Interstate National Dealer Services Posts 1998 Results
14 January 1999
Interstate National Dealer Services, Inc. Announces Record Fiscal 1998 Results
MITCHEL FIELD, N.Y.--Jan. 14, 1999---Revenues Increase 30%; Net Income Rises 55%-
Interstate National Dealer Services, Inc. today announced record year-end results for the period ended October 31, 1998.
Revenues for the year ended October 31, 1998 increased approximately 30% to a record $49,283,426, compared to $37,928,719 for the same period a year earlier. Net income for the year ended October 31, 1998 increased approximately 55% to $3,303,802, or $0.67 per share on 4,960,939 diluted weighted average shares outstanding compared to net income of $2,136,673, or $0.54 per share on 3,949,744 diluted weighted average shares outstanding for the comparable period a year earlier. The current fiscal year net income includes $300,000 received in the first quarter as the result of a settlement of a dispute.
Mr. Chester J. Luby, Chairman and CEO of Interstate, stated, "For the sixth year in a row we are very pleased to announce a record year in both revenues and profits. The increase in revenues was the result of two factors. First, there was a significant increase in the recognition of deferred contract revenue as a result of an increase in the total number of unexpired service contracts under administration. Second, there was a significant increase in administrative and insurance fees resulting from an increase in the number of service contracts accepted for administration by the Company in fiscal 1998. Throughout the year our continued aggressive efforts to enroll additional producers and to develop a broader array of products were rewarded with significant growth and new business."
"At the same time," Mr. Luby added, "we have maintained a close control over our costs resulting in a significant improvement in our internal efficiency. In fiscal 1998, our selling, general and administrative expenses were 44.3% of revenue compared to 48.2% of revenue in the previous fiscal year. We are positioned to take on additional business efficiently and profitably."
Mr. Luby continued, "Our interest income nearly doubled in the past year to approximately $1.5 million from $770,000 a year earlier. Interest-bearing assets rose sharply as a consequence of the 42% growth in deferred contract revenue, proceeds provided by the exercise of the Company's outstanding warrants in October 1997 ($6.7 million) and by funds provided by other operating activities. While we are quite pleased with the income generated from these assets, we believe we can do even better and we have selected Merrill Lynch Asset Management to assist us in improving the total return on our invested funds."
"During the year Interstate devoted considerable time and effort to furthering our internet activities with major success. As we reported earlier, our internet-related sales tripled in the past year to over a $10 million annualized rate. We expect further significant growth in sales derived from the internet and view this new marketing medium as a logical extension of our normal activities."
Mr. Luby noted, "Interstate's financial position continues to strengthen as evidenced by our very liquid and very solid balance sheet. Cash and cash equivalents and US Treasury Notes, at cost, rose to $37.3 million, or $7.53 per diluted weighted average share outstanding compared to $26.9 million, or $6.80 per diluted weighted average share outstanding for the same period a year earlier. Interstate has no long-term debt."
"The revenue momentum experienced in FY1998 and the addition of significant new accounts such as Chase Manhattan Automotive, Lee Myles and other large financial groups, created an opportune time to review and tighten the underwriting requirements of our dealer network. As a consequence of that review, towards the end of our last fiscal year we eliminated a substantial number of dealers who did not meet the new underwriting criteria. The first quarter will be below historic growth as a result of this upgrading but it does not change our expectation of another record year in revenues and profits. We are very optimistic about FY1999 and beyond and look forward to another successful year," Mr. Luby concluded.
Interstate is a leading nationwide provider of service contracts and extended warranties, primarily for new and used cars and recreational vehicles, as well as watercraft, manufactured housing, motorcycles and other power sport vehicles. Please visit our websites: http://www.inds.com for Company information and http://www.Interstateautomall.com for the most comprehensive listing on the Internet of everything auto-related.
This press release contains forward-looking statements, which are subject to risks and uncertainties. Such statements are based on assumptions and expectations which may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, may differ from the results discussed in the forward-looking statements. A number of these risks and other factors that might cause differences, some of which could be material, along with additional discussion of forward-looking statements, are set forth in the Company's Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 1996.
INTERSTATE NATIONAL DEALER SERVICES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS
(Audited)
For the year ended For the year ended
October 31, October 31,
1998 1997
Revenues $49,283,426 $37,928,719
Operating income 3,473,179 2,791,487
Other income 1,968,296(a) 743,734
Income before income taxes 5,441,475 3,535,221
Net income $3,303,802 $2,136,673
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Net Income Per Share:
Basic $0.71 $0.62
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Weighted average shares
outstanding 4,635,301 3,434,008
Diluted $0.67 $0.54
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Weighted average shares
outstanding 4,960,939 3,949,744
(a) Includes $500,000 received in the first quarter as the result of
a settlement of a dispute.
CONDENSED BALANCE SHEETS
(Audited)
October 31, October 31,
1998 1997
Cash and cash equivalents(b) $37,331,242 $26,856,861
Working Capital 39,073,654 29,704,256
Total Assets 53,406,741 41,282,561
Total stockholders' equity 18,115,563 14,758,838
(b) Including United States Treasury Notes, at cost.