Warrantech Reports Net Income For Second Quarter 2001
25 October 2000
Warrantech Corporation Reports Net Income of $.05 Per Share For Second Quarter 2001; Second Consecutive Quarter of Solid Results
EULESS, Texas, Oct. 25 Warrantech Corporation
(OTC Bulletin Board: WTEC) today reported net income of $692,383 or $0.05 per
diluted share for the Company's second quarter 2001 which is the three month
period ended September 30, 2000, compared to a net loss of $2.5 million or
$0.17 per diluted share in the same period a year ago.
For the six month period, net income was $932,983 or $0.06 per diluted
share compared to a net loss of $6.0 million or $0.40 per diluted share for
the same period a year ago.
Joel San Antonio, Warrantech chairman and chief executive officer, stated,
"This is the fifth consecutive quarterly improvement in our return to
profitability and our second consecutive quarter in the black. As a part of
our strategy, we closed our U.K. operation at the end of this quarter, in
which we took a one-time charge for discontinued operations of $1.05 million.
Without this one-time charge and the related tax benefits, net income for the
quarter would have been $1.7 million."
He continued, "Throughout the quarter, we have signed several new
agreements in all business lines. We are very focused with our goal to
provide greater value to our shareholders throughout the year by continuing to
bring to market exciting new products while at the same time leveraging new
technology to reduce cost and improve customer service."
Net Administrative Fee
The net earned administrative fee for the quarter ended September 30, 2000
increased to $12.8 million compared to $10.1 million for the same period a
year ago. This was a quarter-to-quarter increase of $2.7 million or 27%.
For the six months, net earned administrative fee was $25.3 million,
compared to $19.6 million of the same period a year ago.
The change was primarily attributed to improved margins in the Automotive
segment and increased revenues recognized from prior periods in the Consumer
Products segment. These results were partially offset by lower volumes in the
International segment.
The South American and Puerto Rican markets continued to contribute higher
volumes from existing and new customers although the net earned administrative
fees from the total International segment declined from $0.7 million for the
quarter ended September 30, 1999 to $0.5 million for the current quarter due
to the closing of the U.K. operations. The Automotive segment had an increase
in net earned administrative fee of $3.0 from $1.9 million last year to
$4.9 million this year.
Service, selling, general and administrative
SG&A expenses for the second quarter of 2001 decreased 22.5% to
$9.7 million from $12.6 million for the second quarter in 2000. For the six
months, SG&A decreased 22.4% to $19.9 million, compared to $25.6 million for
the six months of fiscal year 2000.
Pre-tax Profit
Warrantech defines its business in three business segments: Automotive,
Consumer Products and International. Automotive reported a pre-tax profit for
the second quarter of 2001 of $2.1 million from a loss of $1.4 in the same
period a year ago. Consumer Products pre-tax profit increased in the second
quarter of 2001 to $0.5 million from a net loss of $1.2 million in the second
quarter of 2000. Excluding the one time charge of closing the U.K.
operations, International reported a pre-tax loss of $1.4 million for the
second quarter of 2001 from a loss of $1.3 in the same period a year ago
resulting primarily from the loss in the U.K. operation.
WARRANTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Three Months Ended For the Six Months Ended
September 30, September 30,
2000 1999 2000 1999
Earned Admin Fee
(Net of
amortization of
deferred costs) $12,792,032 $10,098,863 $25,297,008 $19,563,188
Costs and expenses
Service, selling,
and general and
administrative 9,738,490 12,557,798 19,836,632 25,557,750
Depreciation and
amortization 1,837,294 1,457,331 3,382,220 2,870,678
Discontinued
operations 1,049,552 1,049,552
Total costs and
expenses 12,625,336 14,015,129 24,268,404 28,428,428
Income (loss) from
operations 166,696 (3,916,266) 1,028,604 (8,865,240)
Other income
(expense) 237,673 257,352 404,785 510,447
Income (loss) before
provision for
income taxes 404,369 (3,658,914) 1,433,389 (8,354,793)
Provision (benefit)
for income taxes (288,014) (1,074,841) 500,406 (2,338,456)
Net income (loss) $692,383 ($2,584,073) $932,983 ($6,016,337)
Earnings per share:
Basic $0.05 ($0.17) $0.06 ($0.40)
Diluted $0.05 ($0.17) $0.06 ($0.40)
Weighted average number of shares outstanding:
Basic 15,305,954 15,224,236 15,305,272 15,223,554
Diluted 15,305,954 15,224,236 15,305,272 15,223,554
WARRANTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
A S S E T S
(Unaudited)
September March 31,
2000 2000
Current assets:
Cash and cash equivalents $15,091,483 $10,035,003
Investments in marketable securities 3,305,898 4,638,875
Accounts receivable, (net of allowances of
$1,057,470 and $1,164,125, respectively) 16,425,523 11,858,653
Other receivables, net 5,578,842 2,416,248
Income tax receivable 3,532,875 4,035,346
Deferred income taxes 976,302 926,321
Prepaid expenses and other current assets 1,713,980 1,238,051
Total current assets 46,624,903 35,148,497
Property and equipment, net 13,045,008 15,417,255
Other assets:
Excess of cost over fair value
of assets acquired
(net of accumulated amortization of
$6,221,609 and $5,550,861, respectively) 1,936,924 2,607,671
Deferred income taxes 5,271,884 8,279,643
Deferred direct costs 63,528,086 80,797,199
Investments in marketable securities 1,844,056 1,499,247
Restricted cash 800,000 800,000
Split dollar life insurance policies 642,262 827,262
Notes receivable 802,614 1,167,725
Collateral security fund 0 199,389
Other assets 167,360 177,266
Total other assets 74,993,186 96,355,402
Total Assets $134,663,097 $146,921,154
WARRANTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
September March 31,
2000 2000
Current liabilities:
Current maturities of long-term debt
and capital lease obligations $997,893 $1,451,020
Insurance premiums payable 24,029,188 18,161,357
Accounts and commissions payable 10,588,876 8,857,556
Legal settlements payable
Accrued expenses and other
current liabilities 10,204,704 9,491,175
Total current liabilities 45,820,661 37,961,108
Deferred revenues 84,366,824 105,028,425
Long-term debt and capital lease obligations 1,390,701 1,668,478
Deferred rent payable 342,685 384,501
Total liabilities 131,920,871 145,042,512
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.0007 par value authorized -
15,000,000 Shares issued - none at
September 30, 2000 and March 31, 2000 - -
Common stock - $.007 par value authorized -
30,000,000 Shares issued - 16,516,978
shares at September 30, 2000 and
16,501,911 shares at March 31, 2000 115,541 115,541
Additional paid-in capital 23,737,835 23,737,835
Loans to directors and officers (9,660,606) (9,505,406)
Accumulated other comprehensive
income, net of taxes (58,331) (144,132)
Retained earnings (deficit) (7,168,046) (8,101,029)
6,966,393 6,102,809
Treasury stock - at cost, 1,211,024
shares at September 30, 2000 and
1,211,024 shares at March 31, 2000 (4,224,167) (4,224,167)
Total Stockholders' Equity 2,742,226 1,878,642
Total Liabilities and Stockholders'
Equity $134,663,097 $146,921,154