Warrantech Corporation Reports Strong Results
Quarterly Net Income Triples to $.06 Per Share
Third Consecutive Quarter of Solid Results
EULESS, Texas, Feb. 5 Warrantech Corporation
(OTC Bulletin Board: WTEC.OB), a leader and innovator in the field of service
contracts and extended warranties today reported net income of $909,927 or
$0.06 per diluted share for the Company's third quarter 2001 which is the
three-month period ended December 31, 2000, compared to a net loss of
$1.7 million or ($0.11) per diluted share in the same period a year ago.
For the nine-month period, net income was $1.8 million or $0.12 per
diluted share compared to a net loss of $7.7 million or ($0.50) per diluted
share for the same period a year ago.
Joel San Antonio, Warrantech chairman and chief executive officer, stated,
"We have met our objectives through aggressive cost-cutting and vigorous
marketing efforts. As a result, once again, we are reporting a quarterly
improvement -- our sixth -- and our third consecutive quarter in the black."
Net Administrative Fee
The net earned administrative fee for the quarter ended December 31, 2000
increased to $11.7 million compared to $10.7 million for the same period a
year ago. This was a quarter-to-quarter increase of $1.0 million or 9%.
The Consumer Products segment net earned administrative fee increased to
$9.0 million from $8.2 million for the quarter compared to the same period
last year as a result of increased volumes. The International segments net
earned administrative fee increased to $0.3 million for the quarter from
$0.2 million for the same quarter last year. The Automotive segments net
earned administrative fee increased to $2.5 million from $2.3 million for the
quarter as a result of increased revenues recognized from prior periods.
For the nine-months ended December 31, 2000, net earned administrative fee
was $37.0 million, compared to $30.3 million in the same period a year ago.
Service, selling, general and administrative
SG&A expenses for the third quarter of 2001 decreased 19% to $9.2 million
from $11.3 million for the third quarter in 2000. For the nine-months 2001,
SG&A decreased 21% to $29.0 million, compared to $36.9 million for the nine
months of fiscal year 2000.
Pre-tax Profit
Warrantech defines its business in three business segments: Automotive,
Consumer Products and International. Automotive reported a pre-tax loss for
the third quarter of 2001 of $0.4 million as compared to a loss of
$0.6 million in the same period a year ago. Consumer Products pre-tax profit
increased in the third quarter of 2001 to $2.0 million from a profit of
$0.6 million in the third quarter of 2000. International pre-tax loss
narrowed to $0.6 million for the third quarter of 2001 from a loss of
$2.6 million in the same period a year ago resulting primarily from losses in
the U.K. operation which were terminated September 30, 2000.
Warrantech Corporation and Subsidiaries
Condensed Consolidated Statement of Operations
For the For the
Three Months Ended Nine Months Ended
December 31, December 31,
2000 1999 2000 1999
Earned Administrative
Fee $11,724,995 $10,716,014 $37,022,003 $30,279,202
(Net of amortization
of deferred costs)
Costs and expenses
Service, selling,
and general and
administrative 9,177,970 11,311,378 29,014,602 36,869,128
Depreciation and
amortization 1,476,477 1,504,709 4,858,697 4,375,387
Loss on abandonment
of assets -- -- 1,049,552 --
Total costs and
expenses 10,654,447 12,816,087 34,922,851 41,244,515
Income (loss) from
continuing
operations 1,070,548 (2,100,073) 2,099,152 (10,965,313)
Other income
(expense) 238,967 275,742 643,751 786,189
Income (loss) before
provision for
income taxes 1,309,515 (1,824,331) 2,742,903 (10,179,124)
Provision (benefit)
for income taxes 399,588 (172,119) 899,993 (2,510,575)
Net income (loss) $909,927 ($1,652,212) $1,842,910 ($7,668,549)
Earnings per share:
Basic $0.06 ($0.11) $0.12 ($0.50)
Diluted $0.06 ($0.11) $0.12 ($0.50)
Weighted average number
of shares outstanding:
Basic & Diluted 15,280,549 15,196,263 15,318,259 15,214,422
Warrantech Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
ASSETS
(Unaudited)
December 31, March 31,
2000 2000
Current assets:
Cash and cash equivalents $10,079,167 $10,035,003
Investments in marketable securities 3,660,212 4,638,875
Accounts receivable, (net of allowances of
$803,725 and $1,164,125, respectively) 14,511,980 11,858,653
Other receivables, net 5,841,304 2,416,248
Income tax receivable 4,741,603 4,035,346
Deferred income taxes 507,376 926,321
Prepaid expenses and other current assets 1,229,843 1,238,051
Total current assets 40,571,485 35,148,497
Property and equipment, net 12,362,576 15,417,255
Other assets:
Excess of cost over fair value of assets
acquired (net of accumulated amortization
of $6,371,426 and $5,550,861, respectively) 1,787,107 2,607,671
Deferred income taxes 4,140,910 8,279,643
Deferred direct costs 54,893,528 80,797,199
Investments in marketable securities 1,536,511 1,499,247
Restricted cash 800,000 800,000
Split dollar life insurance policies 708,262 827,262
Notes receivable 640,672 1,167,725
Collateral security fund 0 199,389
Other assets 171,584 177,266
Total other assets 64,678,574 96,355,402
Total Assets $117,612,635 $146,921,154
Warrantech Corporation And Subsidiaries
Condensed Consolidated Balance Sheet
Liabilities And Stockholders' Equity
(Unaudited)
December 31, March 31,
2000 2000
Current liabilities:
Current maturities of long-term
debt and capital lease
obligations $883,602 $1,451,020
Insurance premiums payable 23,107,716 18,161,357
Accounts and commissions payable 6,841,307 8,857,556
Accrued expenses and other
current liabilities 9,432,709 9,491,175
Total current liabilities 40,265,334 37,961,108
Deferred revenues 72,254,051 105,028,425
Long-term debt and capital
lease obligations 1,307,448 1,668,478
Deferred rent payable 317,989 384,501
Total liabilities 114,144,882 145,042,512
Commitments and contingencies
Stockholders' equity:
Preferred stock -- $.0007 par
value authorized - 15,000,000
Shares
issued -- none at December 31,
2000 and March 31, 2000 -- --
Common stock -- $.007 par value
authorized -- 30,000,000 Shares
issued -- 16,518,353 shares at
December 31, 2000 and 16,501,911
shares at March 31, 2000 115,570 115,541
Additional paid-in capital 23,742,018 23,737,835
Loans to directors and officers (9,738,630) (9,505,406)
Accumulated other comprehensive
income, net of taxes (51,820) (144,132)
Retained earnings (deficit) (6,258,119) (8,101,029)
7,809,019 6,102,809
Treasury stock - at cost, 1,451,171
shares at December 31, and 1,211,024
shares at March 31, 2000 (4,341,206) (4,224,167)
Total Stockholders' Equity 3,467,813 1,878,642
Total Liabilities and
Stockholders' Equity $117,612,635 $146,921,154
