National Auto Finance Company, Inc. Announces 1998 and First Quarter 1999 Results
19 May 1999
National Auto Finance Company, Inc. Announces 1998 and First Quarter 1999 Results
JACKSONVILLE, Fla.--May 18, 1999--National Auto Finance Company, Inc. (OTC/BB:NAFI) today announced that it filed its 1998 Annual Report on Form 10-K yesterday, which reflects a loss of $33.7 million or $(3.73) per share for the year ended December 31, 1998, as compared to a loss of $18.6 million or $(2.62) per share for the year ended December 31, 1997.The operating loss for 1998 was primarily due to the following reasons. During much of 1998, the Company curtailed its loan originations in order to preserve its cash while undertaking a comprehensive financial restructuring, which closed on April 7, 1999. Securitization related income associated with overall loan origination volume was $9.6 million, a decrease of $11.6 million or 54% for the year ended December 31, 1998 as compared to $21.2 million for the year ended December 31, 1997. The Company recorded a writedown of Retained Interest in Securitizations of $23.1 million for the year ended December 31, 1998. Finally, interest expense for the year ending December 31, 1998 was $7.9 million, representing a $6.3 million increase over interest expense of $1.6 million for the year ending December 31, 1997, associated primarily with the payment of interest on the Company's Senior Subordinated Notes in 1998. In the audited financial statements included in the Form 10-K, the Company's auditor, BDO Seidman LLP, qualified its audit opinion by raising an issue about the Company's ability to continue as a going concern.
The Company also filed its Quarterly Report on Form 10-Q yesterday for the quarter ended March 31, 1999, which reflects a loss of $1.8 million or $(0.20) per share for the quarter as compared to a loss of $5.2 million or $(0.57) per share for the quarter ended March 31, 1998. The 1999 first quarter loss was primarily due to decreased revenues resulting from the continued curtailment of origination volume in the quarter.
Commenting on the announcement, Keith B. Stein, Chief Executive Officer, said, "We are disappointed with the results of operations for 1998, however they were not unexpected. Our recently completed financial restructuring positions us to execute on our business plan and turn around the business to once again produce positive results. Although we also experienced an operating loss in the first quarter of 1999, it was less than the losses experienced in several prior quarterly periods, indicating that we are heading in the right direction."
National Auto Finance is a specialized consumer finance company engaged in the purchase, securitization and servicing of automobile loans primarily originated by manufacturer-franchised automobile dealers for non-prime consumers. The Company markets its products and services to dealers through the efforts of its direct sales force and through strategic referral and marketing alliances with financial and other institutions that have established relationships with dealers. The Company has active contractual relationships with approximately 775 dealers in 35 states.
Except for the historical information contained herein, this news release contains statements that are forward-looking statements within the meaning of applicable federal securities laws and are based upon the Company's current expectations and assumptions which are subject to a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. Primary factors that could cause actual results to differ include the availability of financing on terms and conditions acceptable to the Company, the ability of the Company to securitize its finance contracts in the asset-backed securities market on terms and conditions acceptable to the Company, and changes in the quality or composition of the serviced loan receivable portfolio. Certain of these as well as other factors are described in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and in certain other reports filed by the Company with the Securities and Exchange Commission.
NATIONAL AUTO FINANCE COMPANY, INC.
Statements of Operations
For the Years Ended December 31, 1998, 1997 and 1996
(in thousands, except per share data)
1998 1997 1996
-------- -------- --------
Revenue:
Securitization related
income (loss) $(13,531) $ (323) $ 13,564
Servicing income 6,424 3,437 866
Interest income 2,399 817 258
Other income 377 214 103
-------- -------- --------
Total revenue (4,331) 4,145 14,791
-------- -------- --------
Expenses:
Servicing expenses 6,262 5,944 1,291
Interest expense 8,417 1,638 1,204
Salaries and employee
benefits 7,705 6,346 3,634
Direct loan acquisition
expenses 1,520 3,591 1,924
Depreciation expense 802 743 492
Other operating expenses 4,544 3,602 1,755
-------- -------- --------
Total expenses 29,250 21,864 10,300
-------- -------- --------
Income (loss) before income
taxes and extraordinary item (33,581) (17,719) 4,491
Income taxes -- -- --
-------- -------- --------
Income (loss) before
extraordinary item (33,581) (17,719) 4,491
Extraordinary loss due to
early extinguishment of debt -- (720) --
-------- -------- --------
Net income (loss) before
preferred stock dividends (33,581) (18,439) 4,491
Preferred stock dividends (160) (148) --
-------- -------- --------
Net income (loss) available
for Common Stockholders $(33,741) $(18,587) $ 4,491
======== ======== ========
Per Share Data:
Loss per common share before
extraordinary item - basic and
diluted $ (3.73) $ (2.52) --
Extraordinary loss -- (0.10) --
-------- -------- --------
Loss per common share -
basic and diluted $ (3.73) $ (2.62) --
======== ======== ========
Weighted average common
shares outstanding:
Basic and diluted 9,031 7,087 --
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NATIONAL AUTO FINANCE COMPANY, INC.
Balance Sheets
December 31, 1998 and December 31, 1997
(dollars in thousands)
Assets: 1998 1997
-------- --------
Cash and cash equivalents $ 9,540 $ 26,467
Retained interest in
securitizations, at estimated
fair value 34,117 31,569
Furniture, fixtures and
equipment, net of accumulated
depreciation of $1,065 and $403 3,277 2,262
Deferred financing costs 2,759 2,539
Other assets 1,039 2,038
-------- --------
Total assets $ 50,732 $ 64,875
======== ========
Liabilities:
Accounts payable and accrued
expenses $ 2,444 $ 3,260
Accrued interest payable-related
parties 117 39
Accrued interest payable-Senior
Subordinated Notes -- 132
Accrued interest payable-notes -- 50
Junior Subordinated Notes-related
parties 1,940 1,940
Senior Subordinated Notes 53,578 34,546
Notes payable 1,017 1,614
-------- --------
Total liabilities 59,096 41,581
-------- --------
Commitments and Contingencies
Mandatorily Redeemable Preferred
Stock series A-$0.01 par value;
$1,000 stated value; 1,000,000
shares authorized; 2,295 shares
outstanding; redeemable in
January 2005, stated at redemption value 2,415 2,336
Stockholders' Equity (Capital Deficit):
Common Stock -$0.01 par value;
20,000,000 shares authorized;
9,031 shares outstanding 90 90
Paid-in-capital 36,261 34,417
Accumulated deficit (47,130) (13,549)
-------- --------
Total stockholders' equity (capital deficit) (10,779) 20,958
-------- --------
Total liabilities, mandatorily
redeemable preferred stock and
stockholders' equity (capital deficit) $ 50,732 $ 64,875
======== ========
NATIONAL AUTO FINANCE COMPANY, INC.
Statements of Operations (unaudited)
For the Three Months Ended March 31, 1999 and 1998
(in thousands, except per share data)
Three Months Ended
March 31,
---------------------
1999 1998
------- -------
Revenue:
Securitization related income $ 1,469 $ 74
Servicing income 1,449 1,272
Interest income 442 696
Other income 362 78
------- -------
Total revenue 3,722 2,120
======= =======
Expenses:
Servicing expenses 857 2,304
Interest expense 2,234 1,530
Salaries and employee benefits 1,206 1,643
Direct loan acquisition expenses 217 651
Depreciation expense 219 187
Other operating expenses 736 937
------- -------
Total expenses 5,469 7,252
------- -------
Loss before income taxes (1,747) (5,132)
Income taxes -- --
------- -------
Net loss (1,747) (5,132)
Preferred stock dividends 40 40
------- -------
Loss attributed to common
shareholders $(1,787) $(5,172)
======= =======
Per Share Data:
Loss per common share -
basic and diluted $ (0.20) $ (0.57)
Weighted average common
shares outstanding:
Basic and diluted 9,031 9,031
NATIONAL AUTO FINANCE COMPANY, INC.
Balance Sheets
March 31, 1999 and December 31, 1998
(in thousands)
March 31,
1999 Dec. 31,
Assets: (unaudited) 1998
-------- --------
Cash and cash equivalents $ 3,045 $ 9,540
Retained interest in securitizations,
at estimated fair value 38,430 34,117
Furniture, fixtures and equipment, net 3,218 3,277
Deferred financing costs 2,613 2,759
Other assets 1,293 1,039
Total assets $ 48,599 $ 50,732
======== ========
Liabilities:
Accounts payable and accrued expenses $ 1,885 $ 2,444
Accrued interest payable-related
parties 155 117
Junior Subordinated Notes-related
parties 1,940 1,940
Senior Subordinated Notes 53,845 53,578
Notes payable 884 1,017
-------- --------
Total liabilities $ 58,709 $ 59,096
-------- --------
Commitments and Contingencies
Mandatory Redeemable Preferred Stock
series A-$0.01 par value; $1,000
stated value; 1,000,000 shares
authorized; 2,295 shares outstanding;
redeemable in January 2005, stated at
redemption value 2,456 2,415
Stockholders' Equity (Capital Deficit):
Common Stock -$0.01 par value;
20,000,000 shares authorized;
9,031 shares outstanding 90 90
Paid-in-capital 36,221 36,261
Accumulated deficit (48,877) (47,130)
-------- --------
Total stockholders' equity
(capital deficit) (12,566) (10,779)
-------- --------
Total liabilities, mandatory
redeemable preferred stock and
stockholders' equity (capital deficit) $ 48,599 $ 50,732
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