Precision Auto Care Extends Bank Loan and Announces Year End Results
15 October 1999
Precision Auto Care Extends Bank Loan and Announces Year End Results
LEESBURG, Va., Oct. 14 -- Precision Auto Care, Inc. announced for the
fiscal year ending June 30, 1999, the Company reported a loss of $21 million,
or ($3.43) per share, compared with net income of $1.2 million, or $.28 per
share, for the prior year. For the quarter ending June 30, 1999, the Company
incurred a loss of $10.1 million, or ($1.64) per share, compared to a loss of
$612 thousand, or ($.11) per share for comparable quarter in 1998. Included
in this loss is a special charge of $4.7 million to reduce the amount of
goodwill associated with businesses it plans to dispose of in the coming year.
The Company's CEO, Charles L. Dunlap stated, "The prior fiscal year was
significantly impacted by write-offs associated with the Company's aborted
acquisition strategy, severance charges, and allowances for accounts
receivable and inventory adjustments. These actions coupled with the
restructuring efforts currently underway are designed to position the Company
to focus on its core auto care and franchising businesses and improving
operating results."
Dunlap also stated, "The Company has been successful in negotiating a
commitment to extend the maturity of its $8.5 million bank loan to October,
2000 and has also negotiated extensions of its board debt totaling
$5.5 million for terms exceeding 12 months. The extended bank loan agreement
will allow the Company to utilize proceeds from the sale of non-strategic
assets to reduce outstanding payables. These extensions will also enable the
Company to pursue its restructuring, recapitalization and profit improvement
objectives."
As previously announced, in an effort to return the Company to positive
cash flow and profitability, the Company has initiated measures which call for
the disposition of certain assets and a restructuring of the Company's
operations. The Company believes that sales of certain assets made in
connection with the discontinuation of certain businesses will improve future
cash flow and reduce outstanding trade payables. The Company is also pursuing
joint venture arrangements that would also improve cash flow and reduce
inventories and trade payables.
The Company said that these initiatives are being coupled with strategies
designed to increase revenues and profitability at the operating level. The
Company further stated that efforts are also under way to raise capital with
strategic partners or investors in order to reduce the Company's current level
of debt. While all of these actions may result in a restructured company with
potentially less revenue, the Company believes that greater profitability and
cash flow will be achieved.
In the event that the Company is unable to accomplish its restructuring
and strategic objectives, is unable to secure additional financing or is
otherwise unable to generate revenues sufficient to cover operating expenses,
the Company may be unable to satisfy most of its current liabilities and would
not be able to sustain its operations at the current level thereafter which
would result in the Company, among other things, further reducing
discretionary expenses, and liquidating certain assets.
Precision Auto Care, Inc. is the world's largest franchisor of auto care
centers, with 603 operating centers as of October 14, 1999. The Company
franchises and operates Precision Tune Auto Care, Precision Auto Wash, and
Precision Lube Express centers around the world, and offers a vertically
integrated organization with manufacturing and distribution subsidiaries.
Cautionary Statement: The statements in this press release constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements are subject to risks and uncertainties that could cause
Precision Auto Care Inc.'s actual results, performance or achievements to
differ materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. For example, there
can be no assurance that the Company will be able to modify the terms of its
outstanding debt, obtain additional capital, or complete any divestiture,
partnership or other restructuring transactions in a timely fashion or on
terms and conditions that are acceptable to the Company. Other risks and
uncertainties include, but are not limited to, (i) the risks and uncertainties
reflected and set forth in the text of this press release, (ii) the fact that
Precision Auto Care Inc. and the companies it acquired on and subsequent to
the date of its initial public offering have only recently conducted
operations as a combined company, (iii) the seasonal nature of portions of the
business, (iv) the highly competitive markets in which Precision Auto Care
Inc. operations, (v) difficulties in integrating all of the businesses
Precision Auto Care Inc. has acquired, (vi) risks associated with Precision
Auto Care Inc.'s ability to continue its strategy of growth through
acquisitions and (vii) risks associated with Company's ability to make or
effect acquisitions in the future and to successfully integrate newly-acquired
businesses into existing operations and the risks associated with such newly-
acquired businesses. For a discussion of such other risks and uncertainties
which could cause actual results, performance or achievements to differ from
those contained in the forward-looking statements, see "Risk Factors" in the
Company's most recently filed Annual Report on Form 10-K.
Three Months Ending June 30, 1999
000s except per share amounts
1999 1998
Revenue $11,322 $13,628
Net income (loss) ($10,103) ($612)
Diluted earnings (loss) per share ($1.64) ($0.11)
Shares outstanding - diluted 6,126 5,549
Twelve Months Ending June 30, 1999
000s except per share amounts
1999 1998
Revenue $44,769 $41,776
Net income (loss) ($21,019) $1,228
Diluted earnings (loss) per share ($3.43) $0.28
Shares outstanding - diluted 6,126 4,323