National Auto Credit Announces Financial Results for Fiscal 2000 Third Quarter
31 December 1999
National Auto Credit Announces Financial Results for Fiscal 2000 Third Quarter
SOLON, Ohio, Dec. 30 -- National Auto Credit, Inc.
(OTC Bulletin Board: NAKD) today announced financial results for the third
quarter of fiscal year 2000 ended October 31, 1999. The Company operates on a
fiscal year ending January 31.
For the three months ended October 31, 1999, National Auto Credit (NAC)
incurred a net loss of $1,163,000, or $.04 per share, primarily as a result of
a 56 percent decline in revenues to $1,572,000, expenses relating to certain
litigation and non-recurring charges of $1,657,000 and $724,000 in costs
relating to the repurchase of shares. For the three months ended October 31,
1998, the Company incurred a net loss of $5,629,000, or $.20 per share, on
revenues of $3,569,000. That loss included costs relating to certain
litigation and non-recurring charges of $3,260,000.
For the first nine months of fiscal 2000, NAC incurred a net loss of
$10,003,000, or $.35 per share, primarily as a result of a 59.5 percent
decline in revenues to $5,445,000, costs of $5,642,000 for certain litigation
and non-recurring charges, and $2,224,000 in costs relating to the repurchase
of shares. For the nine months ended October 31, 1998, the Company incurred a
net loss of $11,369,000 or $.40 per share, on revenues of $13,461,000.
The decline in revenues during the three months ended October 31, 1999 was
due primarily to a 57.4 percent decrease in the average size of the Company's
total net loan investments from the same point a year earlier. As previously
reported, in light of the large credit losses the Company experienced in
recent years, the Company 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 declines in revenues experienced in the three and nine month periods
of fiscal 2000, as well as the litigation and share repurchase charges, were
partially offset by negative provisions, or reductions in the allowance for
credit losses, of $3,000,000 and $3,186,000 for those three and nine month
periods, respectively. This compares to provisions of $796,000 and $2,195,000
for the three and nine month periods in fiscal 1999. The reductions in the
allowance for credit losses recorded in fiscal 2000 are principally the result
of loan collections exceeding the amounts originally projected. The higher
than estimated collections came principally from certain of the Company's
older, larger loan pools, and reflect, among other things, improvements in the
Company's collection procedures. Only actual cash collections in excess of
estimates were recognized in reducing the allowance for credit losses in the
fiscal 2000 interim periods. The Company did not significantly change its
estimates of remaining cash flows from the collection of loan pools.
Operating expenses decreased to $2,621,000 for the three months ended
October 31, 1999 from $2,865,000 for the three months ended October 31, 1998.
The decrease was attributable to lower personnel, collection, sales and
marketing and other operating costs offset by an increase in costs the Company
is incurring to develop a more automated, technology-based business model.
Operating expenses increased by $13,000 to $8,347,000 for the nine months
ended October 31, 1999 as compared to $8,334,000 for the corresponding period
of the prior year. As a percentage of revenues, operating expenses increased
to 166.7 percent and 153.3 percent for the three and nine month periods of
fiscal 2000 ending October 31, 1999, from 80.3 percent and 61.9 percent for
the same periods in fiscal 1999 due principally to the decline in revenues.
Results for the three and nine month periods ended October 31, 1999
include $724,000 and $2,224,000, respectively, of expense relating to an
agreement entered into with an unaffiliated stockholder to repurchase shares
of the Company's common stock.
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)
October 31, January 31,
1999 1999
ASSETS
Cash and cash equivalents $ 52,027 $ 32,109
Installment loans, net 36,304 70,401
Property and equipment, net of
accumulated depreciation
of $5,845, and $5,262, respectively 8,673 8,558
Affordable housing investments 10,384 10,270
Income taxes refundable 3,236 3,295
Other assets 1,858 2,659
TOTAL ASSETS $ 112,482 $ 127,292
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Self-insurance claims $ 3,727 $ 4,880
Accrued income taxes 6,449 6,510
Other liabilities 12,840 16,126
Total 23,016 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 29,963,301 and
29,982,512 shares, respectively 1,498 1,500
Additional paid-in capital 166,139 166,168
Retained deficit (65,792) (55,789)
Option for repurchase of shares (276) --
Treasury stock, at cost,
1,345,968 shares (12,103) (12,103)
Total 89,466 99,776
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 112,482 $ 127,292
National Auto Credit, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
October 31, October 31,
1999 1998 1999 1998
REVENUE
Interest income $ 1,530 $ 3,278 $ 5,316 $ 12,711
Fees and other income 42 291 129 750
Total 1,572 3,569 5,445 13,461
COSTS AND EXPENSES
Provision for credit
losses (3,000) 796 (3,186) 2,195
Operating 2,621 2,865 8,347 8,334
General and
administrative 1,309 1,308 3,902 3,757
Litigation and
non-recurring charges 1,657 3,260 5,642 6,588
Cost related to purchase
of shares 724 -- 2,224 --
Interest (income) expense (576) 969 (1,481) 3,956
Total 2,735 9,198 15,448 24,830
LOSS BEFORE INCOME TAXES (1,163) (5,629) (10,003) (11,369)
Provision for income taxes -- -- -- --
NET LOSS $(1,163) $(5,629) $(10,003) $(11,369)
BASIC AND DILUTED LOSS
PER SHARE $ (.04) $ (.20) $ (.35) $ (.40)
WEIGHTED AVERAGE NUMBER
OF SHARES
OUTSTANDING (000'S)
Basic and Diluted 28,630 28,650 28,634 28,648
National Auto Credit, Inc.
Installment Loans, Net
For the Three and Nine Months Ended October 31, 1999 and 1998
(In Thousands)
(Unaudited)
Gross Credit Allowance Installment
Finance Unearned Loss for Credit Loans,
Receivable Income Discount Losses Net
Balance,
July 31,
1999 $85,557 $(5,526) $(23,603) $(11,777) $44,651
Purchases 3,075 (310) (1,081) -- 1,684
Cash
collected (14,561) -- -- -- (14,561)
Charge-offs (5,671) -- 3,799 1,872 --
Provision for
credit losses -- -- -- 3,000 3,000
Interest income -- 1,530 -- -- 1,530
Reclassification -- -- -- -- --
Dealer fees
charged -- -- -- -- --
Balance,
October 31,
1999 $68,400 $(4,306) $(20,885) $ (6,905) $36,304
Gross Credit Allowance Installment
Finance Unearned Loss for Credit Loans,
Receivable Income Discount Losses Net
Balance,
January 31,
1999 $115,473 $(7,052) $(21,190) $(16,830) $70,401
Purchases 25,963 (1,857) (10,714) -- 13,392
Cash
collected (55,991) -- -- -- (55,991)
Charge-offs (17,045) -- 10,306 6,739 --
Provision for
credit losses -- -- -- 3,186 3,186
Interest income -- 5,316 -- -- 5,316
Reclassification -- (713) 713 -- --
Dealer fees
charged -- -- -- -- --
Balance,
October 31,
1999 $68,400 $(4,306) $(20,885) $ (6,905) $36,304
National Auto Credit, Inc.
Installment Loans, Net (Cont.)
(In Thousands)
Gross Credit Allowance Installment
Finance Unearned Loss for Credit Loans,
Receivable Income Discount Losses Net
Balance,
July 31,
1998 $177,097 $(11,586) $(26,241) $(36,415) $102,855
Purchases 10,913 (653) (4,303) -- 5,957
Cash
collected (26,092) -- -- -- (26,092)
Charge-offs (15,072) -- 6,426 8,646 --
Provision for
credit losses -- -- -- (796) (796)
Interest income -- 3,278 -- -- 3,278
Reclassification -- -- -- -- --
Dealer fees
charged -- -- -- 14 14
Balance,
October 31,
1998 $146,846 $(8,961) $(24,118) $(28,551) $85,216
Gross Credit Allowance Installment
Finance Unearned Loss for Credit Loans,
Receivable Income Discount Losses Net
Balance,
January 31,
1998 $269,690 $(20,534) $(34,920) $(61,789) $152,447
Purchases 30,899 (1,138) (9,694) -- 20,067
Cash
collected (97,148) -- -- -- (97,148)
Charge-offs (56,595) -- 20,496 36,099 --
Provision for
credit losses -- -- -- (2,195) (2,195)
Interest income -- 12,711 -- -- 12,711
Reclassification -- -- -- -- --
Dealer fees
charged -- -- -- (666) (666)
Balance,
October 31,
1998 $146,846 $(8,961) $(24,118) $(28,551) $85,216