Interstate National Dealer Services, Inc. Announces Fiscal 2000 Results
MITCHEL FIELD, N.Y.--Jan. 23, 2001--Interstate National Dealer Services, Inc. today announced year-end results for the period ended October 31, 2000.
Revenues for the year ended October 31, 2000 increased approximately 10% to a record $61,654,625, compared to $56,151,613 for the same period a year earlier. Income from continuing operations for the fiscal years ended October 31, 2000 and October 31, 1999 were $2,870,658, or $0.61 per share on 4,709,794 diluted weighted average shares outstanding and $3,088,560, or $0.62 per share on 4,980,000 diluted weighted average shares outstanding, respectively.
Losses from discontinued operations net of taxes were approximately $803,000, or $0.17 per share for the year ended October 31, 2000, as compared to approximately $274,000, or $0.05 per share during the same period in 1999. The loss from discontinued operations resulted from costs incurred by the Company's subsidiary, Uautobid.com, to develop and finance its car buying web site. The Company made the decision to discontinue this operation due to the rapidly changing and highly competitive Internet car buying landscape which raised the stakes more rapidly than envisioned, bringing a level of risk that was more than was expected or that the Company was willing to tolerate.
Net income and earnings per share after losses from discontinued operations were $2,067,412, or $0.44 per share in fiscal 2000 compared to net income of $2,814,807, or $0.57 per share for the comparable period a year earlier.
Mr. Chester J. Luby, Chairman and CEO of Interstate, stated, "For the eighth year in a row we have achieved record revenue. Profits were below last year's level as a result of expenses associated with our investment in Uautobid.com, and the decline in gross margins related to a higher level of claims. We continue to attract new dealers and replace those dealers with unsatisfactory claims experience. In addition, we have increased our prices for our service contracts and extended warranties across the board. We believe these steps will help improve our margins."
Mr. Luby continued, "Once again we have maintained our selling, general and administrative expenses under tight control and demonstrated that we can handle significant new business efficiently. SG&A was 43% of revenue in the most recent fiscal year compared to 44.2% in the same period a year ago."
"Our rock solid debt free balance sheet continues to strengthen as we increased our cash and investments by approximately $10.3 million, after expending nearly $2.3 million for the repurchase of shares of Interstate's common stock," Mr. Luby added. "As of the end of the current fiscal year, Interstate had cash and investments of $13.34 per fully diluted weighted average share outstanding. The benefit to our shareholders is clear when one notes that investment income rose nearly 72% to over $3.2 million this fiscal year. Our decision to improve our investment returns by investing significant sums through highly regarded professional investment advisors has proven to be sound."
As of this date, Interstate has repurchased 514,700 shares. Management and the board agree that repurchase of common stock at or near book value is an excellent use of Interstate's large cash holdings. The Company intends to continue to repurchase shares from time to time in the open market when and if market conditions suggest that such a move is prudent.
At the National Automobile Dealers Association convention in Las Vegas next month, Interstate will be introducing a new web based Sales Administration Module ("SAM") to its agents and the auto dealers. SAM is designed to enhance service contract and extended warranty sales and facilitate immediate access to both price and product information. SAM's many features include the ability for dealers to present sales messages to the consumer at the dealership as well as online real time pricing and product information. Additional features include the ability to automate contract processing and enable the dealer to view his entire database of contracts at Interstate. Future upgrades will include features for claim submission and processing.
Cindy Luby, President, noted, "The SAM- internet based suite of applications will allow Interstate to give our agents and dealers an even higher level of sales and service. We constantly strive to improve the quality of our operation. SAM is just another example of that ongoing effort."
Interstate also announced that the Company has engaged the investment banking firm of Legg Mason Wood Walker, Inc. as its advisor to assist the Company in creating strategic opportunities, including but not limited to, the development and evaluation of possible acquisitions, joint ventures, or other strategic relationships or transactions.
In commenting on the relationship with Legg Mason, Mr. Luby stated, "We are pleased to announce our association with such a high quality and respected firm as Legg Mason. Legg Mason's outstanding reputation, extensive relationships, and long standing middle market advisory activities should prove to be very advantageous to Interstate in its efforts to maximize shareholder value. We look forward to working closely with them towards that end."
In conclusion Mr. Luby declared, "Our business model has been tested over time and shown to be sound. Over the past 5 years we have experienced compounded revenue growth of 35% and increased our earnings per share from continuing operations to $0.61 from $0.27. We are proud of what we have accomplished and are optimistic about our future."
INTERSTATE NATIONAL DEALER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2000 AND 1999
2000 1999
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Revenues $61,654,625 $56,151,613
Operating income 1,427,909 3,183,191
Other income 3,197,400 1,854,802
Income from continuing operations
before provision for income taxes 4,625,309 5,037,993
Income from continuing operations 2,870,658 3,088,560
Total loss from
discontinued operations (803,246) (273,753)
Net income 2,067,412 2,814,807
NET INCOME PER SHARE - BASIC:
Continuing operations $ 0.63 $ 0.66
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Discontinued operations (0.17) (0.06)
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Total $ 0.46 $ 0.60
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Weighted average shares outstanding 4,528,001 4,664,632
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NET INCOME PER SHARE - DILUTED:
Continuing operations $ 0.61 $ 0.62
Discontinued operations (0.17) (0.05)
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Total $ 0.44 $ 0.57
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Weighted average shares outstanding 4,709,794 4,980,000
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CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 2000 AND 1999
2000 1999
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Cash and investments $ 62,825,533 $ 52,538,607
Total assets 79,784,928 68,661,087
Total stockholders' equity 20,800,567 20,924,415