KAR Holdings, Inc. Reports Third Quarter 2007 Results



    CARMEL, IND., November 13 /CNW/ - KAR Holdings, Inc. today reported its
financial results for the quarter ended September 30, 2007. For the third
quarter of 2007, the company reported revenue of $394.3 million as compared
with third quarter 2006 revenue of $356.4 million for the combined predecessor
companies of ADESA, Inc. and Insurance Auto Auctions, Inc., an increase of
10.6%. Adjusted EBITDA, excluding pro forma adjustments, as defined in the
company's senior credit facility dated April 20, 2007, increased 10.9% to
$97.7 million in the third quarter of 2007, as compared with third quarter
2006 adjusted EBITDA of $88.1 million for the combined predecessor companies.

    For the nine months ended September 30, 2007, the company reported
revenue of $1,190.5 million as compared with revenue of $1,073.9 million for
the combined predecessor companies for the comparable 2006 period, an increase
of 10.9%. Adjusted EBITDA, excluding pro forma adjustments, for the nine
months ended September 30, 2007, increased 6.0% to $307.9 million as compared
with adjusted EBITDA of $290.4 million for the combined predecessor companies
for the comparable 2006 period.

    Earnings Conference Call Information

    KAR Holdings, Inc. will also be hosting an earnings conference call
Wednesday, November 14, 2007 at 11:00 a.m. EST (10:00 a.m. CST). The call will
be hosted by KAR Holdings, Inc.'s Chairman and Chief Executive Officer Brian
Clingen and Executive Vice President and Chief Financial Officer Eric
Loughmiller. The conference call may be accessed by calling 888-245-0987 and
entering participant passcode 4715390.

    Financial statements for the third quarter 2007 can be found at the Web
sites for ADESA, Inc. and Insurance Auto Auctions, Inc., at
http://www.adesainc.com and http://www.iaai.com.

    About KAR Holdings, Inc.

    KAR Holdings, Inc. is the holding company for ADESA, a leading provider
of wholesale used vehicle auctions whose operations span North America with 58
used vehicle sites, Insurance Auto Auctions, Inc., a leader in total
automotive loss control and specialty salvage services in the United States
whose operations span North America with 137 sites and Automotive Finance
Corporation, the premier capital funding source for the used vehicle industry
with 91 sites across North America. For further information on ADESA,
Insurance Auto Auctions, Inc. or Automotive Finance Corporation, visit the
company's Web sites at http://www.adesainc.com and http://www.iaai.com.

    
    KAR Holdings, Inc.
    Consolidated Statements of Income
    (In millions) (Unaudited)
                                     2007                 2006
                                 ------------- ---------------------------
                                   Successor           Predecessor
                                 ------------- ---------------------------
                                                   ADESA         IAAI
                                   July 1 -      July 1 -     June 25 -
                                  September 30  September 30  September 24
                                 ------------- ------------- -------------
    Operating revenues
         ADESA                         $241.4        $236.2           $--
         IAAI                           117.7            --          83.5
         AFC                             35.2          36.7            --
                                 ------------- ------------- -------------
    Total operating revenues            394.3         272.9          83.5

    Operating expenses
         Cost of services
          (exclusive of
          depreciation and
          amortization)                 221.8         137.8          60.4
         Selling, general and
          administrative                 82.5          64.7          11.6
         Depreciation and
          amortization                   39.6          12.1           6.6
         Loss related to flood             --            --           0.3
                                 ------------- ------------- -------------
    Total operating expenses            343.9         214.6          78.9
                                 ------------- ------------- -------------

    Operating profit                     50.4          58.3           4.6

    Interest expense, net                56.3           5.4           8.1
    Other (income) expense, net          (0.9)         (0.1)          0.3
    Loss on extinguishment of
     debt                                  --            --           1.8
                                 ------------- ------------- -------------

    Income (loss) from continuing
     operations before income
     taxes                               (5.0)         53.0          (5.6)

    Income taxes                          3.7          18.6          (1.3)
                                 ------------- ------------- -------------

    Income (loss) from continuing
     operations                          (8.7)         34.4          (4.3)

    Income (loss) from
     discontinued operations, net
     of income taxes                      0.1          (0.3)           --
                                 ------------- ------------- -------------

              Net income (loss)         ($8.6)        $34.1         ($4.3)
                                 ------------- ------------- -------------
    

    
    KAR Holdings, Inc.
    Consolidated Statements of Income
    (In millions) (Unaudited)
                                     2007                     2006
                        ------------------------------ -------------------
                        Successor      Predecessor         Predecessor
                        ---------- ------------------- -------------------
                                     ADESA     IAAI      ADESA     IAAI
                                                                 Dec. 26,
                        April 20 - Jan. 1 -  Jan. 1 -  Jan. 1 -    2005 -
                        Sept. 30,  April 19, April 19, Sept. 30, Sept. 24,
                           2007       2007      2007      2006      2006
                        ---------- --------- --------- --------- ---------
    Operating revenues
      ADESA                $432.3    $325.4       $--    $726.3       $--
      IAAI                  208.4        --     114.8        --     239.5
      AFC                    63.7      45.9        --     108.1        --
                        ---------- --------- --------- --------- ---------
    Total operating
     revenues               704.4     371.3     114.8     834.4     239.5

    Operating expenses
      Cost of services
       (exclusive of
       depreciation and
       amortization)        391.1     187.3      76.5     419.7     170.1
      Selling, general
       and
       administrative       146.3      85.5      19.4     195.4      29.3
      Depreciation and
       amortization          66.8      15.9       7.9      33.9      17.1
      Loss related to
       flood                   --        --        --        --       3.5
      Transaction
       expenses                --      24.8        --        --        --
                        ---------- --------- --------- --------- ---------
    Total operating
     expenses               604.2     313.5     103.8     649.0     220.0
                        ---------- --------- --------- --------- ---------

    Operating profit        100.2      57.8      11.0     185.4      19.5

    Interest expense,
     net                    100.1       6.3       9.9      16.2      21.1
    Other (income)
     expense, net            (2.4)     (0.4)     (0.1)     (0.3)      3.1
    Loss on
     extinguishment of
     debt                      --        --        --        --       1.8
                        ---------- --------- --------- --------- ---------

    Income (loss) from
     continuing
     operations before
     income taxes             2.5      51.9       1.2     169.5      (6.5)

    Income taxes              6.5      30.5       1.5      62.6      (1.7)
                        ---------- --------- --------- --------- ---------

    Income (loss) from
     continuing
    operations               (4.0)     21.4      (0.3)    106.9      (4.8)

    Loss from
     discontinued
     operations, net of
     income taxes              --      (0.1)       --      (0.4)       --
                        ---------- --------- --------- --------- ---------

           Net income
            (loss)          ($4.0)    $21.3     ($0.3)   $106.5     ($4.8)
                        ---------- --------- --------- --------- ---------
    

    
    KAR Holdings, Inc.
    Consolidated Balance Sheets
    (In millions)
                                     Successor          Predecessor
                                   ------------- -------------------------
                                                    ADESA         IAAI
                                   September 30, December 31, December 31,
                                       2007          2006         2006
                                   ------------- ------------ ------------
                                    (Unaudited)
    Assets
    Current assets
    Cash and cash equivalents             $344.4       $195.7        $14.0
    Restricted cash                          7.6          7.8           --
    Trade receivables, net of
     allowances                            360.1        192.8         56.6
    Finance receivables, net of
     allowances                            265.7        203.3           --
    Retained interests in finance
     receivables sold                       73.7         69.6           --
    Deferred income tax assets              32.0         21.9         11.7
    Other current assets                    43.0         17.4         27.5
                                   ------------- ------------ ------------
         Total current assets            1,126.5        708.5        109.8

    Other assets
    Goodwill                             1,502.5        557.8        241.3
    Other intangible assets, net of
     accumulated amortization            1,477.5         49.0        147.5
    Unamortized debt issuance costs         84.9          5.2          8.1
    Other assets                            42.3         57.7          1.6
                                   ------------- ------------ ------------
         Total other assets              3,107.2        669.7        398.5

    Property and equipment, net of
     accumulated depreciation              795.7        597.1         80.2
                                   ------------- ------------ ------------

    Total assets                        $5,029.4     $1,975.3       $588.5
                                   ------------- ------------ ------------
    

    
    KAR Holdings, Inc.
    Consolidated Balance Sheets
    (In millions)
                                     Successor          Predecessor
                                   ------------- -------------------------
                                                    ADESA         IAAI
                                   September 30, December 31, December 31,
                                       2007          2006         2006
                                   ------------- ------------ ------------
                                    (Unaudited)
    Liabilities and Stockholders'
     Equity
    Current liabilities
    Accounts payable                     $453.9       $249.6        $37.5
    Accrued employee benefits and
     compensation expenses                 55.4         43.1          4.9
    Accrued interest                       40.1          1.0          5.5
    Other accrued expenses                 76.4         41.1          9.0
    Income taxes payable                    5.5         11.3           --
    Current maturities of long-term
     debt                                  15.6         30.0          2.2
    Current liabilities of
     discontinued operations                3.8          7.2           --
                                   ------------- ------------ ------------
         Total current liabilities        650.7        383.3         59.1

    Non-current liabilities
    Long-term debt                      2,605.0        322.5        342.6
    Deferred income tax liabilities       648.8         58.8         36.1
    Other liabilities                      43.7          7.2         12.4
                                   ------------- ------------ ------------
         Total non-current
          liabilities                   3,297.5        388.5        391.1

    Commitments and contingencies            --           --           --

    Stockholders' equity
    Preferred stock, $0.01 par
    value:
      Authorized shares:
        5,000,000 (successor)
        50,000,000 (Predecessor -
        ADESA)
      Issued shares: none                    --           --           --
    Common stock, $0.01 par value:
      Authorized shares:
        20,000,000 (Successor)
        500,000,000 (Predecessor -
        ADESA)
        100 (Predecessor - IAAI)
      Issued shares:
        10,686,316 (2007)
        94,868,104 (2006
        Predecessor - ADESA)
        100 (2006 Predecessor -
        IAAI)                               0.1          1.0           --
    Additional paid-in capital          1,057.6        673.3        151.4
    Retained earnings (deficit)            (4.0)       580.0        (13.1)
    Treasury stock, at cost
     (Predecessor - ADESA)
      Shares: 4,785,335                      --       (100.4)          --
    Accumulated other comprehensive
     income                                27.5         49.6           --
                                   ------------- ------------ ------------
         Total stockholders' equity     1,081.2      1,203.5        138.3
                                   ------------- ------------ ------------

    Total liabilities and
     stockholders' equity              $5,029.4     $1,975.3       $588.5
                                   ------------- ------------ ------------
    

    
    KAR Holdings, Inc.
    Consolidated Statements of Cash Flows
    (In millions) (Unaudited)
                                     2007                     2006
                        ------------------------------ -------------------
                        Successor      Predecessor         Predecessor
                        ---------- ------------------- -------------------
                                     ADESA     IAAI      ADESA     IAAI
                                                                 Dec. 26,
                        April 20 - Jan. 1 -  Jan. 1 -  Jan. 1 -    2005 -
                        Sept. 30,  April 19, April 19, Sept. 30, Sept. 24,
                           2007       2007      2007      2006      2006
                        ---------- --------- --------- --------- ---------
    Operating activities
    Net income (loss)       ($4.0)    $21.3     ($0.3)   $106.5     ($4.8)
       Adjustments to
        reconcile net
        income to net
        cash provided by
        operating
        activities:
       Depreciation and
        amortization         66.8      15.9       7.9      33.9      17.1
       Bad debt expense       1.9        --        --       3.5        --
       Deferred income
        taxes                  --       3.4       1.3       3.8      (0.7)
       Amortization of
        debt issuance
        costs                 5.8       0.4       0.4       0.9       1.0
       Stock-based
        compensation
        expense               0.7       6.4       2.6       4.5       1.4
       Unrealized loss
        on interest rate
        swap                 (6.7)     (0.1)       --      (0.2)       --
       Other non-cash,
        net                   0.7       1.3        --       1.7       0.7
       Loss on
        extinguishment
        of debt                --        --        --        --       1.8
       Changes in
        operating assets
        and liabilities,
        net of
        acquisitions:
       Finance
        receivables held
        for sale            (22.6)    (15.1)       --      (8.5)       --
       Retained
        interests in
        finance
        receivables sold     (1.6)     (2.5)       --     (10.4)       --
       Trade receivables
        and other assets     61.1    (164.6)      0.4     (82.3)      2.7
       Accounts payable
        and accrued
        expenses            (12.3)    147.7       4.6      71.0      10.4
                        ---------- --------- --------- --------- ---------
    Net cash provided by
     operating
     activities              89.8      14.1      16.9     124.4      29.6
    Investing activities
       Net increase
        (decrease) in
        finance
        receivables held
        for investment        6.1     (14.0)       --     (27.3)       --
       Acquisition of
        businesses, net
        of cash acquired    (23.3)       --      (0.5)    (54.7)    (89.0)
       Purchases of
        property,
        equipment and
        computer
        software            (31.1)    (11.3)     (5.4)    (24.2)    (12.1)
       Purchase of other
        intangibles          (0.1)     (0.1)       --      (0.6)       --
       Proceeds from the
        sale of
        property,
        equipment and
        computer
        software              0.1        --       0.1        --       1.4
       Equity
        investments            --        --        --     (12.6)       --
       Transfer from
        (to) restricted
        cash                  9.2      (9.0)       --      (1.6)       --
                        ---------- --------- --------- --------- ---------
    Net cash used by
     investing
     activities             (39.1)    (34.4)     (5.8)   (121.0)    (99.7)
    Financing activities
       Net increase in
        book overdrafts      63.5      46.2        --      53.4        --
       Net decrease in
        borrowings from
        lines of credit        --        --        --     (50.0)       --
       Payments on long-
        term debt            (3.9)     (7.5)     (0.5)    (22.5)    (33.5)
       Proceeds from
        long term debt         --        --        --        --     113.9
       Payments on
        capital leases       (0.2)       --      (0.1)       --        --
       Payments for debt
        issuance costs       (1.0)       --        --        --      (1.5)
       Proceeds from
        issuance of
        common stock
        under Stock
        plans                  --      15.0        --       6.3        --
       Contributed
        capital               3.0        --        --        --       0.1
       Dividends paid to
        stockholders           --        --        --     (20.2)       --
       Excess tax
        benefits from
        stock-based
        compensation           --       3.0        --       0.2        --
       Repurchase of
        common stock           --      (0.2)       --      (0.1)       --
                        ---------- --------- --------- --------- ---------
    Net cash provided by
     (used by) financing
     activities              61.4      56.5      (0.6)    (32.9)     79.0
    Effect of exchange
     rate changes on
     cash                    (0.4)     (0.1)       --       0.5        --
                        ---------- --------- --------- --------- ---------
    Net increase
     (decrease) in cash
     and cash
     equivalents            111.7      36.1      10.5     (29.0)      8.9
    Cash and cash
     equivalents at
     beginning of period    232.7     195.7      14.0     240.2      25.9
                        ---------- --------- --------- --------- ---------
    Cash and cash
     equivalents at end
     of period             $344.4    $231.8     $24.5    $211.2     $34.8
                        ---------- --------- --------- --------- ---------
    

    KAR Holdings, Inc.

    EBITDA and Adjusted EBITDA

    EBITDA and Adjusted EBITDA

    EBITDA and Adjusted EBITDA, as presented herein, are supplemental
measures of the Company's performance that are not required by, or presented
in accordance with, generally accepted accounting principles in the United
States ("GAAP"). They are not measurements of the Company's financial
performance under GAAP and should not be considered as alternatives to
revenues, net income (loss) or any other performance measures derived in
accordance with GAAP or as alternatives to cash flow from operating activities
as measures of the Company's liquidity.

    EBITDA is defined as net income (loss), plus interest expense net of
interest income, income tax provision (benefit), depreciation and
amortization. The Company calculates Adjusted EBITDA by adjusting EBITDA for
the items of income and expense and expected incremental revenue and cost
savings as described in the Company's $1,865 million senior credit facility.
Per the Company's senior credit facility, Consolidated EBITDA for the quarters
ending March 31, 2006, June 30, 2006 and September 30, 2006, is deemed to be
$102.9 million, $99.4 million and $88.1 million, respectively. Management
believes that the inclusion of supplementary adjustments to EBITDA applied in
presenting Adjusted EBITDA is appropriate to provide additional information to
investors about certain covenants required pursuant to the Company's senior
credit facilities and the notes. EBITDA and Adjusted EBITDA measures have
limitations as analytical tools, and should not be considered in isolation, or
as a substitute for analysis of the results as reported under GAAP. These
measures may not be comparable to similarly titled measures reported by other
companies.

    The calculation of Adjusted EBITDA (per the credit agreement) for the
last twelve months ended September 30, 2007, presented below, includes a pro
forma adjustment for anticipated cost savings related to the merger totaling
$10.5 million net of realized cost savings. The adjustment relates to
anticipated costs savings for redundant selling, general and administrative
costs for the salvage operations. The following table reconciles EBITDA and
Adjusted EBITDA for the periods presented:

    
                                                                  Twelve
                                                                  Months
                                    Three Months Ended             Ended
                           ------------------------------------- ---------
    (In millions)          Dec. 31, March 31, June 30, Sept. 30, Sept. 30,
     (Unaudited)             2006     2007      2007     2007      2007
                           -------- --------- -------- --------- ---------

    Net income (loss)         $18.2     $38.4  ($12.8)    ($8.6)     $35.2
    Add back: discontinued
     operations                 0.1        --      0.1     (0.1)       0.1
                           -------- --------- -------- --------- ---------
    Income from continuing
     operations                18.3      38.4   (12.7)     (8.7)      35.3
    Add back:
       Income taxes            14.5      24.6     10.2       3.7      53.0
       Interest expense,
        net of interest
        income                 13.8      13.6     46.6      56.3     130.3
       Depreciation and
        amortization           19.4      18.7     32.2      39.6     109.9
                           -------- --------- -------- --------- ---------
    EBITDA                     66.0      95.3     76.3      90.9     328.5

    Nonrecurring charges        5.2       1.1      5.6       5.0      16.9
    Nonrecurring
     transaction charges        6.1       2.4     22.4        --      30.9
    Noncash charges             2.5       5.2      1.0       0.9       9.6
    Advisory services           0.2       0.1      0.8       0.9       2.0
                           -------- --------- -------- --------- ---------
    Adjusted EBITDA            80.0     104.1    106.1      97.7     387.9

    Pro forma impact of
     recent acquisitions        0.7       0.9      0.8       0.9       3.3
    Pro forma cost savings
     per the credit
    agreement                                                7.2       7.2
                           -------- --------- -------- --------- ---------
    Adjusted EBITDA per the
     credit agreement         $80.7    $105.0   $106.9    $105.8    $398.4
                           -------- --------- -------- --------- ---------
    




For further information:

For further information: KAR Holdings, Inc. Eric Loughmiller,
317-249-4254 Executive Vice President & Chief Financial Officer
eric.loughmiller@adesa.com

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KAR HOLDINGS, INC.

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