-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PKJmgHtQYap4e4Vo01r5f5M/ibnHXnzM3Bdq4mPtDMnU7B8HOa6b8kgFVdJ/xlX6 epz7/ZYR44HQkVuamZ5gzQ== 0000912057-01-004471.txt : 20010212 0000912057-01-004471.hdr.sgml : 20010212 ACCESSION NUMBER: 0000912057-01-004471 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20010209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCC INFORMATION SERVICES GROUP INC CENTRAL INDEX KEY: 0001017917 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 541242469 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-28600 FILM NUMBER: 1531212 BUSINESS ADDRESS: STREET 1: WORLD TRADE CENTER CHICAGO STREET 2: 444 MERCHANDISE MART CITY: CHICAGO STATE: IL ZIP: 60654 BUSINESS PHONE: 3122224636 10-Q/A 1 a2037517z10-qa.txt 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 10-Q/A (AMENDMENT NO.1) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ 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 __ As of August 14, 2000, CCC Information Services Group Inc. common stock, par value $0.10 per share, outstanding was 22,612,291 shares. TEXT OF AMENDMENTS The purpose of this amendment is to amend the Company's Quarterly Report on Form 10-Q for the period ending June 30, 2000 ("Original Filing"). Specifically, this amendment makes certain changes to the Notes to the Consolidated Financial Statements (included in Item 1), Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") (Item 2) and the Quantitative and Qualitative Disclosures about Market Risk (Item 3). This filing incorporates the unchanged portions from the Original Filing in addition to the changes identified above. The Company is filing this amended Quarterly Report on Form 10-Q/A in response to comments received from the Securities and Exchange Commission ("SEC"). As requested by the SEC, the Company has provided additional disclosure in the notes to the financial statements, in the MD&A and the Quantitative and Qualitative Disclosures about Market Risk. This report continues to speak as of the date of the Original Filing and we have not updated the disclosures in this report to speak to any later date. While this report primarily relates to the historical period covered, events may have taken place since the date of the Original Filing that might have been reflected in this report if they had taken place prior to the Original Filing. All information contained in this amendment is subject to updating and supplementing as provided in the Company's periodic reports filed with the SEC subsequent to the date of such reports. CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES TABLE OF CONTENTS
Page(s) PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Interim Statement of Operations (Unaudited), Three Months and Six Months Ended June 30, 2000 and 1999 3 Consolidated Interim Balance Sheet, June 30, 2000 (Unaudited) and December 31, 1999 4 Consolidated Interim Statement of Cash Flows (Unaudited), Six Months Ended June 30, 2000 and 1999 5 Notes to Consolidated Interim Financial Statements (Unaudited) 6-11 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 12-14 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17
2 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED INTERIM STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Six Months Ended ---------------------- ---------------------- June 30, June 30, ---------------------- ---------------------- 2000 1999 2000 1999 -------- -------- --------- --------- Revenues $ 51,265 $ 50,968 $ 106,689 $ 100,877 Expenses: Production and customer support 16,614 15,033 32,809 29,149 Commissions, royalties and licenses 3,179 4,390 6,576 8,850 Selling, general and administrative 22,012 22,186 42,521 39,032 Depreciation and amortization 3,062 2,503 5,943 4,926 Product development and programming 6,139 6,225 12,106 11,970 -------- -------- --------- --------- Total operating expenses 51,006 50,337 99,955 93,927 -------- -------- --------- --------- Operating income 259 631 6,734 6,950 Interest expense (755) (186) (1,422) (381) Other income, net 225 189 4,602 228 Gain on exchange of investment securities 18,437 - 18,437 - Equity in losses of ChoiceParts (312) - (312) - -------- -------- --------- --------- Income before income taxes 17,854 634 28,039 6,797 Income tax benefit (provision) 2,899 (58) (1,938) (2,737) -------- -------- --------- --------- Income before equity losses 20,753 576 26,101 4,060 Equity in net losses of affiliates (3,496) (501) (4,309) (4,996) -------- -------- --------- --------- Net income (loss) 17,257 75 21,792 (936) Dividends and accretion on mandatorily redeemable preferred stock - (1) - (2) -------- -------- --------- --------- Net income (loss) applicable to common stock $ 17,257 $ 74 $ 21,792 $ (938) -------- -------- --------- --------- -------- -------- --------- --------- PER SHARE DATA Income (loss) per common share - basic $ 0.79 $ - $ 0.99 $ (0.04) -------- -------- --------- --------- -------- -------- --------- --------- Income (loss) per common share - diluted $ 0.78 $ - $ 0.97 $ (0.04) -------- -------- --------- --------- -------- -------- --------- --------- Weighted average shares outstanding: Basic 21,959 23,381 22,054 23,550 Diluted 22,113 23,685 22,479 23,910
The accompanying notes are an integral part of these consolidated interim financial statements. 3 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES CONSOLIDATED INTERIM BALANCE SHEET (IN THOUSANDS)
June 30, December 31, 2000 1999 ----------- ------------ (Unaudited) ASSETS Cash $ 701 $ 1,378 Accounts receivable (net of reserves of $2,974 (unaudited) and $3,975 at June 30, 2000 and December 31, 1999, respectively) 27,399 24,377 Income taxes receivable 1,191 - Other current assets 7,735 11,546 -------- -------- Total current assets 37,026 37,301 Property and equipment (net of accumulated depreciation of $43,978 (unaudited) and $40,278 at June 30, 2000 and December 31, 1999, respectively) 22,007 17,807 Goodwill (net of accumulated amortization of $15,300 (unaudited) and $14,040 at June 30, 2000 and December 31, 1999, respectively) 15,259 16,358 Deferred income taxes 5,126 6,719 Notes receivable 5,177 - Investment in affiliates 5,110 - Investments 22,926 3,402 Other assets 2,450 2,962 -------- -------- Total Assets $ 115,081 $ 84,549 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 33,651 $ 35,548 Income taxes payable - 1,188 Current portion of long-term debt 423 440 Deferred revenues 5,811 3,993 -------- -------- Total current liabilities 39,885 41,169 Long-term debt 39,441 24,685 Deferred revenues 234 368 Other liabilities 3,291 3,061 Minority interest in consolidated companies 5 5 -------- -------- Total Liabilities 82,856 69,288 -------- -------- Common stock ($0.10 par value, 40,000,000 shares authorized, 21,606,561 (unaudited) and 21,991,826 shares issued and outstanding at June 30, 2000 and December 31, 1999, respectively) 2,579 2,549 Additional paid-in capital 102,494 98,799 Accumulated deficit (23,927) (45,719) Accumulated other comprehensive loss (383) (65) Treasury stock, at cost ($0.10 par value, 4,301,665 and 3,618,115 shares in treasury at June 30, 2000 (unaudited) and December 31, 1999, respectively) (48,538) (40,303) -------- -------- Total stockholders' equity 32,225 15,261 -------- -------- Total Liabilities and Stockholders' Equity $ 115,081 $ 84,549 -------- -------- -------- --------
The accompanying notes are an integral part of these consolidated interim financial statements. 4 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Six Months Ended ------------------------- June 30, ------------------------- 2000 1999 -------- -------- Operating activities: Net income (loss) $ 21,792 $ (936) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Gain on exchange of investment securities (18,437) - Gain on settlement of marketing agreement (3,644) - Equity in net losses of affiliates 4,621 4,996 Depreciation and amortization of property and equipment 4,560 3,768 Amortization of goodwill 1,333 1,120 Deferred income tax provision (benefit) 1,593 (202) Other, net (299) 223 Changes in: Accounts receivable, net (3,841) (603) Other current assets (1,108) (665) Other assets (24) 280 Accounts payable and accrued expenses (2,470) 6,752 Current income taxes (1,066) (1,281) Deferred revenues 1,684 859 Other liabilities (4) (233) -------- -------- Net cash provided by operating activities 4,690 14,078 -------- -------- Investing activities: Capital expenditures (8,779) (4,135) Purchase of investment securities - (1,484) Proceeds from the sale of investment securities - 1,484 Increase in long-term notes receivable (3,557) - Investment in ChoiceParts (1,420) - Purchase of InsurQuote securities (527) - Investments - (1,064) -------- -------- Net cash used for investing activities (14,283) (5,199) -------- -------- Financing activities: Principal repayments on long-term debt (14,261) (23,000) Proceeds from borrowings on long-term debt 29,000 25,000 Proceeds from exercise of stock options 2,096 814 Proceeds from employee stock purchase plan 316 401 Payments to acquire treasury stock (8,235) (12,622) Issuance of treasury stock - 152 Redemption of preferred stock, including accrued dividends - (690) -------- -------- Net cash provided by (used for) financing activities 8,916 (9,945) -------- -------- Net decrease in cash (677) (1,066) Cash: Beginning of period 1,378 1,526 -------- -------- End of period $ 701 $ 460 -------- -------- -------- -------- SUPPLEMENTAL DISCLOSURES: Cash paid: Interest $ (1,085) $ (383) -------- -------- -------- -------- Income taxes, net of refunds $ (1,415) $ (4,218) -------- -------- -------- --------
The accompanying notes are an integral part of these consolidated interim financial statements. 5 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS AND ORGANIZATION CCC Information Services Group Inc., through its wholly owned subsidiary CCC Information Services Inc. ("CCC") (collectively referred to as the "Company"), is a supplier of automobile claims information and processing services, claims management software and communication services. The Company's services and products enable automobile insurance company customers and collision repair facility customers to improve efficiency, manage costs and increase consumer satisfaction in the management of automobile claims and restoration. As of June 30, 2000, White River Ventures Inc. ("White River") held approximately 33.5% of the total outstanding common stock of the Company. On June 30, 1998, White River Corporation, the sole shareholder of White River, was acquired in a merger with 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 is acting as investment manager with respect to the investment of White River in the Company. NOTE 2 - CONSOLIDATED INTERIM FINANCIAL STATEMENTS BASIS OF PRESENTATION The accompanying consolidated interim financial statements as of and for the three and six months ended June 30, 2000 and 1999 are unaudited. The Company is of the opinion that all material adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company's 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. These consolidated interim financial statements should be read in conjunction with the Company's 1999 Annual Report on Form 10-K, as amended, filed with the Securities and Exchange Commission ("SEC"). CHANGE IN ESTIMATE Effective January 1, 2000, the Company has modified its methodology for determining allowances for accounts receivable. The previous method applied primarily a predetermined percentage to the accounts receivable aging balances, while considering the specific identification of customer accounts requiring allowances. The modified method incorporates a higher degree of specific identification of customer accounts requiring allowances in conjunction with the general percentage application on remaining accounts receivable balances. As a result of the change, the Company reduced reserves by approximately $1.2 million. This amount was recorded in the first quarter of 2000 and is reflected in the revenue line in the consolidated statement of operations for the six month period ended June 30, 2000. The adjustment was reflected in the same line the original provisions for allowances were recorded. Management believes that the new methodology provides for a more accurate valuation of the Company's accounts receivable balances. PER SHARE INFORMATION Earnings per share are based on the weighted average number of shares of common stock outstanding and common stock equivalents using the treasury method. NOTE 3 - NEW ACCOUNTING PRONOUNCEMENTS In December 1999, the SEC issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"), which provides the SEC's views in applying generally accepted accounting principles to selected revenue recognition issues. In June 2000, the SEC issued SAB 101B, the second amendment to SAB 101, which has delayed the implementation of SAB 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The Company does not expect SAB 101 to have a material impact on the Company's consolidated results of operations or financial position. 6 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4 - OTHER COMPREHENSIVE INCOME (LOSS) The Company's other comprehensive income (loss) includes foreign currency translation adjustments. The Company's comprehensive income (loss) was as follows:
Three Months Six Months Ended June 30, Ended June 30, ---------------- ------------------ 2000 1999 2000 1999 ------ ------- ------- ------- (in thousands) Net income (loss) $17,257 $ 74 $21,792 $(938) Foreign currency translation adjustments (196) (31) (318) (58) ------- ------- ------- ------- Comprehensive income (loss) $17,061 $ 43 $21,474 $(996) ------- ------- ------- ------- ------- ------- ------- -------
NOTE 5 - NONCASH FINANCING ACTIVITIES In conjunction with the exercise of certain stock options, the Company has reduced current income taxes payable with an offsetting credit to paid-in capital for the tax benefit of stock options exercised. During the six months ended June 30, 2000 and 1999, these amounts totaled $1.3 million and $0.5 million, respectively. NOTE 6 - INVESTMENT IN INSURQUOTE On February 10, 1998, the Company invested $20.0 million in InsurQuote Systems, Inc. ("InsurQuote"). InsurQuote, formed in 1989, was a provider of insurance rating information and software tools used to manage that information. The Company's $20.0 million investment included 19.9% of InsurQuote common stock, an $8.9 million subordinated note, warrants, shares of Series C redeemable convertible preferred stock and Series D convertible preferred stock. The warrants provided the Company with the right to acquire additional shares of InsurQuote common stock and were exercisable by the Company through February 10, 2008, subject to potential early termination provisions. The Series C preferred stock was redeemable in full at the end of five years from issuance, or earlier under certain conditions, if not converted prior to that time. Each share of Series C and D preferred stock was initially convertible into one share of common stock at the option of the Company. Under the terms of the investment agreement, the Company, subject to certain conditions, could increase its investment through additional purchases of common and preferred shares. In February 1998 and subsequently amended in March of 1999, the Company and InsurQuote entered into a sales and marketing agreement that gave the Company certain rights to market and sell InsurQuote products to the automobile insurance carrier market. In March 2000, the Company and InsurQuote entered into an agreement to terminate the marketing and sales agreement. As part of the termination agreement, the Company received an unsecured, subordinated promissory note in the amount of $4.5 million that matures in September 2002 and bears interest at 7.5% and $0.5 million in cash in April 2000. As a result of the termination agreement, the Company recorded a gain on the settlement of this marketing agreement of approximately $4.1 million which was included in other income in the consolidated interim statement of operations for the six month period ended June 30, 2000. The Company accounted for its investment in InsurQuote on the equity method. Notwithstanding the Company's original 19.9% common stock equity share, the Company recorded 100% of InsurQuote's net losses for the period from the Company's initial investment, February 10, 1998 to March 31, 1999. The recording of 100% of InsurQuote's losses was the result of the Company's $20.0 million investment being the primary source of funding for InsurQuote's operating losses during that period. On March 31, 1999, InsurQuote received a $20.0 million investment from a new investor for convertible preferred stock with a 19.0% voting interest. As a result of this new investment, the Company's ownership percentage decreased to 14.7% and the 7 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Company ceased recording losses on its investment, unless its was determined that its remaining investment was impaired. The Company has not recorded any income tax benefit on the equity in InsurQuote losses recorded in 1999 and 1998. On April 7, 2000, ChannelPoint, Inc., an e-commerce exchange services and technology platform provider for insurance and benefits companies, acquired InsurQuote. Under the terms of the transaction, the Company exercised its warrant for InsurQuote common stock in exchange for surrendering its $8.9 million subordinated note from InsurQuote. In addition, the Company invested $0.5 million in cash and converted $0.3 million in interest receivables associated with the $8.9 million subordinated note for additional common stock. The Company's securities in InsurQuote were then exchanged for common stock in the combined entity, ChannelPoint, Inc. ("ChannelPoint"). As a result of this transaction, the Company now owns 5,036,635 shares, representing approximately 6.6%, on a fully diluted basis, of ChannelPoint's common stock. In connection with the Company exchanging its equity investment in InsurQuote securities for ChannelPoint's common stock, the Company's investment in ChannelPoint's common stock was recorded at its fair market value, and as a result, a gain was reflected in the consolidated interim statement of operations for the three and six months ended June 30, 2000. The Company accounts for its investment in ChannelPoint as a cost based investment. Prior to the end of the second quarter, the Company reviewed its carrying value of the ChannelPoint common stock. Based on this review, the Company determined that there had been an other than temporary decline in market value of these securities. This determination was based on market conditions for like companies, restrictions on the stock holding, delay in the initial public offering of the ChannelPoint common stock and the limited liquidity of a private security. The resulting charge related to this change in carrying value has been included in the net gain on the exchange of securities of $18.4 million reflected in the consolidated interim statement of operations for the three and six months ended June 30, 2000. The impact on the Company's tax provision resulting from this gain on exchange of investment securities was minimal, since for tax purposes it largely represented a reversal of prior equity losses for which no tax benefit was recorded. As such, the tax impact of $0.7 million related to the increase from the original cost of the investment of $20.8 million to the current carrying value of $22.7 million as of June 30, 2000. NOTE 7 - ENTERSTAND JOINT VENTURE On December 30, 1998, the Company and Hearst Communications, Inc. ("Hearst") established a joint venture, Enterstand Limited ("Enterstand"), in Europe to develop and market claims processing tools to insurers and collision repair facilities. Under the provision of the Subscription and Stockholders Agreement ("Subscription Agreement"), the Company invested $2.0 million for a 19.9% equity interest. The Subscription Agreement provides the Company with an option to purchase 85% of Hearst's shares of Enterstand at an agreed upon purchase price. The option is exercisable by the Company after one year from the date of the Subscription Agreement. On March 17, 2000, the Company and Hearst agreed to terms for an amendment to the Subscription Agreement. Under the terms of the amendment, both parties contributed additional funds to Enterstand to provide additional working capital. On March 20, 2000, the Company funded $0.5 million and Hearst funded $5.0 million to Enterstand. After these investments, the Company's ownership percentage decreased to 14.2%. The Company's option was adjusted to include a right to purchase 78% of the shares issued to Hearst in connection with this transaction and would give the Company an 84.5% ownership in Enterstand, if exercised. In addition, on March 31, 2000, the Company and Hearst loaned Enterstand $8.5 million and $1.5 million, respectively, which were evidenced by promissory notes. Of the $8.5 million loaned to Enterstand by the Company, $3.5 million was funded in cash and $5 million of receivables from the joint venture were converted into the note receivable. These promissory notes mature in March 2005 and bear interest at 9%. The Company applies the equity method of accounting for its investment in Enterstand. Since the 8 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) inception date through March 31, 2000, the Company recorded 19.9% of Enterstand's losses. Notwithstanding the Company's current ownership percentage of 14.2%, for the three months ended June 30, 2000, the Company recorded 85% of Enterstand losses based on the Company's proportionate share of the total funding to Enterstand which occurred on March 31, 2000. The Company recorded a charge of $4.3 million and $0.8 million for its share of Enterstand's losses for the six months ended June 30, 2000 and 1999, respectively. The Company has not recorded any income tax benefit on the equity in Enterstand losses recorded since inception. Summary financial information for Enterstand for the three and six months ended June 30, 2000 was as follows:
THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 2000 2000 ------------- -------------- (IN THOUSANDS) -------------- Revenues $ - $ - ------------- -------------- ------------- -------------- Loss from operations $ (4,012) $ (8,094) ------------- -------------- ------------- -------------- Net loss $ (4,113) $ (8,195) ------------- -------------- ------------- --------------
NOTE 8 - INVESTMENT IN CHOICEPARTS On May 4, 2000, the Company formed a new independent company, ChoiceParts, LLC ("ChoiceParts") with The Reynolds and Reynolds Company and Automatic Data Processing, Inc. ChoiceParts will serve as an electronic auto parts marketplace for franchised auto retailers, collision repair facilities and other parts suppliers. On May 4, 2000, the Company invested approximately $1.4 million in ChoiceParts for a 27.5% equity interest. In addition, the Company has an additional commitment to fund $5.5 million to ChoiceParts based on its pro-rata ownership percentage through April 2001. The Company applies the equity method of accounting for its investment in ChoiceParts and recorded a charge of $0.3 million for the period May 4, 2000 through June 30, 2000. Based on the nature of the Company's investment, the Company has recorded a related income tax benefit on its share of the losses. Summary financial information for ChoiceParts from the inception date May 4, 2000 through June 30, 2000 was as follows:
(IN THOUSANDS) -------------- Revenues $ 2,350 -------------- -------------- Loss from operations $ (1,113) -------------- -------------- Net loss $ (1,135) -------------- --------------
NOTE 9 - BUSINESS SEGMENTS SFAS No. 131, "Disclosures About Segments for Enterprise and Related Information," requires companies to provide certain information about their operating segments. The Company has four reportable segments: CCC U.S., Consumer Services, International and Drive Logic (formerly known as the Company's Internet Business-to-Business division). CCC U.S. sells products and services which assist its customers in managing total loss and repairable auto claims. Consumer Services sells products and services which provide complete outsourcing services on all aspects of the claims process. International offers products to help manage the claims process and settlement of repairable automobile claims 9 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) in Europe. DriveLogic, formed in 1999 as an outgrowth of the CCC U.S. Division, is concentrating on developing products and services that will serve the automobile claims industry supply chain through the Internet. The Company's reportable segments are based upon the nature of the products and services within the Company and the methods used to distribute these products and services. The Company is organized into revenue producing divisions and shared services organizations (e.g. product development, management information systems, finance and administration) tasked with facilitating the performance of the revenue producing divisions. Divisional expenses represent principally salaries and related employee expenses directly related to the Division's activities. Each revenue division and support organization is led by a president or executive vice president that reports to the Chief Executive Officer. Management evaluates performance at the total company profit level, divisional profit level and at the product revenue level. The shared services costs are not currently allocated to the revenue producing divisions and include product development, management information systems and finance and administration costs. Financial information relating to each reportable segment was as follows (in thousands):
CCC CONSUMER CCC DRIVE SHARED U.S. SERVICES INTERNATIONAL LOGIC SERVICES TOTAL --------- --------- ------------- --------- --------- ------- SIX MONTHS ENDED JUNE 30, 2000 Net revenue $ 87,801 $ 14,530 $ 4,358 $ - $ - $ 106,689 Expenses (34,296) (14,714) (6,308) (6,015) (38,622) (99,955) --------- --------- ---------- --------- --------- --------- Operating income 53,505 (184) (1,950) (6,015) (38,622) 6,734 Gain on settlement of marketing agreement 4,144 - - - - 4,144 Gain on investment in ChannelPoint 18,487 - - - - 18,487 Equity in losses of affiliates - - (4,309) (312) - (4,621) --------- --------- ---------- --------- --------- --------- Division operating margin $ 76,136 $ (184) $ (6,259) $ (6,327) $ (38,622) $ 24,744 --------- --------- ---------- --------- --------- --------- --------- --------- ---------- --------- --------- --------- BALANCE AT JUNE 30, 2000 Accounts receivable, net $ 12,995 $ 10,881 $ 3,523 $ - $ - $ 27,399 --------- --------- ---------- --------- --------- --------- --------- --------- ---------- --------- --------- --------- SIX MONTHS ENDED JUNE 30, 1999 Net revenue $ 86,205 $ 13,698 $ 974 $ - $ - $ 100,877 Expenses (44,360) (13,257) (1,194) - (35,116) (93,927) --------- --------- ---------- --------- --------- --------- Operating income 41,845 441 (220) - (35,116) 6,950 Equity in losses of affiliates (4,167) - (828) - - (4,995) --------- --------- ---------- --------- --------- --------- Division operating margin $ 37,678 $ 441 $ (1,048) $ - $ (35,116) $ 1,955 --------- --------- ---------- --------- --------- --------- --------- --------- ---------- --------- --------- --------- BALANCE AT JUNE 30, 1999 Accounts receivable, net $ 16,614 $ 6,360 $ 841 $ - $ - $ 23,815 --------- --------- ---------- --------- --------- --------- --------- --------- ---------- --------- --------- ---------
During the six months ended June 30, 2000 and 1999, substantially all revenues recognized in the CCC U.S. and Consumer Services Divisions were derived from customers located in the United States. During those same periods, substantially all revenues recognized in the CCC International segment were derived from customers located in Europe. NOTE 10 - LEGAL PROCEEDINGS On or about July 18, 2000, a putative class action was filed in the Circuit Court of Cook County, Illinois, against CCC, The Hartford Financial Services Group, Inc., and Hartford Insurance Company of the Midwest. The case is captioned LEPIANE V. THE HARTFORD FINANCIAL SERVICES GROUP, INC., HARTFORD INSURANCE COMPANY OF THE MIDWEST, AND CCC INFORMATION SERVICES INC., No. 00 CH 10545 (filed 07/18/00). The LEPIANE lawsuit was filed by a group of plaintiffs' attorneys, including several attorneys 10 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) who previously filed five other putative class action lawsuits in Cook County against CCC and various of its customers, as reported in the Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1999. The plaintiff asserts substantially the same claims and seeks substantially the same relief as in those previously filed Cook County actions. CCC was only recently served with the complaint in the LEPIANE lawsuit. No other action has been taken in the case. On or about July 6, 2000, one of the previously filed Cook County lawsuits, KEILLER V. FARMERS INSURANCE GROUP OF COMPANIES, FARMERS GROUP, INC., FARMERS INSURANCE EXCHANGE, FARMERS INSURANCE CO. OF OREGON, AND CCC INFORMATION SERVICES INC., No. 99 CH 15485, was voluntarily dismissed without prejudice by the plaintiff. On or about June 16, 2000, a group of plaintiffs' attorneys filed two essentially identical putative state-wide class actions against CCC and certain of its customers in the State Court of Fulton County, Georgia. The cases are captioned MCGOWAN V. PROGRESSIVE CASUALTY INSURANCE CO., PROGRESSIVE INSURANCE CO., CCC INFORMATION SERVICES INC., AND DAVID PARHAM, CIVIL ACTION FILE NO. 00VS006525-J (06/16/00) AND DASHER V. ATLANTA CASUALTY COMPANY AND CCC INFORMATION SERVICES INC., Civil Action File No. 00VS006315-H (06/16/00). The plaintiff in each case alleges that his or her insurance company, using CCC's TOTAL LOSS valuation product, offered plaintiff an inadequate amount for his or her automobile and that CCC's TOTAL LOSS valuation product provides values that do not comply with applicable Georgia regulations. The plaintiff asserts various common law and statutory claims against the defendants. Plaintiff seeks unspecified compensatory, treble and punitive damages, as well as an award of attorneys' fees and expenses. CCC was only recently served with the complaints in these lawsuits. No other action has been taken in the cases. CCC is a defendant in an arbitration before the American Arbitration Association captioned AUTOBODY SOFTWARE SOLUTIONS, INC. V. CCC INFORMATION SERVICES INC., as reported in the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000. On June 5, 2000, the plaintiff increased its demand to in excess of $23 million. Plaintiff's demand purports to represent a projection of the revenue it would have received over the term of the agreement. CCC continues to believe that Autobody Software Solutions' ("Autobody") claims are barred by CCC's defenses and that its damage demand is insupportable. CCC also continues to pursue its own claims for damages against Autobody. The hearing in this arbitration, originally scheduled for July 2000, has been rescheduled to September 2000. CCC intends to vigorously defend all of the above-described lawsuits. Due to the numerous legal and factual issues that must be resolved during the course of the litigation, CCC is unable to predict the ultimate outcome of any of these actions. If CCC were held liable in any of these actions (or otherwise concludes that it is in CCC's best interests 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. The Company is unable to estimate the magnitude of its exposure, if any, at this time. As additional information is gathered and the litigations proceed, CCC will continue to assess their potential impact. 11 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999 The Company reported net income applicable to common stock of $17.3 million, or $0.78 per share on a diluted basis, for the three months ended June 30, 2000, versus net income of $0.1 million, or $0.00 per share on a diluted basis, for the same quarter last year. REVENUES. Second quarter 2000 revenues of $51.3 million were $0.3 million, or 0.6%, higher than the same quarter last year. The increase in revenues was primarily due to growth in the Company's International division. The acquisition of D.W. Norris in the third quarter of 1999 accounted for $0.9 million of the increase in revenues in the International division. Revenues for the CCC U.S. Division decreased due to lower conversion fees associated with the collision estimating seats from the same quarter last year and the sale of its Dealer Services business in the fourth quarter of 1999. PRODUCTION AND CUSTOMER SUPPORT. Production and customer support increased from $15.0 million, or 29.5% of revenues, to $16.6 million, or 32.4% of revenues. The year over year increase was due primarily to customer support costs related to Consumer Services and the addition of D.W. Norris to the International Division, offset, in part, by a reduction related to the sale of the Dealer Services business. COMMISSION, ROYALTIES AND LICENSES. Commission, royalties and licenses decreased from $4.4 million, or 8.6% of revenues, to $3.2 million, or 6.2% of revenues. The commission decrease was a result of the CCC U.S. Division's conversion of its independent sales representatives for collision repair facilities to salaried employees and the Company's elimination of its highly commissioned Dealer Services products. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative decreased from $22.2 million, or 43.6% of revenues, to $22.0 million, or 42.9% of revenues. The decrease was a result of compensation charges of $1.2 million as a result of a stock repurchase and reorganization charges of $0.8 million of CCC U.S.'s automotive services group in the second quarter of 1999. Offsetting this decrease, in part, was $3.4 million in costs associated with DriveLogic, which was formerly known as the Company's "Internet Business-to-Business" division until the Company changed the name of the division to DriveLogic in the second quarter of 2000. DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from $2.5 million, or 4.9% of revenues, to $3.1 million, or 6.0% of revenues. The increase was mainly the result of an increase in goodwill amortization resulting from the acquisition of D.W. Norris in the third quarter of 1999 and an increase in amortization of internal use software costs, primarily those relating to a new customer relationship management system installed in the third quarter of 1999. PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming decreased from $6.2 million, or 12.2% of revenues, to $6.1 million, or 12.0% of revenues. The slight decrease in dollars was due to lower development costs related to CCC U.S. Division products, offset, in part, by additional development costs of $0.8 million associated with DriveLogic . INTEREST EXPENSE. Interest expense increased from $0.2 million in 1999 to $0.8 million in 2000. The increase from 1999 was due to a higher level of borrowings in late 1999 and 2000 under the Company's bank credit facility. The increase in borrowings was mainly the result of the Company's stock repurchase program, acquisitions and funding to Enterstand. GAIN ON EXCHANGE OF INVESTMENT SECURITIES. The Company recorded a gain of approximately $18.4 million in connection with the exchange of its equity investment in InsurQuote securities for ChannelPoint common stock. Net of income taxes, the gain was approximately $17.7 million. EQUITY IN LOSSES OF CHOICEPARTS. The Company recorded a charge of $0.3 million for the period May 4, 2000 through June 30, 2000 related to its share of the losses in ChoiceParts. INCOME TAXES. Income taxes decreased from a provision of $0.1 million, or 9.1% of income before taxes, to a benefit of $2.9 million, or 16.2% of income before taxes. The decrease reflected minimal tax 12 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES expense associated with the gain on exchange of investment securities and an adjustment to effect a lower effective tax rate expected for the full year. EQUITY IN NET LOSSES OF AFFILIATES. Equity in net losses of affiliates increased from $0.5 million in 1999 to $3.5 million in 2000. The results reflected losses relating to Enterstand for 2000 and 1999, respectively, including the change in the percentage of losses recognized from 19.9% to 85%. SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999 The Company reported net income applicable to common stock of $21.8 million, or $0.97 per share on a diluted basis, for the six months ended June 30, 2000, versus a net loss of $(0.9) million, or $(0.04) per share on a diluted basis, for the same period last year. REVENUES. Revenues of $106.7 million were $5.8 million, or 5.8%, higher than the same period last year. The increase in revenues was primarily due to growth in the Company's International and Consumer Services divisions. The acquisition of D.W. Norris in the third quarter of 1999 accounted for $2.9 million of the increase in revenues in the International division from the prior year. Consumer Services accounted for $0.8 million of the increase. In addition, in the first quarter of 2000 the Company reduced accounts receivable allowance reserves by approximately $1.2 million based on a detailed analysis of exposures and required reserves on an individual account basis in the accounts receivable. PRODUCTION AND CUSTOMER SUPPORT. Production and customer support increased from $29.1 million, or 28.9% of revenues, to $32.8 million, or 30.8% of revenues. The year over year increase was due primarily to customer support costs related to the Consumer Services Division and the addition of D.W. Norris to the International Division, offset, in part, by a reduction related to the sale of the Dealer Services business. COMMISSION, ROYALTIES AND LICENSES. Commission, royalties and licenses decreased from $8.9 million, or 8.8% of revenues, to $6.6 million, or 6.2% of revenues. The commission decrease was a result of the CCC U.S. Division's conversion of its independent sales representatives for collision repair facilities to salaried employees and the Company's elimination of its highly commissioned Dealer Services products. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative increased from $39.0 million, or 38.7% of revenues, to $42.5 million of revenues, or 39.9%. Of this increase, approximately $4.9 million was due to costs associated with DriveLogic. This increase was offset by a decrease in compensation charges of $1.2 million as a result of a stock repurchase and $0.8 in reorganization costs of CCC U.S.'s automotive services group incurred in the second quarter of 1999. DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from $4.9 million, or 4.9% of revenues, to $5.9 million, or 5.6% of revenues. The increase was mainly the result of an increase in goodwill amortization resulting from the acquisition of D.W. Norris in the third quarter of 1999 and an increase in amortization of internal use software costs, primarily those relating to a new customer relationship management system installed in the third quarter of 1999. PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming increased from $12.0 million, or 11.8% of revenues, to $12.1 million, or 11.3% of revenues. The slight increase in dollars was due to additional development costs of $1.0 million associated with DriveLogic, offset, in part, by lower development costs related to CCC U.S. Division products. INTEREST EXPENSE. Interest expense increased from $0.4 million in 1999 to $1.4 million in 2000. The increase from 1999 was due to a higher level of borrowings in late 1999 and 2000 under the Company's bank credit facility. The increase in borrowings was mainly the result of the Company's stock repurchase program, acquisitions and funding to Enterstand. OTHER INCOME, NET. Other income, net increased from $0.2 million in 1999 to $4.6 million in 2000. The increase from prior year was principally due to a $4.1 million gain recorded in the first quarter of 2000 on the termination of the sales and marketing agreement between the Company and InsurQuote. GAIN ON EXCHANGE OF INVESTMENT SECURITIES. The Company recorded a gain of approximately $18.4 million in connection with the exchange of its equity investment in InsurQuote securities for ChannelPoint common stock. Net of income taxes, the gain was approximately $17.7 million. 13 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES EQUITY IN LOSSES OF CHOICEPARTS. The Company recorded a charge of $0.3 million for the period May 4, 2000 through June 30, 2000 related to its share of the losses in ChoiceParts. INCOME TAXES. Income taxes decreased from $2.7 million, or 40.3% of income before taxes, to $1.9 million, or 6.9% of income before taxes. The decrease reflected minimal tax expense associated with the gain on exchange of investment securities and a decrease to the income tax provision based on a adjustment to lower the projected full year effective tax rate in the second quarter of 2000. EQUITY IN NET LOSSES OF AFFILIATES. Equity in net losses of affiliates decreased from $5.0 million in 1999 to $4.3 million in 2000. The results included $4.2 million in losses relating to InsurQuote for 1999, and $4.3 million and $0.8 million in losses relating to Enterstand for 2000 and 1999, respectively, including the change in percentage of losses recognized from 19.9% to 85%. The Company ceased recording the net losses of InsurQuote in the second quarter of 1999 as a result of a new investor funding InsurQuote's net losses subsequent to March 31, 1999. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 2000, net cash provided by operating activities was $4.7 million and net borrowings on the Company's credit facility were approximately $15 million. During that same period, the Company had capital expenditures of $8.8 million. In addition, the Company loaned Enterstand $8.5 million, of which $3.5 million was funded in cash, and invested approximately $1.4 million in ChoiceParts for a 27.5% equity interest. The Company also purchased 683,550 of its outstanding shares for $8.2 million. For the six months ended June 30, 2000, the Company had significant expenditures above net cash provided by operations mainly, driven by the Company's share repurchase program of $8.2 million and strategic investments in ChoiceParts of $1.4 million and Enterstand of $3.5 million. CCC's credit facility was established, in part, to meet the needs for its strategic investments. Additionally, as permitted by the terms of the credit facility, CCC has used borrowings under the credit facility to fund its share repurchase program. The Company's share repurchase program of up to 2,000,000 shares of the Company's common stock, either on the open market or in privately negotiated transactions, was approved on June 12, 2000 by the Company's Board of Directors. This program is a continuation of CCC's original share repurchase plan that was announced on August 18, 1998. Under the guidelines established by the Company's Board of Directors, cash expenditures and requirements under the share repurchase program are solely at the discretion of management. CCC has the ability to operate with a working capital deficit, as it receives substantial payments from customers for its services in advance of recognizing the revenues and the costs incurred to provide such services. CCC invoices each customer a month in advance for the following month's Pathways Collision Estimating software services. As such, CCC typically receives cash from its customers prior to recognizing the revenue and incurring the expense for the services provided. These amounts are reflected in the deferred revenue line in the consolidated balance sheet until these amounts are earned and recognized as revenues. The Company is currently considering raising additional capital to increase working capital, which will help fund new initiatives, such as DriveLogic and reduce or eliminate the current working capital deficit. Management believes that cash flows from operations and the Company's credit facility will be sufficient to meet the Company's liquidity needs over the next 12 months. There can be no assurance, however, that the Company will be able to satisfy its liquidity needs in the future without engaging in financing activities beyond that described above. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 contains certain safe harbors regarding forward-looking statements. In that context, certain sections of this Form 10-Q contain forward-looking statements that involve certain degrees of risks and uncertainties, including statements relating to liquidity and capital resources. Except for the historical information, the risks and uncertainties, include, without limitation, the effect of competitive pricing within the industry, the inherent uncertainty of the ultimate resolution of pending litigation, the presence of competitors with greater financial resources than the Company, the intense competition for top software engineering talent and the volatile nature of technological change within the software development and information services industries (including Internet-related businesses). In addition, discussions concerning new business ventures, such as DriveLogic, are inherently uncertain. Additional factors that could affect the Company's financial condition and results of operations are included in the Company's Initial Public Offering Prospectus and Registration on Form S-1 filed with the Securities and Exchange Commission ("Commission") on August 16, 1996, the Company's 1999 Annual Report on Form 10-K filed on March 30, 2000, and Amendment No. 1 on Form 10-K/A, filed with the Commission on April 28, 2000. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a result of the 1998 acquisition of CCC International and the 1999 acquisition of D.W. Norris Limited, the Company has operations in the U.K. All foreign operations are measured in the British Pound Sterling. As a result, the Company's financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company has operations. As the International Division growth expands and the potential exposure to foreign currency fluctuations increases, the Company will monitor such exposure and may engage in hedging against foreign currency fluctuations as management deems appropriate. 14 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On or about July 18, 2000, a putative class action was filed in the Circuit Court of Cook County, Illinois, against CCC, The Hartford Financial Services Group, Inc., and Hartford Insurance Company of the Midwest. The case is captioned LEPIANE V. THE HARTFORD FINANCIAL SERVICES GROUP, INC., HARTFORD INSURANCE COMPANY OF THE MIDWEST, AND CCC INFORMATION SERVICES INC., No. 00 CH 10545 (filed 07/18/00). The LEPIANE lawsuit was filed by a group of plaintiffs' attorneys, including several attorneys who previously filed five other putative class action lawsuits in Cook County against CCC and various of its customers, as reported in the Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1999. The plaintiff asserts substantially the same claims and seeks substantially the same relief as in those previously filed Cook County actions. CCC was only recently served with the complaint in the LEPIANE lawsuit. No other action has been taken in the case. On or about July 6, 2000, one of the previously filed Cook County lawsuits, KEILLER V. FARMERS INSURANCE GROUP OF COMPANIES, FARMERS GROUP, INC., FARMERS INSURANCE EXCHANGE, FARMERS INSURANCE CO. OF OREGON, AND CCC INFORMATION SERVICES INC., No. 99 CH 15485, was voluntarily dismissed without prejudice by the plaintiff. On or about June 16, 2000, a group of plaintiffs' attorneys filed two essentially identical putative state-wide class actions against CCC and certain of its customers in the State Court of Fulton County, Georgia. The cases are captioned MCGOWAN V. PROGRESSIVE CASUALTY INSURANCE CO., PROGRESSIVE INSURANCE CO., CCC INFORMATION SERVICES INC., AND DAVID PARHAM, CIVIL ACTION FILE NO. 00VS006525-J (06/16/00) AND DASHER V. ATLANTA CASUALTY COMPANY AND CCC INFORMATION SERVICES INC., Civil Action File No. 00VS006315-H (06/16/00). The plaintiff in each case alleges that his or her insurance company, using CCC's TOTAL LOSS valuation product, offered plaintiff an inadequate amount for his or her automobile and that CCC's TOTAL LOSS valuation product provides values that do not comply with applicable Georgia regulations. The plaintiff asserts various common law and statutory claims against the defendants. Plaintiff seeks unspecified compensatory, treble and punitive damages, as well as an award of attorneys' fees and expenses. CCC was only recently served with the complaints in these lawsuits. No other action has been taken in the cases. CCC is a defendant in an arbitration before the American Arbitration Association captioned AUTOBODY SOFTWARE SOLUTIONS, INC. V. CCC INFORMATION SERVICES INC., as reported in the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000. On June 5, 2000, the plaintiff increased its demand to in excess of $23 million. Plaintiff's demand purports to represent a projection of the revenue it would have received over the term of the agreement. CCC continues to believe that Autobody Software Solutions' ("Autobody") claims are barred by CCC's defenses and that its damage demand is insupportable. CCC also continues to pursue its own claims for damages against Autobody. The hearing in this arbitration, originally scheduled for July 2000, has been rescheduled to September 2000. CCC intends to vigorously defend all of the above-described lawsuits. Due to the numerous legal and factual issues that must be resolved during the course of the litigation, CCC is unable to predict the ultimate outcome of any of these actions. If CCC were held liable in any of these actions (or otherwise concludes that it is in CCC's best interests 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. The Company is unable to estimate the magnitude of its exposure, if any, at this time. As additional information is gathered and the litigations proceed, CCC will continue to assess their potential impact. 15 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of the stockholders of the Registrant was held on June 28, 2000. (b) The directors listed in the Registrant's Proxy Statement dated May 25, 2000, were elected to serve until the earlier of the next Annual Meeting of Stockholders or until their respective successors have been elected and qualified, as follows:
Director For Withheld Abstentions -------- --- -------- ----------- Morgan W. Davis 18,528,274 737,405 0 Michael R. Eisenson 18,531,178 734,501 0 Thomas L. Kempner 18,532,678 733,001 0 Dudley C. Mecum 18,537,178 728,501 0 Githesh Ramamurthy 18,530,837 734,842 0 Mark A. Rosen 18,527,178 738,501 0 Herbert S. Winokur 18,537,178 728,501 0
(c) Appointment of PricewaterhouseCoopers LLP as the Company's independent auditors was approved. Voting by stockholders on the proposal was 19,230,900 for, 33,166 against, 1,613 withheld and 0 abstentions. (d) The Executive Management Group Stock Ownership Plan set forth in the Report of the Report of the Compensation Committee was approved. Voting by stockholders on the proposal was 12,615,822 for, 1,385,254 against, 6,906 withheld and 0 abstentions. (e) An increase to the number of authorized shares of Common Stock from 30,000,000 to 40,000,000 for use in the Company's 2000 Stock Incentive Plan and for other purposes that the Board of Directors deems appropriate. Voting by stockholders on the proposal was 13,138,269 for, 856,493 against, 13,221 withheld and 0 abstentions. (f) The amendment and restatement of the Company's 1997 Stock Option Plan (the "2000 Stock Incentive Plan") was approved. Voting by stockholders on the proposal was 13,090,806 for, 901,656 against, 15,521 withheld and 0 abstentions. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10 2000 Stock Incentive Plan 11 Statement Re: Computation of Per Share Earnings 27 Financial Data Schedule (b) Reports on Form 8-K None 16 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: February 9, 2001 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 17 -----END PRIVACY-ENHANCED MESSAGE-----