-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LkazotTI/CMyF9vpcaTdCGYELQLNRJwaWGQCk6c0oRiaJLpZLlPow1XPR5rmfRdl 3xoo4vW3Jz8u24EeSwGcug== 0001005477-97-002070.txt : 19970815 0001005477-97-002070.hdr.sgml : 19970815 ACCESSION NUMBER: 0001005477-97-002070 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOINFO INC CENTRAL INDEX KEY: 0000351017 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 132867481 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11497 FILM NUMBER: 97661043 BUSINESS ADDRESS: STREET 1: 1600 ROUTE 208 CITY: FAIR LAWN STATE: NJ ZIP: 07410 BUSINESS PHONE: 2017030500 MAIL ADDRESS: STREET 1: 1600 ROUTE 208 CITY: FAIR LAWN STATE: NJ ZIP: 07410 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: June 30, 1997 Commission File Number: 0-14786 AUTOINFO, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-2867481 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification number) incorporation or organization) One Paragon Drive., Suite 255., Montvale, New Jersey 07645 - -------------------------------------------------------------------------------- (Address of principal executive office) (201) 930-1800 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES |X| NO |_| Number of shares outstanding of the registrant's common stock as of August 11, 1997: 8,018,752 shares of common stock, $.01 par value. AUTOINFO, INC. AND SUBSIDIARIES INDEX Part I. Financial Information: Item 1. Financial Statements: Page ---- Condensed Balance Sheets - June 30, 1997 (unaudited) and December 31, 1996.............3 Condensed Statements of Operations (unaudited)- Three and Six months ended June 30, 1997 and 1996...........4 Condensed Statements of Cash Flows (unaudited)- Six months ended June 30, 1997 and 1996.....................5 Notes to Unaudited Condensed Financial Statements...........6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................9 Part II. Other Information....................................................13 Signatures....................................................................14 Exhibit 11....................................................................15 2 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1997 1996 ------------- ------------ Unaudited Audited ASSETS Gross automobile receivables $ 129,315,763 $ 81,406,679 Unearned interest (32,618,143) (19,867,745) ------------- ------------ Net automobile receivables 96,697,620 61,538,934 Allowance for credit losses (15,207,260) (15,725,390) ------------- ------------ Net automobile receivables after allowance for credit losses 81,490,360 45,813,544 Cash 2,295,435 4,307,038 Restricted cash 5,572,576 6,380,437 Short-term investments 4,358,484 4,892,199 Fixed assets, net 2,091,833 1,725,774 Goodwill and other intangibles, net 2,810,851 2,906,587 Other assets 4,370,678 4,073,502 Income tax refund, receivable 3,483,731 4,352,000 ------------- ------------ $ 106,473,948 $ 74,451,081 ============= ============ LIABILITIES AND STOCKHOLDERS EQUITY Liabilities: Revolving lines of credit $ 57,919,969 $ 18,082,472 Automobile receivables backed notes 21,794,650 31,611,989 Subordinated notes and other debt 10,921,777 10,710,330 Accounts payable and accrued liabilities 1,601,405 1,718,901 ------------- ------------ Total liabilities 92,237,801 62,123,692 ------------- ------------ Stockholder's Equity Common stock - authorized 20,000,000 shares $.01 par value; issued and outstanding - 8,018,752 as of June 30, 1997 and 7,954,752 as of December 31, 1996 80,188 79,548 Additional paid-in capital 18,260,642 18,171,282 Officer note receivable (466,797) (466,797) Deferred compensation under stock bonus plan (376,851) (385,930) Retained earnings (deficit) (3,261,035) (5,070,714) ------------- ------------ Total stockholder's equity 14,236,147 12,327,389 ------------- ------------ $ 106,473,948 $ 74,451,081 ============= ============
See notes to condensed unaudited financial statements 3 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) Six Months Ended Three Months Ended June 30, June 30, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenues: Interest and other finance revenue $ 9,394,830 $ 5,078,038 $ 5,143,587 $ 2,747,467 Investment income 213,537 515,019 151,933 230,613 Long distance telephone services 177,646 280,149 85,585 137,083 ----------- ----------- ----------- ----------- Total revenues 9,786,013 5,873,206 5,381,105 3,115,163 ----------- ----------- ----------- ----------- Costs and expenses: Interest expense 3,547,779 1,670,531 1,978,381 848,972 Operating expenses 4,830,641 2,757,521 2,506,824 1,542,832 Depreciation & amortization 319,584 489,123 167,513 252,460 Unusual item-provision for credit losses on acquired automobile receivables -- 2,000,000 -- 2,000,000 ----------- ----------- ----------- ----------- Total operating expenses 8,698,004 6,917,175 4,652,718 4,644,264 ----------- ----------- ----------- ----------- Income(loss) before income tax benefit 1,088,009 (1,043,969) 728,387 (1,529,101) Income tax benefit (721,670) (506,467) (833,108) (590,050) ----------- ----------- ----------- ----------- Net income (loss) $ 1,809,679 $ (537,502) $ 1,561,495 $ (939,051) =========== =========== =========== =========== Net income (loss) per share $ .22 $ (.07) $ .19 $ (.12) =========== =========== =========== =========== Weighted average number of common and common ----------- ----------- ----------- ----------- equivalent shares 8,047,000 7,885,000 8,081,000 7,987,000 ----------- ----------- ----------- -----------
See notes to condensed unaudited financial statements 4 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, 1997 1996 ------------ ------------ Cash flows from operating activities: Net income (loss) $ 1,809,679 $ (537,502) Adjustments to reconcile net income to net cash provided by (used in) operations activities: Depreciation and amortization 319,584 489,123 Amortization of deferred compensation 9,081 9,081 Changes in assets and liabilities: Automobile receivables, net (35,676,816) (13,900,203) Other assets (297,176) (1,107,739) Income tax refund receivable 868,269 (540,041) Accounts payable and accrued liabilities (117,498) (506,468) ------------ ------------ Net cash (used in) operating activities (33,084,877) (16,093,749) ------------ ------------ Cash flows from investing activities: Capital expenditures (589,907) (1,229,431) Proceeds from redemptions of short term investments 6,416,358 21,717,616 Purchases of short term investments (5,882,643) (7,912,141) ------------ ------------ Net cash (used in) provided by investing activities (56,192) 12,576,044 ------------ ------------ Cash flows from financing activities: Increase in borrowings 30,231,605 3,750,948 Issuance of common stock 90,000 390,375 Decrease in restricted cash 807,861 -- ------------ ------------ Net cash provided by financing activities 31,129,466 4,141,323 ------------ ------------ Net (decrease) increase in cash (2,011,603) 623,618 Cash at beginning of period 4,307,038 964,842 ------------ ------------ Cash at end of period $ 2,295,435 $ 1,588,460 ============ ============
See notes to condensed unaudited financial statements 5 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 1. - Business and Summary of Significant Accounting Policies Business The Company's primary business is to purchase non-prime automobile retail installment contracts from new and used automobile dealers. The Company services these dealers through CarLoanCo, its wholly owned operating subsidiary, by providing specialized financing programs for buyers who typically have impaired credit histories and are unable to access traditional sources of available consumer credit. In December 1995, the Company acquired the operating assets of FALK Finance Company ("FFC"), a Norfolk Virginia based specialty financial services company. The Company also provides long distance telephone communication services which are marketed through an independent commissioned sales force. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. Automobile Receivables Automobile receivables represent retail installment sales contracts purchased from automobile dealers at discounts ranging up to 20%. Allowance for Credit Losses The Company established an allowance for credit losses in the FFC acquired portfolio as of the date of acquisition based upon an evaluation of a number of factors including prior loss experience, contractual delinquencies, the value of underlying collateral and other factors. At the time of the purchase of installment contracts from dealers an allowance for credit losses is established based on an analysis of similar factors. The allowance is periodically evaluated for adequacy based upon a review of credit loss experience, delinquency trends, static pool loss analysis and an estimate of future losses inherent in the existing finance receivable portfolio. Subsequent to the purchase of loans, a provision for losses, if any, is charged to income in order to maintain the allowance at an adequate level. The Company charges the allowance for loss account at the time a customer receivable is deemed uncollectable. Any reduction in the required allowance will be amortized to income prospectively as an adjustment in the yield on the related loans. The estimate of the allowance for credit losses requires a high degree of judgment based upon, among other things, the inherent risk associated with the portfolio of loans being purchased from dealers. Changes in estimates and additional losses on portfolios could develop in the future based on changes in economic factors and other circumstances and such changes could be significant. The Company estimates and records losses as they become apparent, estimable and probable. Concentration of Credit Risks The Company's primary credit risk relates to lending to individuals who cannot obtain traditional forms of financing. The Company is currently acquiring automobile receivables in 13 states and, accordingly, does not believe that its business is subject to credit risk with respect to geographic concentration. 6 Repossessed Vehicles Held for Sale The Company repossesses the collateral when a determination is made that collection efforts are unlikely to be successful. The value of a repossessed vehicle is based upon an estimate of the net realizable amount upon liquidation. As of June 30, 1997, there were 415 repossessed vehicles held for resale with an aggregate value of approximately $1,162,000. Revenue Recognition The Company recognizes interest income from automobile receivables on the interest method. The accrual of interest income is suspended when a loan is ninety days contractually delinquent. All discounts on the purchase of installment contracts from dealers are held in reserve and are considered to cover future anticipated credit losses. Short-Term Investments Debt and equity securities used as part of the Company's investment management that may be sold in response to cash needs, changes in interest rates, and other factors have been classified as securities available for sale. Such securities are reported at cost which approximates fair value and have maturities of less than one year and included: June 30, December 31, 1997 1996 ---------- ------------ Common stock and bond funds $2,456,541 $2,883,524 Money market instruments 958,887 665,619 Municipal bonds 943,056 1,343,056 ========== ========== $4,358,484 $4,892,199 ========== ========== Gains and losses on disposition of securities are recognized on the specific identification method in the period in which they occur. Unrealized gains and losses, if material, would be excluded from earnings and reported as a separate component of stockholders' equity on an after-tax basis. During the three and six month periods ended June 30, 1997 and 1996, gains and losses arising from the disposition of marketable securities as well as unrealized gains and losses were not material. Fixed Assets Depreciation of fixed assets is provided on the straight-line method over the estimated useful lives of the related assets which range from three to five years. Goodwill and Other Intangibles The excess of cost over the fair value of net assets acquired is allocated to goodwill and other intangibles and is being amortized using the straight-line method over periods of up to twenty years. In March 1995, the Financial Accounting Standards Board issued SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of." The pronouncement is effective for fiscal years beginning after December 15, 1995. This statement requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company currently uses methods that are consistent with SFAS No. 121 to evaluate the carrying amount of goodwill and other intangibles including comparing estimated future cash flows identified with each long-lived asset group. For purposes of such comparison, portions of unallocated excess of cost over net assets acquired were attributed to related long-lived assets and identifiable intangible assets based upon the relative fair values of such assets at acquisition. In the fourth quarter of 1996, the Company determined that certain components of goodwill and other intangible assets were impaired resulting in a charge to operations of $11,193,000. 7 Net Income (Loss) Per Share Net income (loss) per share of common stock is based on the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The net income (loss) per share and the weighted average number of common and common equivalent shares represent primary earnings per share data. Fully diluted earnings per share is not presented since its effect is not significant. Use of Estimates The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Management estimates that are particularly sensitive to change relate to the determination of the adequacy of the allowance for credit losses on automobile receivables. The Company believes that all such assumptions are reasonable and that all estimates are adequate, however, actual results could differ from those estimates. Note 2 - General The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 1997 and 1996 are not necessarily indicative of the results that may be expected for a full fiscal year. For further information, refer to the financial statement and footnotes thereto included in the Company's report on Form 10-K for the year ended December 31, 1996. 8 AUTOINFO, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition And Results of Operations Forward Looking Statements Certain statements made in this Quarterly Report on Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the Company's early stage operations, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. General The Company, since December 1995, has been a specialized consumer finance company that acquires and services automobile receivables from automobile dealers selling new and used vehicles to non-prime customers. Results of Operations Three and Six Months Ended June 30, 1997 and 1996 Revenues Revenues for the three month periods ended June 30, 1997 and 1996 were derived from the interest and other finance revenue ($5,144,000 and $2,747,000, respectively), investment income ($152,000 and $231,000, respectively) and the long-distance telephone service business ($86,000 and $137,000, respectively). Revenues for the six month periods ended June 30, 1997 and 1996 were derived from the interest and other finance revenue ($9,395,000 and $5,078,000, respectively), investment income ($213,000 and $515,000, respectively) and the long-distance telephone service business ($178,000 and $280,000, respectively). The increase in the interest and other finance revenue is directly related to the growth in the Company's portfolio of automobile receivables from $47,326,000 to $96,698,000. The decrease in investment income is the result of the investment by the Company in the growth of the automobile receivables portfolio. Net Interest Income on Automobile Installment Contracts Receivable The Company's principal revenue source is the net interest income, or net spread, earned on its automobile installment contracts receivable. This net spread is the differential between interest income received on loans receivable and the interest expense on related loans payable. The following table summarizes the pertinent data on the Company's automobile contracts receivable portfolio for the three and six month periods ended June 30, 1997 and 1996: 9
Six Months Ended June 30, Three Months Ended June 30, 1997 1996 1997 1996 ------------- ----------- ------------- ----------- Average loans receivable $ 76,245,000 $38,071,000 $ 85,270,000 $42,089,000 ------------- ----------- ------------- ----------- Average loans payable 71,350,000 30,687,000 78,870,000 31,185,000 ------------- ----------- ------------- ----------- Interest income $ 8,261,000 $ 4,870,000 $ 4,449,000 $ 2,611,000 Interest expense 3,472,000 1,595,000 1,941,000 811,000 ------------- ----------- ------------- ----------- Net interest income $ 4,789,000 $ 3,275,000 $ 2,509,000 $ 1,800,000 ------------- ----------- ------------- ----------- Yield on loans (1) 21.7% 25.6% 20.8% 24.8% Cost of funds 9.7% 10.4% 9.8% 10.4% ------------- ----------- ------------- ----------- Net interest spread 12.0% 15.2% 11.1% 14.4% ------------- ----------- ------------- ----------- Net interest margin (2) 12.6% 17.2% 11.7% 17.1% ------------- ----------- ------------- -----------
(1) Percentages are presented on an annualized basis (2) Net interest margin is net interest income divided by average loans outstanding Costs and Expenses Interest expense for the three month periods ended June 30, 1997 and 1996 ($1,978,000 and $849,000, respectively) and for the six month periods ended June 30, 1997 and 1996 ($3,548,000 and $1,671,000, respectively) was primarily related to the debt outstanding under the Company's senior credit facility, automobile receivables backed notes and subordinated debt. The increase is directly related to the increase in total outstanding debt utilized to support the growth of the automobile receivables portfolio. Operating expenses for the three months ended June 30, 1997 and 1996 ($2,507,000 and $1,543,000, respectively) and for the six months ended June 30, 1997 and 1996 ($4,831,000 and $2,758,000, respectively) consisted primarily of the operating expenses of the non-prime automobile finance business and corporate overhead. The increase is directly related to the opening of the Northeast Region operating center in July 1996 and the general growth of the Company's automobile finance business. Depreciation and amortization expense for the three months ended June 30, 1997 and 1996 ($168,000 and $252,000, respectively) and for the six months ended June 30, 1997 and 1996 ($320,000 and $489,000, respectively) consisted primarily of the depreciation of fixed assets and the amortization of goodwill and other intangible assets associated with the acquisition of FFC in December 1995. The decrease is the result of the write-off of goodwill in the fourth quarter of 1996. The Unusual item - provision for credit losses on acquired automobile receivables in the quarter ended June 30, 1996 was the result of the Company recording additional credit losses of $2,000,000 on the portfolio acquired from FFC in December 1995. Income (Loss) from Operations Income (loss) from operations for the three month periods ended June 30, 1997 and 1996 was $728,000 and ($1,529,000), respectively. Income (loss) from operations for the six month periods ended June 30, 1997 and 1996 was $1,088,000 and ($1,044,000), respectively. Income tax benefits for the three month periods ended June 30, 1997 and 1996 were $833,000 and $590,000, respectively. Income tax benefits for the six month periods ended June 30, 1997 and 1996 were $722,000 and $506,000, respectively. Income tax benefits are primarily the result of timing differences in the treatment of net chargeoffs for tax purposes. 10 Automobile Receivables The following table provides information regarding the Company's allowance for credit losses as of June 30, 1997 and December 31, 1996: June 30, December 31, 1997 1996 ----------- ------------ Allowance for credit losses $15,207,000 $ 15,725,000 Percentage of outstanding automobile receivables 15.7% 25.5% The following table summarizes the Company's delinquent accounts that were more than 60 days delinquent as of June 30, 1997 and December 31, 1996: June 30, December 31, 1997 1996 --------------------------------------- Amount % (1) Amount % (1) --------------------------------------- 60 to 89 days delinquent $3,102,000 2.4% $3,290,000 4.1% 90 days or more delinquent 1,620,000 1.3% 1,739,000 2.2% --------------------------------------- Total delinquent loans $4,722,000 3.7% $4,744,000 6.3% ======================================= (1) All percentages are based on gross loans outstanding and are presented on an annualized basis. Management has reviewed its past due loans and repossessed collateral as of June 30, 1997 and, in management's opinion, the allowance for credit losses is adequate to absorb losses in the portfolio. Liquidity and Capital Resources Since its entry into the Non-Prime Automobile industry in December 1995, the Company has funded its operations with payments received from automobile receivables, borrowings under senior credit facilities and the issuance of asset backed secured notes. In October 1996, the Company issued $36.3 million of securitized notes backed by $40.3 million of automobile receivables to a group of institutional investors in a private placement transaction. These notes were issued in two classes, $ 34.3 million of 6.53% Class "A" notes rated "AAA" by Standard & Poor's Rating Group and "Aaa" by Moody's Investors Service and $ 2.0 million of 11.31% Class "B" notes rated "BB" by Standard & Poor's Rating Group. The Class "A" notes were credit enhanced with an insurance policy issued by MBIA Insurance Corporation. The proceeds from the securitization were used to fund cash reserve accounts ($5.6 million) and the balance was used to reduce the amount outstanding under the Company's senior credit facility. Among other provisions, the notes require the maintenance of certain performance standards with respect to the portfolio of loan contracts securitized and certain overall financial considerations of the Company as a whole, including not realizing a net loss from operations in any two consecutive quarters and maintenance of minimum tangible net worth, as defined, of $7 million. At June 30, 1997 the Company was in compliance with all covenants. The Company expects to maintain compliance with these covenants through 1997 and beyond. In December 1996, the Company entered into a financing agreement with a lender which provides for a $100 million line of credit to be used for the funding of the acquisition of non-prime automobile receivables. This facility provides for borrowings at LIBOR plus 300 basis points and replaced the Company's existing $42 million facility. Among other provisions, this facility requires the Company to maintain tangible net worth, as defined, of $10 million and is cancelable in the event of a material adverse change in the Company's business. At June 30, 1997 the 11 Company was in compliance with all covenants. The Company expects to maintain compliance with these covenants through 1997 and beyond. The Company has outstanding $10.2 million of subordinated debt. Of this amount, $8.2 million of 12% notes was included with the liabilities assumed with the acquisition of FALK Finance Company, Inc. ("FFC") in December 1995 and $2.0 million of 7.55% notes was issued by the Company in 1994. The Company's liquid assets amounted to $6.7 million as of June 30, 1997. In addition, the Company had $5.6 million in Restricted Cash Reserve accounts established pursuant to the Indenture Agreement executed in conjunction with the issuance of Securitized Notes issued pursuant to the Private Placement Memorandum dated October 11, 1996. The total amount of debt outstanding as of June 30, 1997 and December 31, 1996 was $90.6 million and $60.4 million, respectively. This following table presents the Company's debt instruments and weighted average interest rates on such instruments as of June 30, 1997 and December 31, 1996, respectively: June 30, 1997 December 31, 1996 ------------- ----------------- Weighted Weighted Average Average Balance Rate Balance Rate ------- ---- ------- ---- Revolving lines of credit $57.9 8.69% $18.1 8.75% Automobile receivable backed notes $21.8 6.97% $31.6 6.75% Subordinated debt $10.2 11.14% $10.2 11.14% The Company's ability to continue to acquire automobile receivables as well as plan for future expansion is directly related to its ability to secure required capital. The Company has demonstrated the ability to secure warehouse lines of credit, issue receivable secured notes and obtain subordinated debt. The Company plans to continue to meet its capital needs through the cash flow generated from the payment of principal and interest on its outstanding automobile portfolio, the utilization of its senior credit facility, the issuance of receivable backed notes and the issuance of subordinated debt instruments. As of June 30, 1997, $42.1 million is available under the Company's senior credit facility. The Company believes that it has sufficient liquid assets and available lines of credit to meet its short and long-term capital requirements. The Company is primarily engaged in the acquisition of automobile receivables. It finances this acquisition program through the utilization of available lines of credit and other forms of debt. Accordingly, an increase in the cost of borrowing could adversely impact the results of operations by impacting the spread between interest earned on existing automobile receivables and the cost of borrowings which, to some degree, are variable. Inflation and changing prices had no material impact on revenues or the results of operations for the three and six months ended June 30, 1997. 12 AUTOINFO, INC. AND SUBSIDIARIES Part II - OTHER INFORMATION Item 1 - 3: Inapplicable Item 4: Submission of Matters to a Vote of Security Holders: Pursuant to a Notice of Annual Meeting of Stockholders and the Proxy Statement dated April 22, 1997, the 1997 Annual Meeting of Stockholders of the Company was held on May 22, 1997. At the Annual Meeting the following individuals were elected by an affirmative vote of approximately 85% of the common shares eligible to vote in person or by proxy as directors of the Company: Jason Bacher, Robert Fagenson, Andrew Gaspar, Howard Nusbaum, Jerome Stengel and Scott Zecher. In addition, the Company's 1997 Stock Option Plan was approved (3,221,305 votes in favor, 2,600,932 opposed and 25,788 abstentions) and the Company's 1997 Non-Employee Directors' Stock Option Plan was approved (3,564,559 votes in favor, 2,301,561 opposed and 24,988 abstentions). Item 5: Inapplicable Item 6 (a): The following exhibits are filed with this report: Exhibit 11 - Calculation of Earnings Per Share Item 6 (b): No reports on Form 8-K were filed by the Registrant during the quarter for which this report is filed. 13 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized. AUTOINFO, INC. (Registrant) /s/ Scott Zecher ----------------------------------- Scott Zecher President & Chief Executive Officer /s/ William I. Wunderlich ----------------------------------- William I. Wunderlich Treasurer, Secretary and Principal Financial Officer Date: August 13, 1997 14 EX-11 2 CALCULATION OF EARNINGS PER SHARE Exhibit 11 AUTOINFO, INC. AND SUBSIDIARIES Calculation of Earnings Per Share
Six Months Ended Three Months Ended June 30, June 30, 1997 1996 1997 1996 ---------- ----------- ---------- ----------- Primarily and fully diluted earnings: Earnings from operations applicable to common stock $1,809,679 $ (537,502) $1,561,495 $ (939,051) ---------- ----------- ---------- ----------- Shares: Weighted average number of common shares outstanding 8,007,730 7,885,487 8,018,752 7,987,088 Add shares issuable from assumed exercise of options and warrants 40,131 -- 62,444 -- ---------- ----------- ---------- ----------- Weighted average number of common shares as adjusted 8,047,861 7,885,487 8,081,196 7,987,088 ---------- ----------- ---------- ----------- Primary and fully diluted earnings per common share: $ .22 $ (.07) $ .19 $ (.12) ---------- ----------- ---------- -----------
15 EX-27 3 ART. 5 FDS FOR THE 2ND QUARTER 10-Q
5 1 U.S. DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1.000 7,868,011 4,358,484 96,697,620 (15,207,260) 0 101,571,264 2,663,052 (571,219) 106,473,948 1,601,405 90,636,396 80,188 0 0 14,155,959 106,473,948 9,786,013 9,786,013 0 0 5,150,225 0 3,547,779 1,088,009 (721,670) 1,809,679 0 0 0 1,809,679 0.220 0.220
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