National Auto Credit Reports Third Quarter Results
15 December 1997
National Auto Credit Reports Third Quarter Results
SOLON, Ohio, Dec. 15 -- National Auto Credit, Inc.
, a leading provider of cash advances to dealers in the used car
industry, today reported a net loss of $9,929,000, or $(.35) per share, for
the nine months ended October 31, 1997, and a net loss of $18,417,000, or
$(.65) per share, for the quarter then ended. The reported loss resulted from
an increase in the non-cash provision for credit losses relating to dealer
advances. The increase is primarily due to the recording of amounts to
reflect the results of the Company's evaluation of the collectability of its
portfolio utilizing enhanced static pool information applied on a
dealer-by-dealer basis. Revenues for the three and nine month periods ended
October 31, 1997 were $17,590,000 and $55,203,000, respectively, compared with
revenues of $16,163,000 and $46,468,000, respectively, for the same periods in
1996.
Based upon data collected from the enhanced static pool information, the
Company has established portfolio collection standards for all dealers.
Dealers falling below these standards have been eliminated from the program.
To date 229 dealers have been deleted, accounting for approximately 12% of the
contract volume during the last six months.
In addition, the Company is in the process of reducing its bank debt and
plans to satisfy its bank debt completely by August 1998. Under its credit
agreements, the Company must be in compliance with a fixed charge coverage
covenant in the agreements related to its borrowings. The Company reported
that it has obtained waivers from its banks and holders of its senior notes
with respect to this fixed charge coverage covenant. These waivers are in
effect for third quarter reporting requirements.
Sam J. Frankino, Chairman of the Board and majority stockholder, stated,
"Consistent with recent updates in industry reporting, National Auto Credit
has taken certain strategic initiatives to identify and eliminate unprofitable
dealers in order to devote its efforts to pursuing growth opportunities while
maximizing shareholder value."
The statements contained in this release that are not purely historical
are forward looking statements within the meaning of the Securities and
Exchange Act of 1934. Among the factors that could cause actual results to
differ materially from those forward looking statements are the potential for
greater than anticipated non-performing contracts, the potential for lower
than anticipated recoverability of amounts advanced to the Company's member
dealers, availability with regards to the Company's financing arrangements,
and other factors as discussed in the Company's annual and quarterly reports
filed with the Securities and Exchange Commission.
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Nine Months Ended
October 31, October 31,
1997 1996 1997 1996
REVENUE
Interest income $16,201 $14,156 $49,988 $41,373
Fee and other income 1,389 2,007 5,215 5,095
Total 17,590 16,163 55,203 46,468
COSTS AND EXPENSES
Provision for credit losses 41,741 2,642 57,555 7,031
Operating 1,482 1,489 4,760 4,151
General and administrative 1,448 1,161 4,072 3,537
Interest 1,672 788 4,610 1,616
Total 46,343 6,080 70,997 16,335
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES (28,753) 10,083 (15,794) 30,133
Provision (benefit) for
income taxes (10,336) 3,419 (5,865) 10,637
INCOME (LOSS) FROM
CONTINUING OPERATIONS (18,417) 6,664 (9,929) 19,496
LOSS FROM DISCONTINUED
OPERATIONS, NET OF TAX -- (5,098) -- (6,917)
NET INCOME (LOSS) $(18,417) $1,566 $(9,929) $12,579
EARNINGS (LOSS) PER SHARE
Continuing operations $(0.65) $.23 $(0.35) $.68
Discontinued operations -- (.18) -- (.24)
Total $(0.65) $.05 $(0.35) $. 44
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING (000's) 28,548 28,504 28,537 28,490
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
October 31, January 31,
1997 1997
ASSETS (Unaudited)
Cash and cash equivalents $1,791 $1,756
Installments notes receivable, net 292,145 316,048
Property and equipment, net of
accumulated depreciation of $7,029 and
$6,264, respectively 8,757 9,224
Other assets 12,209 11,741
Deferred income taxes 21,553 11,641
Total $336,455 $350,410
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Self-insurance claims $5,305 $13,787
Notes payable 13,835 13,354
Operating debt 78,365 66,846
Income taxes payable 4,406 6,777
Other liabilities 15,325 20,098
Total 117,236 120,862
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
29,893,912 and 29,845,673 shares,
respectively 1,495 1,492
Additional paid-in capital 166,011 165,605
Retained earnings, including cumulative
foreign currency translation loss of
$1,398 and $1,070, respectively 63,816 74,073
Treasury stock, at cost, 1,345,968 and
1,298,568 shares, respectively (12,103) (11,622)
Total 219,219 229,548
Total $336,455 $350,410
NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
(THOUSANDS OF DOLLARS)
(UNAUDITED)
INSTALLMENT NOTES RECEIVABLE, NET
a.) Period End Balances:
October 31, January 31,
1997 1997
Gross installment notes receivable $511,224 $496,947
Unearned income (70,552) (72,475)
Dealer holdbacks, net of advances (73,674) (74,967)
Allowance for credit losses (74,853) (33,457)
Installment notes receivable, net $292,145 $316,048
b.) Changes in Gross Installment
Notes Receivable:
Three Months Ended Nine Months Ended
October 31, October 31,
1997 1996 1997 1996
Balance, beginning of period $514,217 $426,030 $496,947 $354,012
Contracts accepted 74,983 97,779 242,331 274,013
Cash collected (44,302) (44,002) (145,442) (124,192)
Charge-offs against:
Dealer holdbacks (26,558) (15,895) (64,377) (33,727)
Unearned/Allowance (7,116) (4,683) (18,235) (10,877)
Balance, end of period $511,224 $459,229 $511,224 $459,229
c.) Dealer Holdbacks, Net of Advances:
October 31, January 31,
1997 1997
Dealers holdbacks $406,167 $392,733
Advances (332,493) (317,766)
Dealer holdbacks, net of advances $73,674 $74,967
d.) Changes in Allowance for
Credit Losses:
Three Months Ended Nine Months Ended
October 31, October 31,
1997 1996 1997 1996
Balance, beginning of period $44,327 $28,078 $33,457 $23,284
Advance reserve fees 5,524 1,356 12,178 2,691
Provision for credit losses 41,741 2,642 57,555 7,031
Net charge-offs and other (16,739) (2,055) (28,337) (2,985)
Balance, end of period $74,853 $30,021 $74,853 $30,021
SOURCE National Auto Credit, Inc.