuation allowance. . . . . . . . . . . . . . . (11,599) (11,599)
------------------------
Total deferred income tax asset. . . . . . . . . 10,151 10,454
------------------------
Total income tax assets, current and non-current $ 11,813 $ 12,128
========================
Total current income taxes payable . . . . . . . $ 5,690 $ 2,568
========================
NOTE 6 - LEGAL PROCEEDINGS
- ------------------------------
As disclosed in our Annual Report on Form 10-K for the year ended December
31, 2002, the Company has pending against it a variety of putative class action
suits and individual actions raising issues regarding the use of the Company's
CCC Valuescope valuation product by its insurance company customers. Many of
these suits are brought by the same group or groups of plaintiffs' lawyers. CCC
intends to vigorously defend its interests in all of the above described
lawsuits. Due to the numerous legal and factual issues that must be resolved
during the course of litigation, CCC is unable to predict the ultimate outcome
of any of these actions. If CCC were held liable in any of the actions (or
otherwise concludes that it is in CCC's best interest to settle any of them),
CCC could be required to pay monetary damages (or settlement payments).
Depending upon the theory of recovery or the resolution of the plaintiff's
claims for compensatory and punitive damages, or potential claims for
indemnification or contribution by CCC's customers in any of the actions, these
monetary damages (or settlement payments) could be substantial and could have a
material adverse effect on CCC's business, financial condition or results of
operations. During the fourth quarter of 2001, the Company recorded a charge of
$4.3 million, net of an expected insurance reimbursement of $2.0 million, as an
estimate of the amount that CCC will contribute toward an anticipated settlement
of potential claims arising out of approximately 30 percent of the Company's CCC
Valuescope transaction volume for the period covered by the lawsuits. As of
March 31, 2003, the Company believes that the charge recorded is an appropriate
estimate for the settlement of the claims covered by the anticipated settlement.
As additional information is gathered and the litigations (both those covered by
the anticipated settlement, as well as others) proceed, CCC will continue to
assess its potential impact.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIS REPORT CONTAINS STATEMENTS THAT CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934 AND ARE SUBJECT TO THE SAFE
HARBOR PROVISIONS OF THOSE SECTIONS AND THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. SOME OF THESE FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE
USE OF WORDS IN THE STATEMENTS SUCH AS "ANTICIPATE," "ESTIMATE," "EXPECT,"
"PROJECT," "INTEND," "PLAN," "BELIEVE," OR OTHER WORDS AND TERMS OF SIMILAR
MEANING. READERS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING
THOSE DESCRIBED IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2002 AND OUR OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, AND
THAT ACTUAL RESULTS OR DEVELOPMENTS MAY DIFFER MATERIALLY FROM THOSE IN THE
FORWARD-LOOKING STATEMENTS. SPECIFIC FACTORS THAT MIGHT CAUSE ACTUAL RESULTS TO
DIFFER FROM OUR EXPECTATIONS INCLUDE, BUT ARE NOT LIMITED TO, COMPETITION IN THE
AUTOMOTIVE CLAIMS AND COLLISION REPAIR INDUSTRIES, THE ABILITY TO DEVELOP NEW
PRODUCTS AND SERVICES, THE ABILITY TO PROTECT TRADE SECRETS AND PROPRIETARY
INFORMATION, THE ABILITY TO GENERATE THE CASH FLOW NECESSARY TO MEET OUR
OBLIGATIONS, THE OUTCOME OF CERTAIN LEGAL PROCEEDINGS, AND OTHER FACTORS.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH REFLECT MANAGEMENT'S ANALYSIS, JUDGMENT, BELIEF OR EXPECTATION
ONLY AS OF THE DATE HEREOF. WE HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON
INFORMATION CURRENTLY AVAILABLE AND DISCLAIM ANY INTENTION OR OBLIGATION TO
UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT.
GENERAL
Our products and services fall into five categories or "suites": Pathways,
CCC Valuescope Valuation Services, Workflow Products, Information Services
and Other Products and Services. Each of these product and services suites is
described below. For additional information regarding these suites and the
various products and services in each suite, please refer to the "Business"
section of our annual report on Form 10-K for the year ended December 31, 2002.
PATHWAYS. This suite consists of our collision estimating products,
including:
- Pathways Appraisal Solution (for insurance customers),
- Pathways Estimating Solution (for repair facility customers),
- Pathways Independent Appraiser Solution (for independent appraisers),
- Pathways Digital Imaging, and
- Recycled Parts Service.
These products help our customers manage aspects of their day-to-day
automobile claim activities, including receipt of new assignments, preparation
of estimates, communication of status and completed activity and maintenance of
notes and reports. Pathways Digital Imaging allows our customers to digitally
photograph and transmit images of damaged vehicles to the Pathways estimate
workfile. Customers using Pathways with Recycled Parts Services also have access
to a database that provides local part availability and price information on
over 15 million available recycled or salvage parts. From the date of
acquisition, revenues from Comp-Est are also included in this suite.
CCC VALUESCOPE VALUATION SERVICES. Our CCC Valuescope Valuation
Services products are used primarily by automobile insurance companies in
processing claims involving vehicles that have been heavily damaged or stolen.
In cases where the insurance company declares a vehicle to be a "total loss"
(typically when the cost to repair exceeds 70% to 90% of a vehicle's value), CCC
Valuescope Valuation Services provides the insurer with the local market value
of the vehicle to assist the insurer in processing the claim. Commercial and
Recreational Vehicle Valuation Services is our CCC Valuescope valuation service
for specialty vehicles including trucks, semi-trailers, marine craft,
motorcycles, recreational vehicles and pre-fabricated housing.
WORKFLOW PRODUCTS. This suite includes of the following products and
services:
EZNet Communications Network, a secure network that allows clients to
communicate estimates and claim information electronically.
Pathways Appraisal Quality Solution (QAAR Plus), which allows for
electronic audits of automobile repair estimates prepared by direct repair
facilities, independent appraisers and internal insurance staff for quality
control and for identification and correction of errors or discrepancies prior
to the completion of repairs. In addition, Pathways Appraisal Quality Solution
allows automobile insurance companies to use available historical data to track
the performance of appraisers and provides a mechanism to establish and monitor
compliance with certain reinspection objectives developed by the automobile
insurance company.
CCC Autoverse, our web-based open workflow solution that allows for the
exchange of claims information derived from using Pathways products as well as
established collision estimating systems that meet the Collision Industry
Electronic Commerce Association Estimating Management System standard. CCC
Autoverse permits the free-flow of communication between those who write damage
estimates and the insurers who process claims.
INFORMATION SERVICES. This suite includes ClaimScope Navigator, our
on-line, web-based information service that provides a comprehensive method to
create management reports comparing industry and company performance using
Pathways and CCC Valuescope data.
OTHER PRODUCTS AND SERVICES. Pathways Enterprise Solution is an automotive
repair shop management software system for multiple location collision repair
facilities that allows them to manage accounts, prepare employee schedules and
perform various other management functions. Pathways Professional Advantage,
similar to Pathways Enterprise Solution, is a shop management software system
for a single store location. Also included in this group is our Computerized
Automobile Rental System and leasing of computer hardware.
CRITICAL ACCOUNTING POLICIES
Management's Discussion and Analysis of our financial condition and results
of operations are based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States ("GAAP"). We review the accounting policies, including those
described in Note 2, "Summary of Significant Accounting Policies", we use in
reporting our financial results on a regular basis. The preparation of these
financial statements requires us to make estimates, assumptions and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses
and related disclosure of contingent assets and liabilities. On an on-going
basis, we evaluate our estimates, including those related to the items listed
below. We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities. Actual results may differ from these estimates under
different assumptions or conditions. Our senior management has reviewed these
critical accounting policies and related disclosures with the Audit Committee of
the Board of Directors and our Disclosure Committee. We have identified the
policies below as critical to our business operations and the understanding of
our financial condition and results of operations:
- Accounts receivable
- Income taxes
- Goodwill
- Software development costs
- Fair value of financial instruments
- Commitments and contingencies
For a detailed discussion on the application of these accounting policies,
see "Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report on Form 10-K for the year ended
December 31, 2002.
PREPARATION OF FINANCIAL INFORMATION
We believe that the application of accounting standards is as important as
the underlying financial data in reporting our financial position, results of
operations and cash flows. We also believe that our accounting policies are
prudent and provide a clear view of our financial performance. Our Disclosure
Committee, composed of senior management, including senior financial and legal
personnel, reviews our public disclosures and evaluates our disclosure controls
and procedures to help ensure the completeness and accuracy of our financial
results and disclosures. In addition, prior to the release of our financial
results, key members of management review the annual and quarterly results,
along with key accounting policies and estimates, with the Audit Committee of
our Board of Directors.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 COMPARED WITH THREE MONTHS ENDED MARCH 31,
2002
OPERATING INCOME. Operating income increased quarter-over-quarter from 2002
to 2003 by $0.6 million, to $9.8 million, due to a decrease in expenses of $0.4
million and an increase in revenues of $0.2 million. Our operating margin
(operating income as a percentage of revenue) increased to 20.5% for the quarter
ended March 31, 2003 compared to 19.4% for the same quarter in 2002. The
increase in operating income and margin for the first quarter of 2003 was due to
continued improvement in profitability resulting from our restructuring, which
occurred in 2001.
REVENUES. Revenues for the first quarter of 2003 were $47.7 million versus
$47.5 million for the same quarter last year. Revenues increased $0.2 million,
or 0.4%, compared to the same quarter last year.
Revenues for each of our product and service suites are as follows (in
thousands):
THREE MONTHS ENDED
MARCH 31,
------------------
2003 2002
------------------
Pathways. . . . . . . . . . . . $29,016 $28,521
CCC Valuescope. . . . . . . . . 10,696 11,439
Workflow Products . . . . . . . 6,366 5,391
Information Services. . . . . . 307 297
Other Products and Services . . 1,347 1,852
------------------
Total . . . . . . . . . . . . . $47,732 $47,500
==================
Revenues from our Pathways products increased in the first quarter of 2003
by $0.5 million, or 1.7%, compared to the first quarter of last year. This was
led by an increase in the number of new automotive collision repair customers
and an increase in the number of Pathways Digital Imaging product units used by
our automotive collision repair customers.
Revenues from our CCC Valuescope valuation services product decreased by
$0.7 million, or 6.5%, from the first quarter of 2002 to the first quarter of
2003 due to lower transaction volumes. This decline was due in part to lower
claim volume in the insurance industry. However, the decline in CCC Valuescope
revenue was also a result of lost business. As previously disclosed, one of our
large customers transitioned most of its valuation services to an in-house
solution. Additionally, the market for valuation services is highly competitive,
and we have seen other customers move to other providers for a variety of
reasons. In some cases, customer decisions have been tied to workflow issues -
for example, some customers that use a competitive estimating platform have
decided to switch to the competitor's valuation product. In other cases,
regulatory issues have played a role, as well as industry consolidation of the
customer base. We are taking several steps to address these issues and reinforce
CCC Valuescope's position in the marketplace. We have been proactive in
addressing regulatory concerns and in working with state regulators to resolve
those concerns. In addition, notwithstanding the recent decline in CCC
Valuescope revenue, the product continues to be the leading product in the
automated vehicle valuation market, and we have launched a new branding and
marketing campaign to promote CCC Valuescope in the marketplace.
Revenues from our workflow products increased in the first quarter of 2003
by $1.0 million or 18.1% compared to the first quarter of 2002. The increase
was attributed to strong sales of our open and closed workflow solutions
resulting in increased transaction volumes.
Revenues from our other products and services decreased by $0.5 million, or
27.3%. The decrease was mainly attributable to a decrease in the number of
hardware units leased and a decrease in transaction volume related to our CARS
service.
OPERATING EXPENSES. Operating expenses as a percentage of revenues are
summarized as follows (in thousands):
THREE MONTHS ENDED MARCH 31,
-----------------------------------
2003 2002
-----------------------------------
Revenues $ 47,732 100.0% $ 47,500 100.0%
Production and Customer Support. . . 7,344 15.3 7,146 15.0
Commissions, Royalties and Licenses. 2,417 5.1 2,463 5.2
Selling, General and Administrative. 18,566 38.9 19,177 40.4
Depreciation and Amortization. . . . 1,930 4.0 2,418 5.1
Product Development and Programming. 7,696 16.1 7,086 14.9
-----------------------------------
Total Operating Expenses . . . . . . $ 37,953 79.5% $ 38,290 80.6%
===================================
PRODUCTION AND CUSTOMER SUPPORT. Production and customer support
expenses increased by $0.2 million, or 2.8%, due to investments made in the
technical support area as well as operating costs related to the acquisition of
Comp-Est.
COMMISSION, ROYALTIES AND LICENSES. Commission, royalties and licenses
expenses remained relatively stable quarter-over-quarter from last year.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses decreased by $0.6 million, or 3.2%, from the first quarter of fiscal
2002 to the first quarter of fiscal 2003 primarily as a result of cost reduction
initiatives taken in our management information systems group, which included
consolidation of our data center operations by entering into a new contract.
These savings were partially offset by a bi-annual industry conference held in
2003.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased by $0.5 million, or 20.2% from the first quarter of fiscal 2002 to the
first quarter of fiscal 2003 as a result of fewer investments in software and
customer leased computer equipment as well as using fully depreciated software.
PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming
expenses increased by $0.6 million, or 8.6%, from the first quarter of fiscal
2002 to the first quarter of fiscal 2003 due primarily to additional staff being
hired and additional consulting work for increased product development efforts.
INTEREST EXPENSE. Interest expense remained relatively stable from the
first quarter of fiscal 2002 to the first quarter of fiscal 2003.
MINORITY INTEREST EXPENSE. The interest recorded for the first quarter of
2002 of $0.4 million was associated with the issuance, on February 23, 2001, of
the Trust Preferred Securities to Capricorn Investors III, L.P ("Capricorn").
The minority interest expense represented Capricorn's share of CCC Trust's
income. In October 2002, we purchased the outstanding Trust Preferred Securities
from Capricorn and, as a result, do not have any interest expense relating to
these securities beyond October 2002. Assuming the Trust Preferred Securities
had not been repurchased early, the following (in thousands) is our estimate of
the amount of minority interest expense that would have been incurred in the
years 2003 through the scheduled maturity date of the Trust Preferred Securities
in 2006:
REMAINING
TOTAL 2003 2004 2005 2006
------------------------------------------
Interest expense savings $ 7,103 $ 1,603 $ 2,392 $ 2,695 $ 413
==========================================
EQUITY IN LOSSES OF CHOICEPARTS. We recorded a loss of $0.3 million for
the three months ended March 31, 2002 related to our 27.5% share of the income
(losses) in ChoiceParts compared to a nominal charge for the same period this
year as ChoiceParts has been operating essentially at a break-even level.
INCOME TAXES. Income taxes increased from a provision of $3.2 million for
the first quarter of fiscal 2002 to a provision of $3.7 million for the first
fiscal quarter of 2003 as income before income taxes increased
quarter-over-quarter. However as a percentage of income before income taxes, the
provisions have remained stable at approximately 38%.
OUTLOOK
As part of our first quarter earnings release, we provided updated guidance
for the second quarter and the remainder of 2003.
Revenue is expected to increase in the 1% to 2% range for the second
quarter of 2003. Full year revenue is expected to increase in the mid-single
digit range for fiscal 2003, versus our prior guidance of low-to-mid single
digits. The acquisition of Comp-Est is expected to add over $5 million in
revenue for the remainder of the 2003 period to our Pathways suite.
Operating income for the second quarter of 2003 is expected to be in the
$10 million range, while operating income for the full year is expected to be in
the $40-$43 million range, which is unchanged from our prior guidance. Operating
income is expected to increase over the remaining quarters due to new product
sales beginning to generate incremental revenue and the acquisition of Comp-Est.
The earnings per share target range for the second quarter is $0.22 to
$0.24, while the earnings per share target for the full year is expected to be
in the $0.92 to $0.96 range (using a fully diluted base of 27.7 million shares
in our calculation), unchanged from our prior guidance.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 2003, net cash provided by
operating activities was $5.2 million and proceeds received from the exercise
of stock options was $0.5 million. We used $13.2 million to complete the
acquisition of Comp-Est and $0.7 million for the purchase of equipment and
software.
Our principal liquidity requirements consist of our operating activities,
including product development, our investments in internal and customer capital
equipment and potential funding requirements for our ChoiceParts investment and
other business development activities. We have the ability to operate with a
working capital deficit, as we receive substantial payments from our customers
for our services in advance of recognizing the revenues and the costs incurred
to provide such services. We invoice each customer one month in advance for the
following month's Pathways' services. As such, we typically receive cash from
our customers prior to recognizing the revenue and incurring the expense for the
services provided. These amounts are reflected as deferred revenue in the
consolidated balance sheet until these amounts are earned and recognized as
revenues. Management believes that cash flows from operations and the available
borrowing capacity under our Credit Facility will be sufficient to meet our
liquidity needs for the foreseeable future. There can be no assurance, however,
that we will be able to satisfy our liquidity needs in the future without
engaging in financing activities beyond those described above.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Our contractual obligations under capital leases and operating leases are
as follows (in thousands):
REMAINING
TOTAL 2003 2004 2005 2006 2007 THEREAFTER
--------------------------------------------------------------------
Capital lease obligations $ 551 393 158 - - - -
Operating leases. . . . . $ 40,317 9,972 12,240 10,542 2,668 2,529 2,366
--------------------------------------------------------------------
Total . . . . . . . . . . $ 40,868 $ 10,365 $ 12,398 $ 10,542 $ 2,668 $ 2,529 $ 2,366
====================================================================
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------
We do not believe our financial results are affected by factors such as
changes in foreign currency exchange rates or weak economic conditions in the
foreign markets.
ITEM 4. CONTROLS AND PROCEDURES
- -----------------------------------
Evaluation of disclosure controls and procedures
The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to the Company's management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Also, the Company has an investment in an
unconsolidated entity. As the Company does not control or manage this entity,
its disclosure controls and procedures with respect to such entity are
necessarily substantially more limited than those it maintains with respect to
its consolidated subsidiaries.
Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.
Changes in internal controls
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information provided in Note 6 to the financial statements contained in
Part I of this Form 10-Q are incorporated herein by reference.
On April 22, 2003, the Company filed a patent infringement lawsuit against
Mitchell International, Inc. in the United States District Court for the
Northern District of Illinois (Eastern Division). In the complaint CCC alleges
that Mitchell is infringing CCC's patent entitled "system and method for
managing insurance claim processing", U.S. Patent No. 5,950,169 (the "'169
Patent"). The '169 Patent includes coverage for the parts comparison feature in
CCC Pathways collision estimating software.
In addition to a judicial determination that Mitchell infringed the '169
Patent, CCC is seeking preliminary and permanent injunctions enjoining Mitchell
from further acts of infringement of the '169 Patent, triple monetary damages
for willful infringement, disgorgement of all profits resulting from the
infringement of the '169 Patent and attorneys fees.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10 Option and Acquisition Agreement dated February 6, 998 by and
among Hearst Business Publishing, Inc. and Comp-Est, Inc.
10.1 First Amendment to Option and Acquisition Agreement dated
February 26, 2003 by and among the Motor Information Systems
Division of Hearst Business Publishing, Inc. and Comp-Est, Inc.
10.2 Option Agreement dated February, 1998 between Motor Information
Systems Division of Hearst Business Publishing, Inc. and CCC
Information Services, Inc.
11 Statement Re: Computation of Per Share Earnings
99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
(b) Reports on Form 8-K:
We filed a Current Report on Form 8-K on January 16, 2003 to report the
exercise of our option to purchase the assets of a third party software
provider.
We filed a Current Report on Form 8-K on March 14, 2003, to furnish
information with respect to the Chief Financial Officer of the Company entering
into a sales plan pursuant to Rule 10b5-1 under the Securities Exchange Act of
1934, as amended.
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
SIGNATURES
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 thereunto duly authorized.
Date: April 28, 2003 CCC Information Services Group Inc.
By: /s/ Githesh Ramamurthy
-----------------------
Name: Githesh Ramamurthy
Title: Chairman and
Chief Executive Officer
By: /s/ Reid E. Simpson
-----------------------
Name: Reid E. Simpson
Title: Executive Vice President
and Chief Financial Officer
CERTIFICATIONS
I, Githesh Ramamurthy, Chairman and Chief Executive Officer of CCC Information
Services Group Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of CCC Information
Services Group Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: April 28, 2003 By: /s/ Githesh Ramamurthy
-----------------------
Name: Githesh Ramamurthy
Title: Chairman and
Chief Executive Officer
I, Reid E. Simpson, Executive Vice President and Chief Financial Officer of CCC
Information Services Group Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of CCC Information
Services Group Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: April 28, 2003 By: /s/ Reid E. Simpson
--------------------
Name: Reid E. Simpson
Title: Executive Vice President
and Chief Financial Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------
10 Option and Acquisition Agreement dated February 6, 1998 by and among
Hearst Business Publishing, Inc. and Comp-Est, Inc.
10.1 First Amendment to Option and Acquisition Agreement dated February 26,
2003 by and among the Motor Information Systems Division of Hearst
Business Publishing, Inc. and Comp-Est, Inc.
10.2 Option Agreement dated February, 1998 between Motor Information Systems
Division of Hearst Business Publishing, Inc. and CCC Information Services,
Inc.
11 Computation of Per Share Earnings
99.1 Certification of Chief Executive Officer and Chief Financial Officer