U.S. Home Systems Reports Sale of Consumer Finance Portfolio.DALLAS -- U.S. Home Systems, Inc. (NasdaqNMS: USHS USHS United States Historical Society ) today reported that on November 2, 2006, First Consumer Credit, Inc. (FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. ), the consumer finance subsidiary of USHS, and FCC Acceptance Corp. (FCCA FCCA Florida-Caribbean Cruise Association FCCA Forestry Conservation Communications Association FCCA Fellow Member of the Association of Chartered Certified Accountants FCCA Federal Court Clerks Association FCCA Family Child Care Association ), a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of FCC, entered into a Purchase and Sale Agreement (Purchase Agreement) with FCC Investment Trust I (the "Trust"), an unaffiliated third party, in which FCC sold a substantial portion of its retail installment obligations ("RIOs") portfolio to the Trust for approximately $49.5 million, including accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. of $481,000. Prior to the sale of the RIOs to the Trust, FCC purchased RIOs from select home improvement contractors, including RIOs generated by USHS's U.S. Remodelers, Inc. subsidiary. FCC had utilized certain credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities to finance the purchase of RIOs which FCC held for investment. The credit facilities provided financing for 90% of the amount of the eligible RIOs purchased, with FCC providing the remaining 10%. Approximately $46.4 million of the proceeds from the sale of RIOs was utilized to pay off FCC's credit facilities, including a termination fee termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. of $280,000 and accrued interest of $67,000. Concurrent with the sale of RIOs, FCC entered into a Sourcing and Servicing Agreement (Sourcing Agreement) with the Trust whereby FCC will provide certain advisory, consultation, management and disposition services with respect to the ownership, management, servicing, marketing, collection and disposition of RIOs acquired by the Trust, including the RIOs acquired under the Purchase Agreement. Additionally, FCC will provide identification, credit analysis and other investment underwriting tasks and other related services to assist the Trust in evaluating and purchasing RIOs. "As a result of entering into the agreements with the Trust the business of FCC has changed from purchasing RIOs and holding them for investment to sourcing RIOs for the Trust and servicing the Trust's RIO portfolio," said Murray Gross, chairman, president and chief executive officer of US Home Systems, Inc. "After the sale FCC had remaining a RIO portfolio of approximately $900,000, which FCC will continue to service until they are sold or paid off." FCC has the right to purchase a non-owner economic participation interest in any RIO investment pool purchased by the Trust. FCC has agreed to a 4% non-owner economic participation interest in the 2006 investment pool of RIOs, inclusive of inclusive of prep. Taking into consideration or account; including. the RIO portfolio acquired by the Trust pursuant to the Purchase Agreement. FCC's non-owner economic participation interest investment was approximately $2,020,000. The non-owner economic participation interest entitles FCC to a preferred return on the investment equal to LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 3.5%, subject to a minimum return of 8%, as further defined in the Sourcing Agreement. After payment of the credit facilities, the non-owner economic participation interest investment and transaction related fees and expenses, FCC estimates that it will realize net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $2.0 million in connection with the transactions. Mr. Gross concluded, "We estimate that after write down of unamortized credit facility origination costs and other fees and expenses, FCC will recognize approximately $700,000 of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in the fourth quarter 2006 as a result of the transactions." About U.S. Home Systems, Inc. U.S. Home Systems, Inc. (www.ushomesystems.com) manufactures or procures, designs, sells and installs custom quality specialty home improvement products and provides financing services. The Company's home improvement products are marketed nationally under the The Home Depot The Home Depot (NYSE: HD) is an American retailer of home improvement and construction products and services. Headquartered in Vinings, just outside Atlanta in unincorporated Cobb County, Georgia, Home Depot employs more than 355,000 people and operates 2,164 big-box [R] Kitchen and Bathroom Refacing and The Home Depot Installed Decks brand. The Company's product lines include kitchen cabinet refacing products utilized in kitchen remodeling remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling , bathroom tub liners and wall surround products utilized in bathroom remodeling, wood decks and related accessories. The Company manufactures its own cabinet refacing products, bathroom cabinetry and wood decks. The Company's consumer finance business provides sourcing and servicing of retail installment obligations. This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on a number of assumptions, including expectations for continued market growth and anticipated revenue levels. Although the Company believes these assumptions are reasonable, no assurance can be given that they will prove correct. The Company's ability to continue to grow sales and to expand geographically and through new products and acquisitions will be key to its success in the future. If the industry's or the Company's performance differs materially from these assumptions or estimates, U.S. Home Systems' actual results could vary significantly from the estimated performance reflected in any forward-looking statements |
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