Westar Financial Reports Fiscal 3Q98 Results
26 February 1998
Westar Financial Reports Fiscal 3Q98 Results Showed Continued Improvement; Loss Declined to $551,000 or $.31 Per Share
OLYMPIA, Wash., Feb. 26 -- Westar Financial Services
Incorporated (OTC: WEST), a prime-credit auto lessor, reported operating and
net losses for the third quarter and first nine months of fiscal 1998 improved
substantially from year-ago levels. Losses declined because Westar's business
has matured enough to provide ongoing fee income and economies of scale from
its increased lease portfolio.
Westar's net loss applicable to common stock for the quarter ended
December 31, 1997, declined to $551,000 or $0.31 per share -- approximately
one-third less than the loss of $808,000 or $.49 per share, in last year's
third quarter. For the first nine months of fiscal 1998, the net loss
applicable to common stock was $1.7 million or $0.93 per share compared to a
loss of $2.1 million, or $1.38 per share, in the prior year. The net loss
includes the expense for dividends on Westar's redeemable preferred stock.
Per share results have been adjusted for a 2-for-1 stock split paid
June 14, 1996.
"Direct financing lease income, and administrative and service fee income
all increased during the first nine months of fiscal 1998, mainly due to the
increased volume of leases serviced," said Robert W. Christensen, Jr.,
Chairman & CEO, "even though no new Asset Based Securitizations (ABS) have
been completed this year. As we retain the servicing of securitized leases,
Westar receives ongoing income from its securitized pools of automobile
leases."
Third quarter revenues fell to $518,000 from $9.2 million in the third
quarter of fiscal 1997, which included a $9.0 million securitization sale.
For the first nine months of fiscal 1998, Westar reported total revenues of
$1.4 million compared to $20.0 million in the year-ago period, which included
two securitization sales. Westar intends to produce securitization
transactions in substantially larger, more efficient denominations.
Direct costs decreased dramatically for both the quarter and nine months
due to the decrease in costs related to securitization sales. For the third
quarter of fiscal 1998, direct costs fell to $592,000 from $9.7 million a year
ago. For the nine month period, direct costs fell to $1.5 million from
$21.3 million in the first nine months of fiscal 1997.
"Westar's margins began improving mid-way through fiscal 1997 as higher
volumes were achieved and major development costs were put behind us," said
Thomas M. Foley, Vice President-Finance. "The face value of leases Westar
services rose to $35.3 million at December 31, 1997 from $22.0 million one
year ago. This off-balance sheet item is the most accurate measure of
Westar's growth. Credit performance remains excellent, with static pool
lifetime losses on our two securitized pools ranging from 106 basis points
(1.06%) to 14 basis points (0.14%)."
Westar is among the first auto financing companies to publicly provide
static pool data. For the trailing 12 months ended December 31, 1997, the
company's credit losses were just 47 basis points (0.47%), comparing favorably
to the banking industry average of from 50 to 100 basis points (0.50 to
1.00%). Westar reports its static pool performance in order to report credit
losses and repossession experience on a consistent and comparable basis.
"Several recently-introduced new products are stimulating growth,"
Christensen noted. "Westar has broadened its product line to high quality
auto dealers -- offering extended lease terms and providing preferred lease
rates for the very highest credit quality lessors, for example. Even though
these products are very new, we're already seeing a substantial increase in
activity. We are structuring these products to improve our long-term
margins."
"Building on Westar's success to date, we look forward to opening in
Phoenix before the summer of 1998. As of December 31,1997, we had 299 dealers
signed -- or 44% of all the franchised dealers in the Pacific Northwest,"
Christensen concluded.
Westar Financial Services Incorporated is a fast-growing, Washington-based
automobile finance company focused solely on the prime-credit segment of the
$110-billion auto-lease finance market. Strategic partners include The
Industrial Bank of Japan, Bank One and MBIA Insurance Corporation.
Full-scale activities through Westar's innovative Dealer-Direct Retail
Leasing(TM) (DDRL) program began in October 1995 to selected, high-quality
automobile dealers in the Pacific Northwest. Its securitizations of prime
automobile lease receivable certificates have been rated AAA by
Standard & Poor's and Aaa by Moody's. WEST shares are traded over-the-counter
by Hoefer & Arnett, San Francisco; Hill Thompson, Jersey City; and Monroe
Securities, Rochester, NY. WEST most recently traded at $2.25 per share.
Statement regarding "Forward Looking Statements": Statements concerning
future performance, developments or events, including expansion plans,
securitization plans, new product developments, various statements concerning
expectations for growth and market forecasts for the Company's products and
for its industry, the ability of the Company to control costs and expenses,
and any other guidance on future periods, constitute forward-looking
statements which are subject to a number of risks and uncertainties including
adequacy of working capital, which might cause actual results to differ
materially from stated expectations.
This company is a client of Len Cereghino & Co. Corporate Investor
Relations. Westar's press releases are available at no charge through PR
Newswire's Company News On-Call fax service. For a menu of Westar press
releases or to retrieve a specific release, call 800-IRNEWS9, extension
110282, or http://www.prnewswire.com/cnoc/exec/menu?westar on the 110282.
FINANCIAL HIGHLIGHTS
(unaudited)
Third Quarter Ended Nine Months Ended
December 31, December 31,
1997 1996 1997 1996
Revenues:
Earned income on
direct financing
leases $300,794 $124,929 $783,086 $386,547
Revenues from sales
and securitizations $163,812 $9,001,087 $458,014 $19,500,750
Administrative
fee income $20,493 -- $109,793 --
Service fee income $27,528 $15,570 $75,821 $19,570
Other income $5,074 $12,859 $15,013 $87,208
TOTAL REVENUES $517,701 $9,154,445 $1,441,727 $19,994,075
Direct costs:
Interest $378,021 $124,426 $898,522 $399,301
Costs related to sales
and securitizations $175,119 $9,540,245 $446,282 $20,734,795
Provision for credit
losses $15,000 $42,417 $55,000 $99,239
Other $24,335 $15,743 $93,677 $34,485
TOTAL DIRECT COSTS $592,475 $9,722,831 $1,493,481 $21,267,820
$(74,774) $(568,386) $(51,754) $(1,273,745)
General and
administrative
expenses $581,479 $507,010 $1,643,092 $1,518,710
Operating loss
before other
expense and
income tax benefit $(656,253) $(1,075,396)$(1,694,846 ) $(2,792,455)
Non-cash interest
expense $30,450 -- $371,496 --
Loss before income
tax benefit $(686,703) $(1,075,396) $(2,066,342) $(2,792,455)
Income tax benefit $233,479 $365,637 $702,556 $949,435
Net loss $(453,224) $(709,759) $(1,363,786) $(1,843,020)
Dividends on
redeemable preferred
stock $(97,864) $(98,235) $(294,334) $(294,705)
Net loss applicable
to common stock $(551,088) $(807,994) $(1,658,120) $(2,137,725)
Net loss per share(A) $(0.31) $(0.49) $(0.93) $(1.38)
Weighted average number
of shares 1,797,300 1,660,890 1,773,522 1,550,200
December 31, March 31, December 31,
1997 1997 1996
Total assets $21,192,984 $12,291,916 $6,122,430
Total liabilities $20,205,792 $10,134,099 $3,821,001
Redeemable preferred stock $4,148,000 $4,2248,000 $4,248,000
Net deficit of common
stock equity $(3,160,808) $(2,090,183) $(1,946,571)
(A) Per share results have been adjusted for a 2-for-1 stock split paid
June 14, 1996.
SOURCE Westar Financial Services Incorporated