National Auto Credit Announces Financial Results for Fiscal 2000 First Quarter
13 December 1999
National Auto Credit Announces Financial Results for Fiscal 2000 First Quarter
SOLON, Ohio, Dec. 10 -- National Auto Credit, Inc.
(OTC Bulletin Board: NAKD) today announced financial results for its fiscal
year 2000 first quarter ended April 30, 1999. The Company operates on a fiscal
year ending January 31 and expects to issue fiscal 2000 second and third
quarter results within the next several weeks.
For the first three months of fiscal 2000, National Auto Credit (NAC)
incurred a net loss of $4,143,000, or $0.14 per share, primarily as a result
of a 59.8 percent decline in revenues to $2,147,000 and $1,954,000 in non-
recurring charges. In the first quarter of fiscal 1999, the Company incurred a
net loss of $3,175,000, or $0.11 per share, on revenues of $5,337,000.
The decline in revenues during the current first quarter was due primarily
to the reduction in the size of NAC's loan portfolio. In light of the large
credit losses NAC experienced in recent fiscal years, the Company has
developed a new dealer-scoring model to allow it to better evaluate and
selectively market its new programs to a smaller number of dealers viewed as
more likely to be the source of higher quality loans. As a result of these
changes to its loan investment operation, the number of dealers enrolled in
NAC's program, as well as the number of loans outstanding, declined.
The $1,954,000 of non-recurring charges during the fiscal 2000 first
quarter were for regulatory investigation, internal investigations, management
changes and stockholder litigation.
Operating expenses, including sales and marketing costs, collection costs
and other operating costs, increased to $3,073,000 for the first three months
of fiscal 2000, compared with $2,803,000 for the fiscal 1999 first quarter. As
a percentage of revenues, operating expenses increased to 143.1 percent for
the fiscal 2000 first quarter, from 52.5 percent for the comparable period in
fiscal 1999, due principally to the decline in revenues.
The Company also announced that it has reached an agreement with two
former Directors, under which the Directors, Mr. Allen D. Rice and Mr. Richard
M. Cohen, have resigned from the NAC Board of Directors. Under the agreements,
Mr. Cohen will continue as Interim Chief Financial Officer through the
earlier of December 31, 1999 or until the Company's Forms 10-Q are completed
for the second and third quarters of fiscal 2000, and Mr. Rice will be
available to the Company as a consultant, as needed, until July 15, 2000. In
addition, the Company announced that the Delaware Supreme Court on December 9,
1999 affirmed the judgment of the Delaware Court of Chancery granting summary
judgment regarding the claims of Sam J. Frankino, the former Chairman of the
Company's Board of Directors, that he had validly amended the Company's bylaws
to expand the number of directors from six to thirteen and duly elected seven
of his nominees to fill these newly-created seats on the Board.
"While the Company still faces challenges and uncertainties from the
pending stockholder litigation and ongoing regulatory investigations, we
believe the new Board of Directors is taking prudent steps to create a stable
environment in which stockholder value can be increased," said David L. Huber,
CEO of National Auto Credit.
National Auto Credit, Inc. is a specialized financial services Company
that invests primarily in sub-prime, used-automobile consumer loans, which
take the form of installment loans collateralized by the related vehicle. The
Company, through its affiliate, NAC, Inc., purchases these loans from used-
automobile dealerships that participate in the Company's loan purchase
program.
National Auto Credit also performs the underwriting and collections
functions for all the loans purchased. Its operations enable these dealers to
provide financing to customers who have limited access to more traditional
consumer credit sources or might otherwise be unable to obtain financing.
This news release may include statements that constitute forward-looking
statements, usually containing the words "believe", "estimate", "project",
"expects", or similar expressions. These statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements inherently involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. By making these forward-looking statements, the company
undertakes no obligation to update these statements for revisions or changes
after the date of this document.
National Auto Credit, Inc.
Condensed Consolidated Balance Sheets
(In Thousands, Except Share Amounts)
(Unaudited)
April 30, January 31,
1999 1999
ASSETS
Cash and cash equivalents $40,071 $32,109
Installment loans, net 57,595 70,401
Property and equipment, net of
accumulated depreciation
of $5,452 and $5,262, respectively 8,508 8,558
Affordable housing investments 10,609 10,270
Income taxes refundable 3,242 3,295
Other assets 2,030 2,659
TOTAL ASSETS $122,055 $127,292
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Self-insurance claims $4,432 $4,880
Accrued income taxes 6,490 6,510
Other liabilities 15,520 16,126
Total 26,442 27,516
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock - $.05 par value,
authorized 2,000,000 shares, none issued - -
Common stock - $.05 par value,
authorized 40,000,000 shares, issued
29,960,613 and 29,982,512 shares,
respectively 1,499 1,500
Additional paid-in capital 166,149 166,168
Retained deficit (59,932) (55,789)
Treasury stock, at cost, 1,345,968 shares (12,103) (12,103)
Total 95,613 99,776
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $122,055 $127,292
National Auto Credit, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
April 30,
1999 1998
REVENUE
Interest income $2,102 $5,279
Fees and other income 45 58
Total 2,147 5,337
COSTS AND EXPENSES
Provision for credit losses 182 724
Operating 3,073 2,803
General and administrative 1,506 1,249
Litigation and non-recurring charges 1,954 2,068
Interest (income) expense (425) 1,668
Total 6,290 8,512
LOSS BEFORE INCOME TAXES (4,143) (3,175)
Provision for income taxes - -
NET LOSS $(4,143) $(3,175)
BASIC AND DILUTED LOSS PER SHARE $(0.14) $(0.11)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (000'S)
Basic and Diluted 28,631 28,560
National Auto Credit, Inc.
Installment Loans, Net
For the Three Months Ended April 30, 1999 and 1998
(In Thousands)
(Unaudited)
Gross Credit Allowance Installment
Finance Unearned Loss for Credit Loans,
Receivable Income Discount Losses Net
Balance,
Jan. 31, 1999 $115,473 $(7,052) $(21,190) $(16,830) $70,401
Purchases 17,314 (985) (7,387) - 8,942
Cash collected (23,668) - - - (23,668)
Charge-offs (6,393) - 3,455 2,938 -
Provision for
credit losses - - - (182) (182)
Interest income - 2,102 - - 2,102
Reclassification - 18 (18) - -
Dealer fees charged - - - - -
Balance,
April 30, 1999 $102,726 $(5,917) $(25,140) $(14,074) $57,595
Gross Credit Allowance Installment
Finance Unearned Loss for Credit Loans,
Receivable Income Discount Losses Net
Balance,
Jan. 31, 1998 $269,690 $(20,534) $(34,920) $(61,789) $152,447
Purchases 9,239 (171) (2,456) - 6,612
Cash collected (39,196) - - - (39,196)
Charge-offs (22,152) - 7,232 14,920 -
Provision for
credit losses - - - (724) (724)
Interest income - 5,279 - - 5,279
Reclassification - - - - -
Dealer fees charged - - - (327) (327)
Balance,
April 30, 1998 $217,581 $(15,426) $(30,144) $(47,920) $124,091