Credit Store Posts Profit for Quarter and Fiscal Year.SIOUX FALLS Sioux Falls, city (1990 pop. 100,814), seat of Minnehaha co., SE S.Dak., on the Big Sioux River; settled 1856, inc. as a village 1877, as a city 1883. Settlers abandoned the site in 1862 because of Native American raids, but with the establishment (1865) of Fort , S.D.--(BUSINESS WIRE)--Oct. 29, 1999-- The Credit Store, Inc. (EBB:PLCR) announced financial results for the fourth quarter and the year ended May 31, 1999. -0-
Fiscal Year 1999 Results
FY 1999 FY 1998
ended 5/31/99 ended 5/31/98
Total Revenues $41.71 million $13.29 million
Total Expenses $40.06 million $42.44 million
Income (Loss) Before Taxes $ 1.65 million $(29.15) million
Income Tax Benefit $ 1.98 million --
Net Income (Loss) $ 3.63 million $(29.15) million
Comprehensive Income $ 6.13 million $(29.15) million
Preferred Dividend $ 1.80 million $ 0.40 million
Net Income (Loss) Applicable
to Common Shareholders $ 1.83 million $(29.55) million
Net Income (Loss)
Per Common Share
Basic and Diluted $ 0.05 $ (0.89)
Weighted Average
Shares Outstanding
Basic 34,761,965 33,109,781
Diluted 38,436,119 33,109,781
Total Assets $45.99 million $ 40.18 million
Total Stockholders' Equity $12.30 million $(7.19) million
Revenues for the year ended May 31, 1999 (FY 1999) increased to $41.71 million from $13.29 million in FY 1998. The Company recorded net income of $3.63 million for the year versus a loss of $29.15 million in FY 1998. Comprehensive income, which included unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. from portfolio sales, was $6.13 million. The Company had no sources of comprehensive income in FY 1998. After requirements for preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) , income applicable to common shareholders was $1.83 million, or $0.05 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a loss of $29.55 million, or $(0.89) per basic and diluted share in FY1998. Profitability was achieved in FY 1999 through a combination of increased revenues from a maturing portfolio and reduced unit costs from an improved operating platform. The primary revenue driver was Revenues in Excess of Costs Recovered (ECR ECR Efficient Consumer Response ECR European Congress of Radiology ECR Electron Cyclotron Resonance ECR El Camino Real (Kings Highway; California) ECR Electronic Cash Register ECR East Coast Radio (South Africa) ), which increased from $8.04 million in FY 1998 to $21.95 million in FY 1999. As previously reported, the Company uses the cost recovery method to recognize the cost of acquiring non-performing consumer debt portfolios. Under cost recovery, the Company fully recovers the cost of an acquired portfolio through cash flow, before recognizing any revenue and income from that portfolio. In FY 1999, the Company realized $11.85 million in gains from the sale and securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. of portfolios. Income from credit card receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed increased 63%, from $3.95 million to $6.44 million. Servicing fees increased 21% from $1.29 million to $1.56 million. These revenue components combined to produce a three-fold increase in total revenues from $13.29 to $41.71 million. Total expenses in FY 1999 declined 6% from FY 1998, from $42.44 million to $40.06 million, as the Company moved beyond a startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. phase and as its operations became more efficient on a larger base of credit cards, driving unit costs lower. Overall operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (exclusive of interest expense and provision for losses) increased 1% from $31.19 million to $31.42 million. The provision for losses decreased 29% from $6.48 million to $4.61 million, based on a more seasoned portfolio of performing credit cards and to a lower average amount of owned receivables due to securitizations. Interest expense declined 15%, from $4.76 million to $4.03 million, primarily due to the lower average amount of debt, due to the conversion of subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". to preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , as previously reported. The above combined for a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profit of $1.65 million in FY 1999, versus a loss of $29.15 million during the previous fiscal year. The Company recorded a $1.98 million tax benefit during the fourth quarter 1999, which pushed Net Income for the full fiscal year to $3.63 million versus a loss of $29.15 million. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 130, "Reporting Comprehensive Income," the Company recorded a $2.5 million unrealized gain, net of taxes, on its retained interest Retained interest (also colloquially known as a payout penalty) is future, currently unpaid, interest that some lenders add to the remaining principal of a loan to determine a payout figure in the event that the loan is terminated before the completion of the original term. in the three securitizations as separate components of stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. and Comprehensive Income. The Company made several moves to strengthen the balance sheet during FY 1999. In August 1998, the Company converted $10 million in subordinated debt from a related party to a like amount of Series E convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". . In May 1999, the Company issued a warrant for 4 million common shares at $3.25 per share to a related party in exchange for $5 million of accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. but unpaid interest on subordinated debt, net of certain equipment and related leases from an affiliated mortgage company assumed during the year. The above transactions in combination with FY 1999 profits improved the Company's net worth position by almost $20 million, from a deficit of $7.19 million to a positive $12.30 million.
Fourth Quarter 1999 Results
3 months ended 3 months ended
5/31/99 5/31/98
Total Revenues $11.29 million $ 5.47 million
Total Expenses $ 9.85 million $ 11.00 million
Income Before Taxes $ 1.44 million $( 5.53) million
Tax Benefit $ 1.98 million --
Net Income (Loss) $ 3.42 million $( 5.53) million
Comprehensive Income $ 3.93 million $( 5.53) million
Preferred Dividend $ 0.50 million $ 0.10 million
Net Income (Loss) Applicable
to Common Shareholders $ 2.93 million $( 5.63) million
Net Income (Loss) Per Common Share
Basic and Diluted $ 0.08 $(0.17)
Weighted Average Shares Outstanding
Basic 34,761,965 33,109,781
Diluted 38,436,119 33,109,781
Revenues for the fourth quarter more than doubled from $5.47 million to $11.29 million, compared to the fourth quarter of FY 1998. Net Income was $1.44 million for the quarter versus a net loss of $5.53 million for the same period last year. Net income applicable to common shareholders, after requirements for preferred dividends, was $2.93 million, or $0.08 per basic and diluted share compared to a loss of $5.63 million, or $(0.17) per basic and diluted share in the fourth quarter of FY 1998. The Company completed a $6.2 million securitization of performing credit card receivables in the fourth quarter, as previously announced. The Company recorded a $2.93 million gain from the cash proceeds of the securitization and $0.50 million unrealized gain, which was recorded in Comprehensive Income. Also contributing to the increased revenue was a 63% increase in Revenues in Excess of Costs Recovered (ECR) from $3.99 million to $6.51 million. Expenses fell 12% for the same reasons discussed in the full-year results. In addition, there had been a one time expenses charged to earnings in the fourth quarter of FY 1998. At May 31, 1999, the Company owned or managed $78.67 million of performing credit card receivables compared to $78.41 million at May 31, 1998. The Company ended the fiscal fourth quarter with 65,925 cards under management, versus 60,852 cards at the end of fiscal 1998. Through May 31, 1999, the Company had made cumulative purchases of non-performing consumer debt of $2.9 billion compared with $1.96 billion at May 31, 1998. Management Commentary Martin J. Burke The name Burke (from Irish Gaelic de Burca, of Norman origin). In English the meaning of the name Burke is "fortified hill." See also Berkley. Places Australia
The practice of a company selling accounts receivables or other debts owed to it. The third party that buys the debt assumes ownership of it and the responsibility for collecting the debts, and keeps the repayments when made. and sell portfolios of performing credit card receivables during the year. The ability to sell and securitize portfolios unlocks the economic value we have created in these portfolios, represented by the cash proceeds from the portfolio sales far exceeding our cost basis in the related receivables." Accounting Procedures for Securitizations, the Effect of Adoption of SFAS 125 on FY 1999 Quarterly and Full-Year Results, and a Comment on 1Q FY2000. The Company adopted the use of Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of Financial Assets Financial assets Claims on real assets. and Extinguishments of Liabilities," in conjunction with its FY1999 audit, to account for the three securitizations of credit cards receivables that took place during the fiscal year. Under SFAS 125, the Company records the excess of cash proceeds over the remaining cost basis in the receivables as gain on the sale of portfolios. The Company carries a retained interest in the securitizations, which will allow them to receive additional cash flow over the life of the transaction. The present value of this additional cash flow, in excess of the alloted cost bases, is then recorded as a component of comprehensive income net of taxes, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. methods prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). in SFAS 130. The Company's previously-released interim financial results for the second and third fiscal quarters FY 1999 did not reflect the application of SFAS 125 for the two securitizations completed during those periods. Had SFAS 125 been adopted earlier in the fiscal year, the Company said that it would have reported revenue of $19.85 million, net income of $0.32 million, unrealized gain of $0.78 million, comprehensive income of $1.10 million, net loss applicable to common shareholders of $0.48 million, or $0.01 per share for the six month period ended November 30, 1998, compared to the previously reported revenue of $21.27 million, net income of $1.74 million, net income applicable to common shareholders of $0.94 million, or $0.03 per share. For the nine month period ended February 28, 1999,the Company says it would have reported revenue of $30.42 million, net income of $0.61 million, unrealized gain of $2.00 million, comprehensive income of $2.60 million, and $0.69 million of net loss applicable to common shareholders, or $0.02 per share, compared to the previously reported $33.62 million in revenue, $3.81 million of net income, $2.51 net income applicable to common shareholders, or $0.07 per share. Separately, the Company also noted that it follows the cost recovery method of accounting for its acquired portfolios of distressed consumer debt, as prescribed in AICPA AICPA See American Institute of Certified Public Accountants (AICPA). Practice Bulletin 6 and as discussed in previous releases. The use of the cost recovery method of accounting and the timing of portfolio sales and the securitization of receivables can cause revenues of the Company to fluctuate significantly from quarter to quarter and, as a result, the level of profit or loss may also fluctuate significantly from quarter to quarter as a matter of routine business. The Company noted that in the first quarter of FY 2000, which ended August 31, 1999, the Company did not securitize or sell any of its receivables. Additional FY 1999 Financial Data Available The audited Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and accompanying Notes for FY 1999 are available from the Company upon request. The Credit Store, Inc. is a nationwide financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company engaged in the acquisition and recovery of non-performing consumer receivables and the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and servicing of credit cards. The Company acquires portfolios of non-performing consumer receivables and originates new credit cards to those consumers who agree to pay all or a portion of the outstanding amount due on their debt. The new card is issued with an initial balance and credit line equal to the agreed repayment amount. After appropriate seasoning, The Credit Store seeks to sell or securitize the credit card receivables generated by its business strategy. This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risk and uncertainties. Risks and uncertainties include the availability and cost of financing, the availability of non-performing consumer debt portfolios for acquisition by the Company, the convertibility and collectibility of receivables, the risks associated with rapid growth, labor availability, and the uncertainties associated with completed and future securitization activities and receivable sales. Future trends, actions or results may differ materially from those discussed in this press release. |
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