Westar Financial Reports Revenues for Fiscal 2001 Q1

29 August 2000

Westar Financial Reports Record Revenues for Fiscal 2001 First Quarter

    OLYMPIA, Wash.--Aug. 29, 2000--Westar Financial Services Incorporated (OTC:WEST), the leading automobile e-finance portal, today reported record revenues its first fiscal quarter ended June 30 were $37 million, up 48% from the first quarter a year ago.
    The company has significantly expanded its B2B and B2C origination channels through innovative technologies and relationships.
    "As planned, our e-commerce revenues are growing at an accelerating pace. The newest and most unique origination channel, Westar's `Private Label' services to financial institutions, is exceeding volume expectations," said R. W. Christensen, Jr., Westar's CEO. WEST pioneered this effort with AmSouth Bancorporation , the nation's 19th largest bank, in May and recently signed its second major private label institution.
    "We made the decision to jump-start our Private Label program in the first few months of launch with very attractive pricing, and were highly successful with monthly volumes doubling between May and June. Although the introductory pricing program ended at the conclusion of the first quarter, we continue to see volume growth accelerate in this channel. Based on current production growth, we are on track to double volumes again this quarter," Christensen continued.
    Internet originations through DriveOff.com, Inc. also are increasing rapidly. DriveOff.com, currently being acquired by MSN CarPoint, a subsidiary of Microsoft and Ford , has become the leading Internet transaction site for serious automobile purchasers. "This Internet channel is beginning to contribute both to originations and fee income for our proprietary decisioning services. We expect the DriveOff.com origination channel to grow rapidly through the next several quarters. This accelerating growth should be matched by growth in our fourth source of originations and income, Westar's Intranet channel, as we activate our first national client in this channel," said Christensen.
    As a result of growth in both historic and portal activities, fiscal first quarter fee income increased 74% to $891,000 compared to $513,000 in the like quarter a year ago.
    First quarter direct costs increased 51% to $38 million due to increased volumes creating higher depreciation and interest costs. The aggressive pricing in the private label channel temporarily impacted first quarter gross margin, which declined to ($413,000) from $297,000 in the first quarter of fiscal 2000. "With the successful series of price increases introduced in the past six weeks, our margins have returned to historic levels and we continue generating record volumes," said Cindy Kay, VP and Controller.
    Overhead costs also increased during the first quarter with general and administrative expenses up 48% to $1.6 million from $1.1 million in the like period a year ago. "In the first quarter, we moved from the Republic Building, our home for the past 14 years, into our new headquarters in The Financial Center in Tumwater. This facility was designed to enhance productivity, support accelerating volume growth and provide the sophisticated technical infrastructure needed to secure and power our 24/7 operations," stated Rachel Aest, Facilities Manager.
    "Westar's growth has been very substantially aided by our long-time relationship with Bank One, NA for warehouse and SBAS facilities and by our $1 billion per year flow funding commitment from First Union ," Christensen added "These facilities are supported by our own direct securitization capabilities, such as our recent placement of $29 million of 'A' rated bonds for the first time with European institutional as well as domestic investors."
    WEST is the leading publicly traded automobile-oriented financial portal. Westar originates, decisions, commits to and fulfills consumer financings for itself or others, using sophisticated decision tools and high speed communications to assure transparency to all parties to the transaction. Through DriveOff.com, presently being acquired by MSN CarPoint, a subsidiary of Microsoft (NASD:MSFT), Westar completed the first entirely electronic Internet automobile purchase and lease transaction in October 1999. The company operates its Dealer Direct leasing program in western states and is rapidly expanding its e-finance activities nationally through alliances with DriveOff.com and others.

     FINANCIAL HIGHLIGHTS -------------------- (unaudited) First Quarter Ended ($ in thousands, except per share) June 30, 2000 1999 ---------------------------- Revenues: Revenues from sales of securitizations $ 35,470 $ 24,122 Revenues from operating leases 838 455 Earned income on direct financing leases 1 Administrative income 740 451 Service fee income 151 62 Other income 16 4 ----------- ----------- TOTAL REVENUES 37,215 25,095 Direct Costs: Cost related to sales and securitizations 36,588 24,147 Interest 277 135 Depreciation expense on operating leases 500 312 Provision for (recovery of) credit losses 8 43 Origination fees 109 -- Other 146 161 ----------- ----------- TOTAL DIRECT COSTS 37,628 24,798 GROSS MARGIN (413) 297 General and administrative expenses 1,578 1,068 Loss before subordinated debt interest (1,991) (771) Subordinated debt interest expense 217 171 Net Income (Loss) (2,208) (942) Dividends on redeemable preferred stock (29) (35) ----------- ----------- Net Income (Loss) applicable to common stock $ (2,237) $ (977) Net Income(Loss) per share $ (0.95) $ (0.44) =========== =========== Weighted average number of shares 2,348,120 2,222,300 30-Jun-00 31-Mar-00 30-Jun-99 --------- --------- --------- Originations $ 41,000 $ 35,000 $ 23,000 Servicing Portfolio $ 242,000 $ 201,000 $ 118,000 Total assets $ 25,009 $ 7,876 $ 11,344 Total liabilities $ 38,359 $ 18,989 $ 19,495 Redeemable preferred stock $ 1,250 $ 1,250 $ 1,548 Net deficit of common stock equity $ (14,600) $ (12,363) $ (9,699)