KAR Holdings, Inc. Reports Second Quarter 2007 Results



    CARMEL, IND., August 29 /CNW/ - KAR Holdings, Inc. today reported its
financial results for the quarter ended June 30, 2007. For the second quarter
of 2007, the company reported that revenue rose 12.8 percent to $399.7 million
as compared with second quarter 2006 revenue of $354.2 million for the
combined predecessor companies of ADESA, Inc. and Insurance Auto Auctions,
Inc. Adjusted EBITDA, as defined in the company's senior credit facility dated
April 20, 2007, rose 6.7 percent to $106.1 million in the second quarter of
2007, as compared with second quarter 2006 adjusted EBITDA of $99.4 million
for the combined predecessor companies.

    For the six months ended June 30, 2007, the company reported that revenue
rose 11 percent to $796.2 million as compared with revenue of $717.5 million
for the combined predecessor companies for the comparable 2006 period.
Adjusted EBITDA for the six months ended June 30, 2007, rose 3.9 percent to
$210.2 million as compared with adjusted EBITDA of $202.3 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
Thursday, August 30, 2007 at 11:00 a.m. EDT (10:00 a.m. CDT). 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 800-289-0572 and
entering participant passcode 4234815.

    Financial statements for the second 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 54
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 89 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          Predecessor
                     ----------- -------------------- --------------------
                                   ADESA      IAAI      ADESA      IAAI
                     April 20 -  April 1 - March 28 - April 1 - March 27 -
                      June 30,   April 19, April 19,  June 30,   June 25,
                        2007       2007       2007      2006       2006
                     ----------- --------- ---------- --------- ----------
    Operating
     revenues
      ADESA               $190.9     $58.9        $--    $239.7        $--
      IAAI                  90.7        --       22.6        --       78.3
      AFC                   28.5       8.1         --      36.2         --
                     ----------- --------- ---------- --------- ----------
    Total operating
     revenues              310.1      67.0       22.6     275.9       78.3

    Operating
     expenses
      Cost of
       services
       (exclusive of
       depreciation
       and
       amortization)
                           169.2      34.3       14.6     137.7       54.0
      Selling,
       general and
       administrative       63.8      16.1        4.8      63.8       11.9
      Depreciation
       and
       amortization         27.1       3.8        1.3      11.0        5.7
      Loss related to
       flood                  --        --         --        --        0.3
      Transaction
       expenses               --      22.4         --        --         --
                     ----------- --------- ---------- --------- ----------
    Total operating
     expenses              260.1      76.6       20.7     212.5       71.9
                     ----------- --------- ---------- --------- ----------

    Operating profit
     (loss)                 50.0     (9.6)        1.9      63.4        6.4

    Interest expense,
     net                    43.9       1.1        1.6       5.4        6.6
    Other income, net      (1.4)     (0.4)         --     (0.1)         --
                     ----------- --------- ---------- --------- ----------

    Income (loss)
     from continuing
     operations
     before income
     taxes                   7.5    (10.3)        0.3      58.1      (0.2)

    Income taxes             2.8       6.4        1.0      21.9      (0.1)
                     ----------- --------- ---------- --------- ----------

    Income (loss)
     from continuing
     operations              4.7    (16.7)      (0.7)      36.2      (0.1)

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

          Net income
           (loss)           $4.6   ($16.7)     ($0.7)     $36.1     ($0.1)
                     ----------- --------- ---------- --------- ----------
    

    
    KAR Holdings, Inc.
    Consolidated Statements of Income
    (In millions) (Unaudited)
                                    2007                      2006
                       ------------------------------ --------------------
                       Successor      Predecessor         Predecessor
                       ---------- ------------------- --------------------
                                    ADESA     IAAI     ADESA      IAAI
                       April 20 - Jan. 1 -  Jan. 1 -  Jan. 1 -  Dec. 26,
                        June 30,  April 19, April 19, June 30, 2005 - June
                          2007      2007      2007      2006    25, 2006
                       ---------- --------- --------- -------- -----------
    Operating revenues
      ADESA                $190.9    $325.4       $--   $490.1         $--
      IAAI                   90.7        --     114.8       --       156.0
      AFC                    28.5      45.9        --     71.4          --
                       ---------- --------- --------- -------- -----------
    Total operating
     revenues               310.1     371.3     114.8    561.5       156.0

    Operating expenses
      Cost of services
       (exclusive of
       depreciation and
       amortization)
                            169.2     187.3      73.6    281.9       105.6
      Selling, general
       and
       administrative        63.8      85.5      22.2    130.7        24.7
      Depreciation and
       amortization          27.1      15.9       7.9     21.8        10.6
      Loss related to
       flood                   --        --        --       --         3.2
      Transaction
       expenses                --      24.8        --       --          --
                       ---------- --------- --------- -------- -----------
    Total operating
     expenses               260.1     313.5     103.7    434.4       144.1
                       ---------- --------- --------- -------- -----------

    Operating profit         50.0      57.8      11.1    127.1        11.9

    Interest expense,
     net                     43.9       6.3       9.9     10.8        12.9
    Other income, net       (1.4)     (0.4)        --    (0.2)          --
                       ---------- --------- --------- -------- -----------

    Income (loss) from
     continuing
     operations before
     income taxes             7.5      51.9       1.2    116.5       (1.0)

    Income taxes              2.8      30.5       1.5     44.0       (0.4)
                       ---------- --------- --------- -------- -----------

    Income (loss) from
     continuing
     operations               4.7      21.4     (0.3)     72.5       (0.6)

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

         Net income
          (loss)             $4.6     $21.3    ($0.3)    $72.4      ($0.6)
                       ---------- --------- --------- -------- -----------
    

    
    KAR Holdings, Inc.
    Consolidated Balance Sheets
    (In millions)
                                      Successor         Predecessor
                                     ----------- -------------------------
                                                    ADESA         IAAI
                                      June 30,   December 31, December 31,
                                        2007         2006         2006
                                     ----------- ------------ ------------
                                     (Unaudited)
    Assets
    Current assets
    Cash and cash equivalents             $310.3       $195.7        $14.0
    Restricted cash                         16.0          7.8           --
    Trade receivables, net of
     allowances                            366.9        192.8         56.6
    Finance receivables, net of
     allowances                            234.2        203.3           --
    Retained interests in finance
     receivables sold                       75.0         69.6           --
    Deferred income tax assets              32.4         21.9         11.7
    Other current assets                    41.5         17.4         27.5
                                     ----------- ------------ ------------
         Total current assets            1,076.3        708.5        109.8

    Other assets
    Goodwill                             1,470.3        557.8        241.3
    Other intangible assets, net of
     accumulated amortization            1,500.0         49.0        147.5
    Unamortized debt issuance costs         87.2          5.2          8.1
    Other assets                            41.9         57.7          1.6
                                     ----------- ------------ ------------
         Total other assets              3,099.4        669.7        398.5

    Property and equipment, net of
     accumulated depreciation              785.7        597.1         80.2
                                     ----------- ------------ ------------

    Total assets                        $4,961.4     $1,975.3       $588.5
                                     ----------- ------------ ------------
    

    
    KAR Holdings, Inc.
    Consolidated Balance Sheets
    (In millions)
                                      Successor         Predecessor
                                     ----------- -------------------------
                                                    ADESA         IAAI
                                      June 30,   December 31, December 31,
                                        2007         2006         2006
                                     ----------- ------------ ------------
                                     (Unaudited)
    Liabilities and Stockholders'
     Equity
    Current liabilities
    Accounts payable                      $424.1       $249.6        $37.5
    Accrued employee benefits and
     compensation expenses                  46.0         43.1          4.9
    Accrued interest                        19.6          1.0          5.5
    Other accrued expenses                  86.4         41.1          9.0
    Income taxes payable                     7.4         11.3           --
    Current maturities of long-term
     debt                                   15.6         30.0          2.2
    Current liabilities of
     discontinued operations                 7.3          7.2           --
                                     ----------- ------------ ------------
      Total current liabilities            606.4        383.3         59.1

    Non-current liabilities
    Long-term debt                       2,608.9        322.5        342.6
    Deferred income tax liabilities        655.7         58.8         36.1
    Other liabilities                       22.4          7.2         12.4
                                     ----------- ------------ ------------
      Total non-current liabilities      3,287.0        388.5        391.1

    Commitments and contingencies
     (Note 15)                                --           --           --

    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:
            10,656,641 (2007)
            94,868,104 (2006
                        Predecessor -
                        ADESA)
                   100 (2006
                        Predecessor -
                        IAAI)                0.1          1.0           --
    Additional paid-in capital           1,048.2        673.3        151.4
    Retained earnings (deficit)              4.6        580.0       (13.1)
    Treasury stock, at cost
     (Predecessor - ADESA)
      Shares: 4,785,335                       --      (100.4)           --
    Accumulated other comprehensive
     income                                 15.1         49.6           --
                                     ----------- ------------ ------------
    Total stockholders' equity           1,068.0      1,203.5        138.3
                                     ----------- ------------ ------------

    Total liabilities and
     stockholders' equity               $4,961.4     $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
                          April 20 - Jan. 1 -  Jan. 1 -  Jan. 1 - Dec. 26,
                           June 30,  April 19, April 19, June 30,  2005 -
                             2007      2007      2007      2006   June 25,
                                                                    2006
                          ---------- --------- --------- -------- --------
    Operating activities
    Net income (loss)           $4.6     $21.3    ($0.3)    $72.4   ($0.6)
       Adjustments to
        reconcile net
        income to net cash
        provided by
        operating
        activities:

       Depreciation and
        amortization            27.1      15.9       7.9     21.8     10.6
       Bad debt expense          0.4        --        --      2.4       --
       Deferred income
        taxes                     --       0.9       1.3      2.0      2.0
       Stock-based
        compensation
        expense                   --       6.4       2.6      3.4      1.2
       Other non-cash, net       2.8       1.6       0.4      1.7      1.5
                          ---------- --------- --------- -------- --------
                                34.9      46.1      11.9    103.7     14.7
       Changes in
        operating assets
        and liabilities,
        net of
        acquisitions:

       Finance receivables
        held for sale            1.7    (15.1)        --   (20.0)       --
       Retained interests
        in finance
        receivables sold       (2.9)     (2.5)        --    (6.8)       --
       Trade receivables
        and other assets        54.1   (164.6)       0.4   (60.4)    (1.8)
       Accounts payable
        and accrued
        expenses              (28.9)     150.2       4.6     39.2      6.8
                          ---------- --------- --------- -------- --------
    Net cash provided by
     operating activities       58.9      14.1      16.9     55.7     19.7
    Investing activities
       Net increase
        (decrease) in
        finance
        receivables held
        for investment           7.9    (14.0)        --   (30.6)       --
       Acquisition of
        businesses, net of
        cash acquired          (0.6)        --     (0.5)   (30.0)   (18.4)
       Purchases of
        property,
        equipment and
        computer software     (13.7)    (11.3)     (5.4)   (16.9)    (8.1)
       Purchase of other
        intangibles            (0.1)     (0.1)        --    (0.4)       --
       Proceeds from the
        sale of property,
        equipment and
        computer software         --        --       0.1       --      0.3
       Equity investments         --        --        --   (12.5)       --
       Transfer from (to)
        restricted cash          0.8     (9.0)        --    (1.3)       --
                          ---------- --------- --------- -------- --------
    Net cash used by
     investing activities      (5.7)    (34.4)     (5.8)   (91.7)   (26.2)
    Financing activities
       Net increase in
        book overdrafts         21.3      46.2        --     27.8       --
       Net increase in
        borrowings from
        lines of credit           --        --        --       --      7.0
       Payments on long-
        term debt                 --     (7.5)     (0.5)   (15.0)    (0.6)
       Payments on capital
        leases                    --        --     (0.1)       --    (0.2)
       Payments for debt
        issuance costs            --        --        --       --    (0.1)
       Proceeds from
        issuance of common
        stock under stock
        plans                     --      15.0        --      6.0       --
       Contributed capital       2.9        --        --       --      0.1
       Dividends paid to
        stockholders              --        --        --   (13.4)       --
       Excess tax benefits
        from stock-based
        compensation              --       3.0        --       --       --
       Repurchase of
        common stock              --     (0.2)        --       --       --
                          ---------- --------- --------- -------- --------
    Net cash provided by
     (used by) financing
     activities                 24.2      56.5     (0.6)      5.4      6.2
    Effect of exchange
     rate changes on cash        0.2     (0.1)        --      0.5       --
                          ---------- --------- --------- -------- --------
    Net increase
     (decrease) in cash
     and cash equivalents       77.6      36.1      10.5   (30.1)    (0.3)
    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                   $310.3    $231.8     $24.5   $210.1    $25.6
                          ---------- --------- --------- -------- --------
    

    KAR Holdings, Inc.

    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
certain items of income, expense, 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 and June 30, 2006, is deemed to be $102.9 million and
$99.4 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 presented
below includes a pro forma adjustment for cost savings related to the merger
totaling $10.5 million for the 12 months ended June 30, 2007. The adjustment
relates to anticipated cost savings for redundant selling, general and
administrative costs for the salvage operations. The following table
reconciles EBITDA and Adjusted EBITDA for the periods presented:

    (Unaudited)

    
                                                                   Twelve
                                                                   Months
                                 Three Months Ended                Ended
                    --------------------------------------------- --------
    (In millions)   September 30, December 31, March 31, June 30, June 30,
                        2006          2006       2007      2007     2007
                    ------------- ------------ --------- -------- --------

    Net income              $29.8        $18.2     $38.4  ($12.8)    $73.6
    Add back:
     discontinued
     operations               0.3          0.1        --      0.1      0.5
                    ------------- ------------ --------- -------- --------
    Income from
     continuing
     operations              30.1         18.3      38.4   (12.7)     74.1
    Add back:
       Income taxes          17.3         14.5      24.6     10.2     66.6
       Interest
        expense, net
        of interest
        income               13.5         13.8      13.6     46.6     87.5
       Depreciation
        and
        amortization         18.7         19.4      18.7     32.2     89.0
                    ------------- ------------ --------- -------- --------
    EBITDA                   79.6         66.0      95.3     76.3    317.2

    Nonrecurring
     charges                  3.1          5.2       1.1      5.6     15.0
    Nonrecurring
     transaction
     charges                   --          6.1       2.4     22.4     30.9
    Noncash charges           4.3          2.5       5.2      1.0     13.0
    Advisory
     services                 0.1          0.2       0.1      0.8      1.2
    Full year impact
     of recent
     acquisitions             1.0          0.7        --       --      1.7
                    ------------- ------------ --------- -------- --------
    Adjusted EBITDA         $88.1        $80.7    $104.1   $106.1    379.0
                    ------------- ------------ --------- --------
    Pro forma cost
     savings per the
     credit
    agreement                                                         10.5
                                                                  --------
    Adjusted EBITDA
     per the credit
    agreement                                                       $389.5
                                                                  --------
    




For further information:

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

Organization Profile

KAR HOLDINGS, INC.

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