Rent-A-Wreck Announces Earnings for Its Fiscal Year Ended March 31, 2002
OWINGS MILLS, Md.--July 2, 2002--Rent-A-Wreck of America, Inc. (NASDAQ SMALLCAP-RAWA) announced earnings for its fiscal year ended March 31, 2002.For the fiscal year ended March 31, 2002, total revenue was approximately $7.0 million, a 3% increase over 2001 fiscal year revenue of approximately $6.8 million. The Company's net income for fiscal 2002 was $677,000, an increase of 157% over fiscal year 2001 net income of $263,000. Net income applicable to common shares was $.14 per common share (Basic) and $.12 per common share (Diluted).
The Company's results were negatively impacted by a small decrease in the number of franchisees, by net losses from two experimental, Company-owned locations specializing in insurance replacement business, and by the decrease in travel that occurred following September 11.
Excluding the expense associated with the repurchase of 957,721 options in 2001, fiscal 2002 operating income was down by 42% to $909,843, and net income applicable to common shares was down by 34% to $676,726. The Company continued its stock repurchase program by buying and retiring an additional 200,825 shares during the fiscal year.
CONDENSED CONSOLIDATED FINANCIAL STATEMENT ATTACHED
Year ended March 31,
2001 2002
----------------------
(in thousands except per
share and number of
franchises)
Franchisees' Results (Unaudited)
Franchisees' Revenue (1) $ 56,630 $ 54,037
Number of Franchises 669 648
(outstanding at year-end)
Company's Results of Operations
Total Revenue $ 6,846 $ 6,969
Operating expenses 6,501 6,059
Income before income taxes $ 487 $ 1,050
Net income 263 677
Earnings per common share
Basic $ .04 $ .14
Weighted average common
shares 4,066 4,310
Diluted $ .04 $ .12
Weighted average common
shares plus convertible
preferred stock, options
and warrants 4,356 5,395
EBITDA (2) 1,934 1,361
(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, 2002. All forward-looking statements should be considered in light of these risks and uncertainties.