First Priority Group's 1999 Results Reveal Significant Improvements
31 March 2000
First Priority Group's 1999 Results Reveal Significant Improvements, First Two Months of 2000 Show Profit
PLAINVIEW, N.Y., March 30 First Priority Group, Inc.
reported today that its operating results improved
significantly in 1999 compared with 1998, reflecting continuing gains in its
affinity program and fleet service businesses.
First Priority Group recorded a net loss of $965,632, or $.12 per share,
for 1999, versus a loss of $2,003,758, or $.24 per share, in the prior year.
The 1998 loss included $1,909,836 from continuing operations and $93,922 from
a direct marketing business discontinued the year before.
Overall sales were level, at $12,135,578 in 1999, compared with
$12,140,971 in 1998, but the totals mask a major change in business mix and
the increasing momentum of FPG's ongoing businesses. The Company's affinity
programs, which provide automotive services and discounts to consumers,
primarily through financial institutions, made rapid strides in 1999 with a
growth rate of 113%. FPG's National Fleet Service subsidiary, which manages
collision claims for self-insured corporate and municipal vehicle fleets, also
gained important new customers and increased volume. The sales gains made up
for revenues lost because of the discontinuance of FPG's direct repair program
(DRP), a significant revenue contributor in 1998.
"We have been able to cut our 1999 losses in half, despite a number of
heavy, one-time expenses," said Barry Siegel, Chairman and Chief Executive
Officer. "This is a real achievement, and our results are continuing to
improve. Although we did not anticipate that we would show a profit until the
end of the third quarter, the first two months of 2000 revealed that we are in
positive territory. Because we have not yet received the final numbers for
March, it is difficult to predict how the first quarter will finish. However,
we are optimistic that our three-year run of losses is over. The most
exciting feature about our profitability is the fact that we have achieved
these results while still funding the growth of our new Internet subsidiary,
driversshield.com, which has the potential to greatly accelerate our growth
and profitability."
Siegel cited the positive impact of continuing cost reduction efforts plus
sharp volume gains in the highly profitable affinity programs business, which
is part of FPG's driversshield.com subsidiary, and growth in the consistently
profitable National Fleet Service subsidiary. The profitability improvement
occurred in spite of other heavy expenses, such as consulting fees, upgrading
of systems, implementing the new Great Plains accounting system, assuring Y2K
compliance and closing down the DRP business.
Siegel added, "These positive results confirmed our ability to meet our
near-term capital needs to grow our businesses. We remain debt free with a
very bright future ahead for all of our shareholders."
driversshield.com's principal activity will be to provide auto insurers
with fast, cost-saving, Internet-based collision claims and customer
relationship management services, using driversshield.com's nationwide network
of 2,400 high quality collision repair centers. driversshield.com's web-site
is being developed and hosted by its strategic partner, Electronic Data
Systems, and is currently in beta testing.
In reporting its 1999 results, FPG reclassified both 1999 and 1998
revenues to reflect its compliance with a new Securities & Exchange Commission
rule on revenue recognition that applies to its successful subrogation
business. Acting as an agent for its clients, FPG's National Fleet Service
subsidiary pursues claims against the insurers of other vehicles involved in
accidents with clients' vehicles, collecting a commission on recoveries. FPG
has traditionally treated total recoveries as revenue and related costs as
expenses. SEC Staff Accounting Bulletin #101, issued in December 1999, says
that unless an agent assumes actual risk, it can count as revenue only the
commissions it receives on a net basis. Application of the rule, as reflected
in the results reported today, reduced 1998 revenue and costs by approximately
$2.5 million, but had no effect on earnings.
Since its founding in 1983, First Priority Group has built a national
reputation for efficient, cost-saving management of collision claims for self-
insured corporate and municipal vehicle fleets through its subsidiary,
National Fleet Service. Clients include Coca-Cola, Time Warner, IBM, Hershey
Foods and many other prominent corporations. Through its " Auto Services and
Discounts Program," the Company has established relationships with Assurant
Group (part of the Fortis group), Providian Bank and other prestigious credit
card and financial organizations.
1999 1998
Total revenues 12,135,578 12,140,971
Cost of revenue
(principally charges
incurred at repair
facilities for services) 9,338,271 9,712,316
Gross profit 2,797,307 2,428,655
Total operating expenses 3,886,899 4,573,009
(1,089,592) (2,144,354)
Total other income 143,096 242,446
Loss from continuing
operations before
income taxes (946,496) (1,901,908)
Income taxes, all current 19,136 7,928
Loss from
continuing operations (965,632) (1,909,836)
Discontinued operations,
loss on disposal of
direct response marketing
division, no income tax benefit -- (93,922)
Net loss ($965,632) ($ 2,003,758)
Basic and diluted loss per share:
Continuing operations ($.12) ($.23)
Discontinued operations -- (.01)
Net loss ($.12) ($.24)
Weighted average number
of common
shares outstanding 8,324,649 8,197,827
Certain information contained herein includes information that is
forward-looking. The matters referred to in forward-looking statements may be
affected by the risks and uncertainties involved in the Company's business.
These forward-looking statements are qualified in their entirety by the
cautionary statements contained in the Company's Securities and Exchange
Commission filings.