TWST: What is ABRA Auto Body & Glass?

Mr. Benjamin: ABRA Auto Body & Glass is a collision repair and auto glass repair and replacement company. Our primary business is auto collision repair and we are primarily focused on insurance direct repair programs or preferred provider programs in the industry. About 90% of collision repair is paid for by insurance companies, so our focus is on serving the insurance industry and their preferred provider network. It is about a $25 billion industry.

TWST: What are the growth aspects from your perspective? Is it opening more locations? Is it trying to get more service at the locations you have today?

Mr. Benjamin: Yes and yes. It is not a growth industry. Claims activity is flat in the industry and, as a result, revenue is flat. It is an industry where we are growing through adding additional centers and taking market share. So we are actually doing consolidation in the industry. We are growing by adding new repair centers and through acquisitions.

TWST: That implies a pragmatic industry, a lot of mom-and-pop operations or small groups of operations.

Mr. Benjamin: That is quite accurate. The industry started consolidating about seven or eight years ago from a mom-and-pop environment to, depending on who you are listening to, an environment that is probably consolidated to somewhere in the area of about 5% today ' so it is still fragmented. There are 47,000 auto collision repair centers serving a $25 billion industry. It probably could be done with 10,000 to 20,000 repair centers.

TWST: What would create a 900 pound gorilla in this space?

Mr. Benjamin: Somebody who is able to deliver quality repairs in a time and cost effective manner to the insurance industry in a multi-unit environment and allow them to reduce the number of vendors they need to do business within the industry. That would take a lot of their loss adjustment of cost out of the transaction and give them a better financial outcome. That is evolving as we speak where they are reducing the number of vendors on their network and doing more with multi-unit providers or regional players, if you will.

TWST: That seems to be the process du jour in all of the supply and interrelated chains with large companies today.

Mr. Benjamin: Yes, we are a small company with $150 million in annual sales. We have 83 collision repair centers in the chain and we consider ourselves a small operator compared to the large insurance companies we do business with. Even ABRA Auto Body & Glass is looking to do business with a limited number of vendors because it is complicated and expensive to have a large number of vendors with which to do business.

TWST: With everything, particularly in the automotive industry, there has been a lot of streamlining and reducing the number of touch points and the amount of paper that gets processed.

Mr. Benjamin: Absolutely, and the relationships are important too. There is more to a relationship than just the product or service. There is quite a bit more that goes beyond that with our customer relationships. We are able to become more strategic with our insurance customer. It is a better model that is less expensive and it results in a better outcome.

TWST: You started with one location back in 1984. I understand now you have over 80 locations in 10 or more states. What has been the funding history and how have you financed the growth?

Mr. Benjamin: I am a Founder of the company. Back in 1984, we had all internal funds and just grew from our own profitability until 1997. At that time we had 18 company-owned repair centers and we decided to grow more quickly. We did our first external round of capital, a private equity round of capital actually, with GE Capital in 1997. That was our first round and since then we have done three additional rounds of capital. Private equity capital has been funding our aggressive growth.

TWST: You do have franchises as part of the locations at this point, right?

Mr. Benjamin: Yes, our strategy for growth is company-owned centers in major markets. Outside of those hubs are franchise centers in mid-size markets. Today we currently have 63 company-owned centers and 20 franchise centers. A lot of focus in the last five years has been growing the company-owned side of the business. We are in six major markets ' Minneapolis, Milwaukee/Madison, Atlanta, Memphis, Denver and Salt Lake. Those are the six major markets and our franchisees are in smaller markets outside of those major markets.

TWST: How much centralization is there with the top-level management team? It would seem that each location that is particularly geographically diverse, as you have described, would be pretty autonomous.

Mr. Benjamin: I think we have a pretty good handle on what functions we can do well in a centralized environment and what we need to have decentralized. Centralized, for example, would be human resources, accounting, certain training functions, HR, payroll and that sort of thing. We actually have three levels in the company ' the home office, which we call central services or the corporate offices, the market or regional level which we call the market level and then we have the repair centers. Those are the three levels. The regional office provides day-to-day operational involvement, local client relations with the insurance community, and operational support in the repair centers. We have management, process instructors and quality assurance coordinators that work with the repair centers.

TWST: At the top management level, are you looking for any changes or any areas to augment when you look at skill sets and bench strengths?

Mr. Benjamin: We are currently satisfied with our central services team. We are looking to add more resources in 2004 to the operations team. Obviously, operations is where we make the money, so we are going to put some more resources to operations.

TWST: What is your agenda? When you look out over the next 12 to 24 months, what goals do you have as an organization and what would make that time frame a success?

Mr. Benjamin: The clear focus in the near term, the near term being the next couple years, is driving higher unit economics. We have had aggressive growth in the last several years and we want to focus on driving higher unit economics, which we believe will create more value. So we are going to continue to grow, but at a more moderate pace and really focus on driving unit economics. Again, that is why we are looking at providing more resources to the operations side of the business.

TWST: What would you consider to be the primary value points for an investor who is looking at this business sector as an area for investment?

Mr. Benjamin: It is a stable industry. It is not high-risk like a dot- com, for example. It is a cash flow industry. The model is changing and those people that are positioned well with multi-unit repair centers and have relations with the major insurance companies are continuing to take market share ' like ABRA. That will continue and with that, we will drive greater revenue, greater capacity utilization and better unit economics. That is where the gains are, so it is going to be an industry of steady growth and consistent cash flow.

TWST: You have the need to be a strategic, working partner with the insurance industry as well as have the demands of facing the consumer, the auto owner who is actually receiving the services. What conflicts do you have to resolve in those two relationships? What do you see as perhaps some of the innovations that you bring to serving those two audiences?

Mr. Benjamin: Good observation. We do serve two customers. We have obviously the big insurance customer ' where we serve as a preferred provider on their network; and we also have the vehicle owner. We have to satisfy both. Sometimes, some of the areas that can be a challenge in managing that relationship is that a consumer might want something that the policy doesn't call for. For example, they may have a five-year-old car and may want all OEM brand new parts and the policy calls for not only OEM, but substituting like, kind and quality (e.g., a salvage or used part). Sometimes we get in the middle of those situations. Sometimes there is damage on the car that is not related to the accident and the vehicle owner might be claiming that it is related to the accident. Sometimes we are in the middle of that situation and we have to put that back to the insurance company to satisfy their policyholder. At the end of the day we have to be skillful in satisfying both customers.

TWST: Are there any other themes or issues that you consider integral to your business that we haven't touched on?

Mr. Benjamin: It is a service industry, and yet it is a manufacturing industry because capacity utilization ultimately drives profitability. We have to be good at quality control and production throughout while satisfying our two customers.

TWST: Thank you. (DWA)

ROLAND D. BENJAMIN Chairman, President & CEO ABRA, Inc. 6601 Shingle Creek Parkway Brooklyn Center, MN 55430 (763) 561-7220 (763) 561-7433 ' FAX www.abraauto.com

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