Warrantech Reports Continued Profitability For Q1 of Fiscal
Year 2002
Seventh Consecutive Quarter of Solid Results;
Beats Analyst Estimate of ($0.04) Per Share
EULESS, Texas, Aug. 13 Warrantech Corporation
(OTC Bulletin Board: WTEC), a leader and innovator in the field of service
contracts and extended warranties, today reported its seventh consecutive
quarter of profitability with net income of $131,223 or $0.01 per diluted
share for the company's fiscal first quarter 2002, which is the period ended
June 30, 2001, compared to $240,600 or $0.02 per diluted share in the same
period a year ago.
The decrease in earnings per share for the first quarter 2002 compared to
the same period a year ago is partly due to the loss of net earned
administrative fees from the Staples account, however, the company's
aggressive cost containment, increased volumes from existing customers and new
business retention has allowed Warrantech to continue on a profitable course.
Joel San Antonio, Warrantech chairman and chief executive officer, stated,
"Throughout the quarter, we have been signing agreements domestically on an
aggressive basis, making up for some of the loss from the Staples account. We
have also increased our market presence in South America, an area where we
expect significant growth, furthering our goal of becoming the preeminent
service contract administration provider in Latin America."
Net Earned Administrative Fee
The net earned administrative fee for the quarter ended June 30, 2001 was
$9.2 million compared to $12.5 million for the same period a year ago.
The Consumer Products segment net earned administrative fee decreased to
$4.6 million from $7.9 million for the quarter compared to the same period
last year. This decrease resulted primarily from the loss of the Staples
account that was partially offset by increased volume from existing customers.
Net earned administrative fees for the International segment increased to
$1.2 million for the quarter from $0.5 million for the same quarter last year.
This increase was the result of the new business signed over the past year in
South America and increased volumes from existing customers, despite the loss
of business resulting from the closing of the U.K. operation. The Automotive
segment net earned administrative fee decreased for the quarter to
$3.5 million from $4.2 million for the same quarter last year resulting from
lower deferred revenues from prior periods recognized this quarter versus the
same quarter last year.
Service, Selling, General and Administrative
SG&A expenses for the first quarter of 2002 decreased $2.1 million,
representing 21.2% to $7.9 million from $10.0 million for the quarter last
year. The decrease in SG&A reflects the improved call center technologies,
cost containment and the closing of the U.K. operations as of September 30,
2000. Total employee and employee related costs for the quarter were down
$1.2 million to $4.6 million from $5.9 million for the same quarter last year.
Income (loss) from Operations
Income from operations for the first quarter 2002 was a loss of $72,366
compared to a profit of $861,909 for the first quarter 2001 primarily as a
result of the loss of the Staples account.
Pre-tax Profit
The Automotive segment reported a pre-tax profit for the first quarter of
2002 of $1.0 million as compared to $1.5 million in the same period a year
ago. This decrease was the result of lower earned administrative fees from
prior periods being recognized this quarter. Consumer Products pre-tax loss
was $1.2 million in the first quarter of 2002 as compared to $ 1.2 million
profit in the first quarter of 2001 caused primarily by the loss of the
Staples business. International pre-tax profit increased to $0.1 million for
the first quarter of 2002 from a loss of $1.6 million in the same period a
year ago, resulting primarily from increased business and a reduction in
losses in the U.K. operation that was terminated as of September 30, 2000.
WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
June 30,
2001 2000
Earned Admin Fee
(Net of amortization of deferred costs) $9,227,622 $12,504,977
Costs and expenses
Service, selling, and
general and administrative 7,965,387 10,098,142
Depreciation and amortization 1,334,601 1,544,926
Total costs and expenses 9,299,988 11,643,068
Income (loss) from operations (72,366) 861,909
Other income (expense) - net 192,989 167,110
Income before provision for income taxes 120,623 1,029,019
Provision (benefit) for income taxes (10,600) 788,419
Net income $131,223 $240,600
Earnings per share:
Basic $0.01 $0.02
Diluted $0.01 $0.02
Weighted average number of shares outstanding:
Basic 15,105,932 15,296,262
Diluted 15,105,932 15,296,262
WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, March 31,
2001 2001
ASSETS
Current assets:
Cash and cash equivalents $1,352,435 $3,001,924
Investments in marketable securities 705,866 196,154
Accounts receivable, (net of allowances of
$1,340,613 and $1,079,946, respectively) 11,386,710 12,152,515
Other receivables, net 7,068,879 7,065,531
Income tax receivable 5,399,429 5,378,648
Deferred income taxes 581,882 571,182
Prepaid expenses and other current assets 714,628 964,929
Total current assets 27,209,829 29,330,883
Property and equipment, net 11,195,803 11,898,890
Other assets:
Excess of cost over fair value of assets
acquired (net of accumulated amortization
of $5,825,405) 1,637,290 1,637,290
Deferred income taxes 2,724,031 2,724,096
Deferred direct costs 40,473,813 46,258,971
Investments in marketable securities 1,562,693 3,094,176
Restricted cash 800,000 800,000
Split dollar life insurance policies 728,262 708,262
Notes receivable 459,765 599,796
Other assets 104,579 64,809
Total other assets 48,490,433 55,887,400
Total Assets $86,896,065 $97,117,173
WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, March 31,
2001 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt
and capital lease obligations $854,102 $801,265
Insurance premiums payable 16,133,408 19,100,164
Accounts and commissions payable 4,974,248 6,346,872
Accrued expenses and other
current liabilities 7,612,342 5,890,078
Total current liabilities 29,574,100 32,138,379
Deferred revenues 52,548,697 60,057,704
Long-term debt and capital lease obligations 1,033,999 1,209,853
Deferred rent payable 268,598 293,293
Total liabilities 83,425,394 93,699,229
Stockholders' equity:
Preferred stock - $.0007 par value
authorized - 15,000,000 Shares
issued - none at June 30, 2001 and
March 31, 2001 -- --
Common stock - $.007 par value
authorized - 30,000,000 Shares
issued - 16,515,603 shares at
June 30, 2001 and 16,514,228 shares
at March 31, 2001 115,590 115,580
Additional paid-in capital 23,743,588 23,742,868
Loans to directors and officers (9,914,979) (9,833,244)
Accumulated other comprehensive income,
net of taxes (29,440) (31,949)
Retained earnings (deficit) (6,102,882) (6,234,105)
7,811,877 7,759,150
Treasury stock - at cost, 1,415,171 shares
at June 30, 2001 and 1,415,171 shares
at March 31, 2001 (4,341,206) (4,341,206)
Total Stockholders' Equity 3,470,671 3,417,944
Total Liabilites & Stockholders' Equity $86,896,065 $97,117,173
