Rent-A-Wreck Announces Earnings for Its Fiscal Year Ended March 31, 2001
OWINGS MILLS, Md--July 13, 2001--Rent-A-Wreck of America, Inc. announced earnings for its fourth quarter and fiscal year ended March 31, 2001.Due to a one-time expense of $1,234,560 for the repurchase of 957,721 options incurred in the third quarter, operating income in fiscal 2001 declined 66% to $344,935 from $1,002,387 in the prior year. Net income for the 2001 fiscal year was $263,022 compared to $820,629 in 2000. Net income applicable to common shares was $174,622, or $.04 per common share (Basic) and $.04 per common share (Diluted).
Excluding the expense associated with the repurchase of options, net income would have been $1,021,041 instead of $263,022, basic earnings per share would have been $.25 instead of $.04, and diluted earnings per share would have been $.19 instead of $.04. The comparable figures for fiscal 2000 were $1,204,379, $.29 (Basic), and $.20 (Diluted), respectively.
"The Company remains strong and stable despite the earnings as stated in FORM 10-KSB, and we remain confident that the stock repurchase will benefit our shareholders in the future. Last year we began taking advantage of new opportunities by putting together a team of car rental experts to help lead our franchisees into the insurance replacement business as well as opening a company store. Early results are promising, and we are looking forward to an exciting year of growth in these new areas. Rent-A-Wreck continues to add new locations, and as the system has grown, so has the advertising budget. As a result, we were able to take advantage of an opportunity to sponsor a NASCAR BUSCH GRAND NATIONAL team to increase the Company's public recognition." says Company President, Kenneth L. Blum, Jr.
CONDENSED CONSOLIDATED FINANCIAL STATEMENT ATTACHED
Year ended March 31,
2000 2001
(in thousands except per share
and number of franchises)
Franchisees' Results (Unaudited)
Franchisees' Revenue (1) $51,707 $56,630
Number of Franchises 675 669
(outstanding at year-end)
Company's Results of Operations
Total Revenue $ 6,282 $ 6,846
Operating expenses 5,279 6,501
Income before income
taxes $ 1,101 $ 487
Net income 821 263
Earnings per common share
Basic $ .19 $ .04
Weighted average common
shares 3,808 4,066
Diluted $ .14 $ .04
Weighted average common
shares plus convertible
preferred stock, options
and warrants 5,902 4,356
EBITDA (2) 1,922 1,934
(1) The franchisees' revenue data have been derived from unaudited
license fee reports provided by franchisees.
(2) "EBITDA" is earnings before interest expense, depreciation,
amortization, taxes and repurchase of options. EDITDA should
not be interpreted as a measure of operating results, cash
flow provided by operating activities, a measure of liquidity,
or as an alternative to any generally accepted accounting
principle measure of performance. The Company is reporting
EBITDA because it is a widely used financial measure of the
potential capacity of a company to incur and service debt.
Rent-A-Wreck's reported EBITDA may not be comparable to
similarly titled measures used by other companies.
The statements regarding anticipated future performance of the Company contained in this press release are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause the Company's actual results to differ materially from the forward-looking statements.
Factors which could cause or contribute to such differences include, but are not limited to, the Company's limited experience in the reinsurance business and the potential for negative claims experience in the Company's reinsurance program, the effects of government regulation of the Company's franchise and reinsurance programs including maintaining properly registered franchise documents and making any required alterations in the Company's franchise program to comply with changes in the laws, competitive pressures from other motor vehicle rental companies which have greater marketing and financial resources than the Company, protection of the Company's trademarks, and the dependence on the Company's relationships with its franchisees.
These risks and uncertainties are more fully described under the caption, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Important Factors" in the Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 2001. All forward-looking statements should be considered in light of these risks and uncertainties.