N E W S R E L E A S E
Contact: Suzy W. Taylor
866-652-1810
FirstCity Financial (FCFC) Completes Sale of Drive Interest for $86.8 Million, and
Announces Third Quarter 2004 Earnings of $.25 Per Share
Highlights:
• | FirstCity has completed the sale of its 31% interest in Drive Financial Services LP and Drive GP LLC (collectively “Drive”)which will have an estimated positive impact to the Company’s fourth quarter earnings of $54.4 million or $4.60 per diluted share (based on weighted average diluted shares outstanding at September 30, 2004) | |||
• | FirstCity posted strong third quarter results, with earnings of $2.9 million, or $.25 per diluted share, bringing the year to date earnings to $11.1 million or $.94 per diluted share, as compared to 2003 year to date earnings of $.49 per diluted share. | |||
• | FirstCity has largest quarter in portfolio acquisition investments in its history, investing a total of $27.4 million. The year to date invested equity of $49.0 million, more than doubled the total investments of $22.9 million made during 2003. |
James T. Sartain, President and CEO of FirstCity said, “The completion of the Drive sale marks the culmination of FirstCity’s long term goal to return solely to the value investment business. The challenge ahead is to replace the Drive earnings. FirstCity believes it will be able to replace and grow earnings through reduced interest costs resulting from the reduction of debt, and by continuing to increase investments in portfolio purchases. We believe the opportunities for these investments are strong, both in the domestic and international marketplace. Considering our strong liquidity, highly motivated employee base and long time expertise, our outlook is very positive.”
Sale of Drive Interest
FirstCity completed the previously announced sale of its 31% interest in Drive and will recognize a gain of $54.4 million in the fourth quarter. The $86.8 million proceeds from the sale were primarily used to retire debt. As a result of the Drive sale, FirstCity and its senior lender are finalizing an increased revolving credit facility, which will have a maximum borrowing limit of $96 million as opposed to its current limit of $50 million.
Summary Sale information
(Dollars in millions)
Proceeds from Sale | $ | 86.8 | ||
FirstCity’s book value of Drive | (24.4 | ) | ||
Fees | (8.0 | ) | ||
Net profit impact of sale | $ | 54.4 |
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Third Quarter 2004 Results
The Company posted a strong quarter, with earnings of $2.9 million or $.25 per share on a fully diluted basis. For the nine months ended September 30, 2004, the Company has earned $11.1 million or $.94 per diluted share, as compared to prior year to date earnings of $ .49 per diluted share.
The effects of the Drive sale will be reflected in the fourth quarter results. However, because Drive represents the Consumer Lending Segment, which the Company is exiting, the Drive earnings for the third quarter were classified as “earnings from discontinued operations” in this release as well as the 10Q to be filed for the quarter. It should be noted that the gain of $54.4 million realized and the anticipated reduced interest costs, of course are not reflected in the third quarter. Therefore earnings from continuing operations as reflected in the third quarter financials are not a clear indicator of what earnings will be going forward.
Components of the results for the three and nine months ended September 30, 2004 and 2003, respectively, are detailed below (dollars in thousands except per share data):
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Portfolio Asset Acquisition and Resolution | $ | 3,638 | $ | 3,005 | $ | 10,127 | $ | 9,418 | ||||||||
Corporate interest | 978 | 1,269 | 3,004 | 3,629 | ||||||||||||
Corporate overhead | 1,708 | 1,387 | 4,051 | 3,849 | ||||||||||||
Earnings from continuing operations | 952 | 349 | 3,072 | 1,940 | ||||||||||||
Loss from discontinued mortgage operations | (950 | ) | — | (1,200 | ) | (420 | ) | |||||||||
Earnings from discontinued consumer operations | 2,906 | 1,491 | 9,184 | 4,118 | ||||||||||||
Preferred Dividends | — | — | — | (133 | ) | |||||||||||
Net earnings to common stockholders | $ | 2,908 | $ | 1,840 | $ | 11,056 | $ | 5,505 | ||||||||
Diluted earnings per common share | $ | 0.25 | $ | 0.16 | $ | 0.94 | $ | 0.49 | ||||||||
Proforma earnings from continuing operations | $ | 7,548 | ||||||||||||||
Proforma diluted earnings per common share from continuing operations | $ | 0.64 |
The proforma consolidated balance sheet and statement of operations on pages 9 and 10 illustrate the effects of the Drive sale as if it had occurred at the beginning of the year.
Portfolio Asset Acquisition and Resolution
FirstCity’s equity investment for the quarter of $27 million was the highest in the history of the company. On a year to date basis, the company has invested $49 million, which is more than twice that invested in the comparable period for 2003. The Company acquired six portfolios; four in the United States, one in Mexico and one in Argentina during the third quarter of 2004.
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Current and historical acquisitions and invested equity are detailed below:
Latin | Invested | |||||||||||||||||||
Domestic | Europe | America | Total | Equity | ||||||||||||||||
2004 | ||||||||||||||||||||
3rd Quarter | $ | 26.6 | $ | — | $ | 9.5 | $ | 36.1 | $ | 27.4 | ||||||||||
2nd Quarter | 34.9 | 9.8 | 40.7 | 85.4 | 18.5 | |||||||||||||||
1st Quarter | 6.5 | — | .2 | 6.7 | 3.1 | |||||||||||||||
Year to Date 2004 | $ | 68.0 | $ | 9.8 | $ | 50.4 | $ | 128.2 | $ | 49.0 | ||||||||||
2003 | ||||||||||||||||||||
4th Quarter | $ | 46.7 | $ | 11.1 | $ | — | $ | 57.7 | $ | 7.6 | ||||||||||
3rd Quarter | 39.3 | — | — | 39.3 | 3.9 | |||||||||||||||
2nd Quarter | 6.7 | 20.1 | 5.4 | 32.2 | 11.4 | |||||||||||||||
1st Quarter | — | — | — | — | — | |||||||||||||||
Total Year 2003 | $ | 92.6 | $ | 31.2 | $ | 5.4 | $ | 129.2 | $ | 22.9 | * | |||||||||
Total Year 2002 | $ | 61.4 | $ | 98.7 | $ | 11.7 | $ | 171.8 | $ | 16.7 | ||||||||||
* | The Company invested $3.4 million in partnerships during 2003 in addition to the acquisitions above. |
Operating contribution for the quarter was $3.6 million. The earnings are comprised of $8.8 million in revenues and $5.2 million of expenses. The business generated 53% of the revenues from domestic investments, 31% from investments in Latin America and 16% from investments in Europe. The major components of revenue for the quarter include equity earnings in Acquisition Partnerships and servicing entities of $3.7 million, servicing fees of $3.3 million, and interest income of $.9 million.
Operating contribution from the Portfolio Asset Acquisition business for the quarter includes net foreign currency gains of $469,000, comprised of $174,000 in Mexican peso gains and $295,000 of foreign currency gains related to cash collections of certain Euro investments. Quarterly results have been, and continue to be, impacted by fluctuations in foreign currencies. The following table details these impacts on corporate earnings (dollars in thousands):
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
Illustration of the Effects of Currency Fluctuations | 2004 | 2003 | 2004 | 2003 | ||||||||||||
Net earnings to Common Stockholders as reported | $ | 2,908 | $ | 1,840 | $ | 11,056 | $ | 5,505 | ||||||||
Mexican Peso gains (losses) | 174 | (1,040 | ) | (42 | ) | (513 | ) | |||||||||
Euro gains | 295 | 415 | 853 | 805 | ||||||||||||
Peso exchange rate at valuation date | 11.58 | 10.93 | ||||||||||||||
Euro exchange rate at valuation date | 0.82 | 0.86 |
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Consumer
Operating contribution for the quarter was $2.9 million, comprised of $3.7 million from the Company’s investment in Drive and $.8 million of interest, taxes and other expenses.
Discontinued Operations
The anticipated realizable value of the Company’s investment in discontinued mortgage operations decreased to $4.5 million, net of reserves of $216,000 at September 30, 2004. Additional provisions of $950,000 were required during the third quarter of 2004, primarily as a result of increased prepayment speed within the underlying pools during the quarter.
Payment of Dividend on New Preferred Stock
On September 30, 2004, the Company paid a regular quarterly dividend of $.525 per share on its New Preferred Stock (NASDAQ FCFCO). The dividend was paid to holders of record as of September 16, 2004. There are currently 126,291 shares of New Preferred Stock outstanding. The issue, which matures in September 2005, has a $21.00 per share liquidation preference and $2.10 per share annual dividend rate. The Company expects to make normal quarterly dividend payments of $.525 per share until the shares are retired.
Conference Call
The Company will host a conference call today. In the call, FirstCity management will discuss third quarter 2004 results, as well as the sale of the company’s 31% interest in Drive. Details are as follows:
Event: | FirstCity Financial Corporation Third Quarter 2004 Conference Call | |
Date: | Thursday, November 4, 2004 | |
Time: | 9:00 a.m. Central Time | |
Host: | James T. Sartain, FirstCity’s President and Chief Executive Officer | |
WebAccess: | FirstCity’s web page- www.fcfc.com/invest.htm, | |
CCBN’sInvestor websites- www.streetevents.com (subscribers only), | ||
www.fulldisclosure.com | ||
Dial In Access: | Domestic 800-261-3417 | |
International 617-614-3673 | ||
Pass code - 68746447 | ||
Replay | Domestic 888-286-8010 | |
International 617-801-6888 | ||
Pass code - 19428783 |
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Forward Looking Statements
Certain statements in this press release, which are not historical in fact, including, but not limited to, statements relating to future performance, may be deemed to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, performance or achievements, and may contain the words “expect”, “intend”, “plan”, “estimate”, “believe”, “will be”, “will continue”, “will likely result”, and similar expressions. Such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. There are many important factors that could cause the Company’s actual results to differ materially.
These factors include, but are not limited to, the performance of the Company’s subsidiaries and affiliates, availability of portfolio assets, assumptions underlying portfolio asset performance, risks associated with foreign operations, currency exchange rate fluctuations, interest rate risk, risks of declining value of loans, collateral or assets; the degree to which the Company is leveraged, the Company’s continued need for financing, availability of the Company’s credit facilities, the impact of certain covenants in loan agreements of the Company and its subsidiaries, the ability of the Company to utilize net operating loss carry forwards, general economic conditions, foreign social and economic conditions, changes (legislative and otherwise) in the asset securitization industry; fluctuation in residential and commercial real estate values, capital markets conditions, including the markets for asset-backed securities, uncertainties of any litigation arising from discontinued operations; factors more fully discussed and identified under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” risk factors and other risks identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC on March 30, 2004, as well as in the Company’s other filings with the SEC.
Many of these factors are beyond the Company’s control. In addition, it should be noted that past financial and operational performance of the Company is not necessarily indicative of future financial and operational performance. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements.
The forward-looking statements in this release speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.
The Company is a diversified financial services company with operations dedicated to portfolio asset acquisition and resolution with offices in the U.S. and with affiliate organizations in France and Mexico. Its common (FCFC) and preferred (FCFCO) stocks are listed on the NASDAQ National Market System.
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FirstCity Financial Corporation
Summary of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues: | ||||||||||||||||
Servicing fees from affiliates | $ | 3,328 | $ | 3,574 | $ | 10,076 | $ | 11,167 | ||||||||
Gain on resolution of Portfolio Assets | 601 | 112 | 838 | 1,079 | ||||||||||||
Equity in earnings of investments | 3,656 | 3,162 | 10,470 | 8,609 | ||||||||||||
Interest income from affiliates | 674 | 501 | 1,735 | 2,327 | ||||||||||||
Interest income — other | 229 | 98 | 365 | 443 | ||||||||||||
Other income | 454 | 545 | 2,236 | 1,161 | ||||||||||||
Total revenues | 8,942 | 7,992 | 25,720 | 24,786 | ||||||||||||
Expenses: | ||||||||||||||||
Interest and fees on notes payable to affiliates | 1,979 | 1,770 | 5,359 | 5,277 | ||||||||||||
Interest and fees on notes payable — other | 107 | 20 | 278 | 134 | ||||||||||||
Interest on shares subject to mandatory redemption | 66 | 66 | 199 | 66 | ||||||||||||
Salaries and benefits | 3,673 | 3,823 | 11,227 | 11,417 | ||||||||||||
Provision for loan and impairment losses | 1 | 23 | 23 | 1 | ||||||||||||
Occupancy, data processing, communication and other | 2,141 | 2,168 | 5,374 | 5,886 | ||||||||||||
Total expenses | 7,967 | 7,870 | 22,460 | 22,781 | ||||||||||||
Earnings from continuing operations before income taxes and minority interest | 975 | 122 | 3,260 | 2,005 | ||||||||||||
Income taxes | 11 | 195 | (145 | ) | (24 | ) | ||||||||||
Earnings from continuing operations before minority interest | 986 | 317 | 3,115 | 1,981 | ||||||||||||
Minority interest | (34 | ) | 32 | (43 | ) | (41 | ) | |||||||||
Earnings from continuing operations | 952 | 349 | 3,072 | 1,940 | ||||||||||||
Discontinued operations | ||||||||||||||||
Earnings from operations of discontinued components | 2,211 | 1,515 | 8,666 | 3,757 | ||||||||||||
Income taxes | (255 | ) | (24 | ) | (682 | ) | (59 | ) | ||||||||
Earnings from discontinued operations | 1,956 | 1,491 | 7,984 | 3,698 | ||||||||||||
Net earnings | 2,908 | 1,840 | 11,056 | 5,638 | ||||||||||||
Accumulated preferred dividends in arrears | — | — | — | (133 | ) | |||||||||||
Net earnings to common stockholders | $ | 2,908 | $ | 1,840 | $ | 11,056 | $ | 5,505 | ||||||||
Basic earnings per common share are as follows: | ||||||||||||||||
Earnings from continuing operations | $ | 0.09 | $ | 0.03 | $ | 0.28 | $ | 0.16 | ||||||||
Discontinued operations | 0.17 | 0.13 | 0.71 | 0.33 | ||||||||||||
Net earnings per common share | $ | 0.26 | $ | 0.16 | $ | 0.99 | $ | 0.49 | ||||||||
Wtd. avg. common shares outstanding | 11,236 | 11,204 | 11,223 | 11,203 | ||||||||||||
Diluted earnings per common share are as follows: | ||||||||||||||||
Earnings from continuing operations | $ | 0.08 | $ | 0.03 | $ | 0.26 | $ | 0.16 | ||||||||
Discontinued operations | 0.17 | 0.13 | 0.68 | 0.33 | ||||||||||||
Net earnings per common share | $ | 0.25 | $ | 0.16 | $ | 0.94 | $ | 0.49 | ||||||||
Wtd. avg. common shares outstanding | 11,837 | 11,371 | 11,816 | 11,259 |
Selected Unaudited Balance Sheet Data
September 30, | December 31, | |||||||
2004 | 2003 | |||||||
Cash | $ | 5,265 | $ | 2,745 | ||||
Portfolio assets, net | 33,631 | 4,525 | ||||||
Loans receivable | 19,445 | 17,313 | ||||||
Equity investments | 55,868 | 57,479 | ||||||
Deferred tax asset, net | 20,101 | 20,101 | ||||||
Service fees receivable and other assets | 8,482 | 8,159 | ||||||
Consumer assets held for sale | 36,773 | 15,667 | ||||||
Net assets of discontinued mortgage operations | 4,388 | 6,150 | ||||||
Total assets | $ | 183,953 | $ | 132,139 | ||||
Notes payable to affiliates | 101,641 | 72,628 | ||||||
Notes payable other | 4,211 | 2,432 | ||||||
Preferred stock | 2,652 | 3,846 | ||||||
Minority interest and other liabilities | 6,632 | 5,132 | ||||||
Liabilities from discontinued consumer operations | 30,096 | 19,132 | ||||||
Total liabilities | 145,232 | 103,170 | ||||||
Total equity | 38,721 | 28,969 | ||||||
Total liabilities and equity | $ | 183,953 | $ | 132,139 | ||||
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FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Portfolio Asset Acquisition and Resolution: | ||||||||||||||||
Summary Operating Statement Data | ||||||||||||||||
Revenues | $ | 8,815 | $ | 7,851 | $ | 25,249 | $ | 24,510 | ||||||||
Expenses | 5,176 | 4,823 | 15,099 | 15,091 | ||||||||||||
Operating contribution before provision for loan and impairment losses | 3,639 | 3,028 | 10,150 | 9,419 | ||||||||||||
Provision for loan and impairment losses | 1 | 23 | 23 | 1 | ||||||||||||
Operating contribution, net of direct taxes | $ | 3,638 | $ | 3,005 | $ | 10,127 | $ | 9,418 | ||||||||
Aggregate purchase price of portfolios acquired: | ||||||||||||||||
Acquisition partnerships | ||||||||||||||||
Domestic | $ | 26,586 | $ | 39,304 | $ | 68,072 | $ | 46,053 | ||||||||
Latin America | 9,467 | — | 50,267 | 5,400 | ||||||||||||
Europe | — | — | 9,837 | 20,055 | ||||||||||||
Total | $ | 36,053 | $ | 39,304 | $ | 128,176 | $ | 71,508 | ||||||||
Purchase | FirstCity's | |||||||
Historical Acquisitions - Annual: | Price | Investment | ||||||
2004 year to date | $ | 128,176 | $ | 48,982 | ||||
2003 | 129,192 | 22,944 | ||||||
2002 | 171,769 | 16,717 | ||||||
2001 | 224,927 | 24,319 | ||||||
2000 | 394,927 | 22,140 | ||||||
1999 | 210,799 | 11,203 |
September 30, | September 30, | |||||||
2004 | 2003 | |||||||
Portfolio acquisition and resolution assets by region: | ||||||||
Domestic | $ | 72,210 | $ | 40,515 | ||||
Latin America | 19,198 | 15,412 | ||||||
Europe | 18,490 | 20,069 | ||||||
Total | $ | 109,898 | $ | 75,996 | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues by region: | ||||||||||||||||
Domestic | $ | 4,686 | $ | 4,109 | $ | 13,035 | $ | 13,903 | ||||||||
Latin America | 2,751 | 1,869 | 7,613 | 7,089 | ||||||||||||
Europe | 1,378 | 1,873 | 4,601 | 3,518 | ||||||||||||
Total | $ | 8,815 | $ | 7,851 | $ | 25,249 | $ | 24,510 | ||||||||
Revenues by source: | ||||||||||||||||
Equity earnings | $ | 3,656 | $ | 3,162 | $ | 10,470 | $ | 8,609 | ||||||||
Servicing fees | 3,328 | 3,574 | 10,076 | 11,167 | ||||||||||||
Interest income — loans | 868 | 590 | 2,033 | 2,748 | ||||||||||||
Gain on sale of interest in equity investment | — | — | — | — | ||||||||||||
Gain on resolution of Portfolio Assets | 601 | 112 | 838 | 1,079 | ||||||||||||
Other | 362 | 413 | 1,832 | 907 | ||||||||||||
Total | $ | 8,815 | $ | 7,851 | $ | 25,249 | $ | 24,510 | ||||||||
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FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Analysis of Equity Investments in Acquisition Partnerships: | ||||||||||||||||
FirstCity’s Average investment in Acquisition Partnerships | ||||||||||||||||
Domestic | $ | 37,920 | $ | 34,186 | $ | 36,969 | $ | 33,483 | ||||||||
Latin America | 1,159 | 1,060 | 1,102 | 1,048 | ||||||||||||
Europe | 13,230 | 12,343 | 13,159 | 11,671 | ||||||||||||
Europe-Servicing subsidiaries | 4,549 | 3,777 | 4,549 | 3,641 | ||||||||||||
Total | $ | 56,858 | $ | 51,366 | $ | 55,779 | $ | 49,843 | ||||||||
FirstCity Share of Equity Earnings (Loss): | ||||||||||||||||
Domestic | $ | 2,420 | $ | 2,480 | $ | 6,963 | $ | 8,091 | ||||||||
Latin America | (71 | ) | (1,104 | ) | (849 | ) | (2,774 | ) | ||||||||
Europe | 1,157 | 1,631 | 3,730 | 2,818 | ||||||||||||
Europe-Servicing subsidiaries | 150 | 155 | 626 | 474 | ||||||||||||
Total | $ | 3,656 | $ | 3,162 | $ | 10,470 | $ | 8,609 | ||||||||
Selected other data: | ||||||||||||||||
Average investment in wholly owned portfolio assets and loans receivable: | ||||||||||||||||
Domestic | $ | 22,160 | $ | 6,014 | $ | 13,552 | $ | 7,921 | ||||||||
Latin America | 18,090 | 15,226 | 16,163 | 15,153 | ||||||||||||
Europe | 609 | 3,486 | 1,391 | 1,394 | ||||||||||||
Total | $ | 40,859 | $ | 24,726 | $ | 31,106 | $ | 24,468 | ||||||||
Income from wholly owned portfolio assets and loans receivable: | ||||||||||||||||
Domestic | $ | 863 | $ | 241 | $ | 1,309 | $ | 1,616 | ||||||||
Latin America | 600 | 414 | 1,513 | 2,147 | ||||||||||||
Europe | 6 | 47 | 49 | 64 | ||||||||||||
Total | $ | 1,469 | $ | 702 | $ | 2,871 | $ | 3,827 | ||||||||
Servicing fee revenues: | ||||||||||||||||
Domestic partnerships: | ||||||||||||||||
$ Collected | $ | 32,282 | $ | 24,171 | $ | 89,720 | $ | 88,865 | ||||||||
Servicing fee revenue | 1,192 | 1,121 | 3,453 | 3,703 | ||||||||||||
Average servicing fee % | 3.7 | % | 4.6 | % | 3.8 | % | 4.2 | % | ||||||||
Latin American partnerships: | ||||||||||||||||
$ Collected | $ | 26,352 | $ | 16,331 | $ | 61,447 | $ | 46,356 | ||||||||
Servicing fee revenue | 2,017 | 2,348 | 6,373 | 7,227 | ||||||||||||
Average servicing fee % | 7.7 | % | 14.4 | % | 10.4 | % | 15.6 | % | ||||||||
Incentive service fees | $ | 119 | $ | 105 | $ | 250 | $ | 237 | ||||||||
Total Service Fees: | ||||||||||||||||
$ Collected | $ | 58,634 | $ | 40,502 | $ | 151,167 | $ | 135,221 | ||||||||
Servicing fee revenue | 3,328 | 3,574 | 10,076 | 11,167 | ||||||||||||
Average servicing fee % | 5.7 | % | 8.8 | % | 6.7 | % | 8.3 | % | ||||||||
Servicing portfolio (face value) | ||||||||||||||||
Domestic | $ | 470,002 | $ | 384,476 | ||||||||||||
Latin America | 1,156,011 | 1,123,257 | ||||||||||||||
Europe | 851,080 | 864,153 | ||||||||||||||
Total | $ | 2,477,093 | $ | 2,371,886 | ||||||||||||
Number of personnel at period end: | ||||||||||||||||
Domestic | 62 | 58 | ||||||||||||||
Latin America | 137 | 178 | ||||||||||||||
Total personnel | 199 | 236 | ||||||||||||||
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FirstCity Financial Corporation
Pro Forma Consolidated Balance Sheet at September 30, 2004
(Dollars in thousands)
(Unaudited)
Pro Forma Adjustments | ||||||||||||||||||||
Historical | (A) | (B) | Other | Pro Forma | ||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 5,265 | $ | 86,800 | $ | (85,148 | ) | $ | (177) | (C) | $ | 6,740 | ||||||||
Portfolio Assets, net | 33,631 | — | — | — | 33,631 | |||||||||||||||
Loans receivable from Acquisition Partnerships held for investment | 19,445 | — | — | — | 19,445 | |||||||||||||||
Equity investments | 55,868 | — | — | — | 55,868 | |||||||||||||||
Deferred tax asset, net | 20,101 | — | — | — | 20,101 | |||||||||||||||
Service fees receivable from affiliates | 886 | — | — | — | 886 | |||||||||||||||
Other assets, net | 7,596 | — | (553 | ) | (27) | (C) | 7,016 | |||||||||||||
Drive assets held for sale | 36,773 | (30,502 | ) | �� | — | (6,271) | (D) | — | ||||||||||||
Net assets of discontinued operations | 4,538 | — | — | — | 4,538 | |||||||||||||||
Total Assets | $ | 184,103 | $ | 56,298 | $ | (85,701 | ) | $ | (6,475 | ) | $ | 148,225 | ||||||||
Liabilities: | ||||||||||||||||||||
Notes payable to affiliates | $ | 101,641 | $ | — | $ | (63,854 | ) | $ | — | $ | 37,787 | |||||||||
Notes payable other | 4,211 | — | (3,944 | ) | — | 267 | ||||||||||||||
Preferred stock subject to mandatory redemption | 2,652 | — | — | — | 2,652 | |||||||||||||||
Minority interest | 1,305 | — | — | — | 1,305 | |||||||||||||||
Liabilities from discontinued operations | 30,096 | (6,095 | ) | (16,001 | ) | 8,000 | ||||||||||||||
Other liabilities | 5,327 | — | (386 | ) | — | (C) | 4,941 | |||||||||||||
Total Liabilities | 145,232 | (6,095 | ) | (84,185 | ) | — | 54,952 | |||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Common stock | 112 | — | — | — | 112 | |||||||||||||||
Paid in capital | 99,288 | — | — | — | 99,288 | |||||||||||||||
Accumulated deficit | (62,716 | ) | 62,393 | (1,516 | ) | (204) | (C) | (8,314 | ) | |||||||||||
(6,271) | (D) | |||||||||||||||||||
Accumulated other comprehensive income | 2,187 | — | — | — | 2,187 | |||||||||||||||
Total Stockholders’ Equity | 38,871 | 62,393 | (1,516 | ) | (6,475 | ) | 93,273 | |||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 184,103 | $ | 56,298 | $ | (85,701 | ) | $ | (6,475 | ) | $ | 148,225 | ||||||||
(A) | Record proceeds of sale of FirstCity’s 31% interest in Drive. | |
(B) | Record $83.8 million pay down of debt and interest, payment of $1.3 million of debt fees to Bank of Scotland and write-off $1.3 million of unamortized loan fees relating to the paid off debt (net of $.7 million of new loan fees capitalized). | |
(C) | Record $204 thousand estimated closing costs less $27 thousand fees prepaid. | |
(D) | Record write-off remaining $6.3 million unamortized loan discount relating to $8.0 accrued participation liability owed to Bank of Scotland. |
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FirstCity Financial Corporation
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2004
(Dollars in thousands)
(Unaudited)
Pro Forma | ||||||||||||
Adjustments | ||||||||||||
Historical | (A) | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Servicing fees from affiliates | $ | 10,076 | $ | — | $ | 10,076 | ||||||
Gain on resolution of Portfolio Assets | 838 | — | 838 | |||||||||
Equity in earnings of investments | 10,470 | — | 10,470 | |||||||||
Interest income from affiliates | 1,735 | — | 1,735 | |||||||||
Interest income — other | 365 | — | 365 | |||||||||
Other income | 2,236 | — | 2,236 | |||||||||
Total revenues | 25,720 | — | 25,720 | |||||||||
Expenses: | ||||||||||||
Interest and fees on notes payable to affiliates | 5,359 | (4,476 | ) | 883 | ||||||||
Interest and fees on notes payable — other | 278 | — | 278 | |||||||||
Interest on shares subject to mandatory redemption | 199 | — | 199 | �� | ||||||||
Salaries and benefits | 11,227 | — | 11,227 | |||||||||
Provision for loan and impairment losses | 23 | — | 23 | |||||||||
Occupancy, data processing, communication and other | 5,374 | — | 5,374 | |||||||||
Total expenses | 22,460 | (4,476 | ) | 17,984 | ||||||||
Earnings from continuing operations before income taxes and minority interest | 3,260 | 4,476 | 7,736 | |||||||||
Provision for income taxes | (145 | ) | — | (145 | ) | |||||||
Earnings from continuing operations before minority interest | 3,115 | 4,476 | 7,591 | |||||||||
Minority interest | (43 | ) | — | (43 | ) | |||||||
Earnings from continuing operations | $ | 3,072 | $ | 4,476 | $ | 7,548 | ||||||
Earnings from continuing operations per common share are as follows: | ||||||||||||
Basic | $ | 0.28 | $ | 0.67 | ||||||||
Diluted | $ | 0.26 | $ | 0.64 | ||||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 11,223 | 11,223 | ||||||||||
Diluted | 11,816 | 11,816 |
(A) | To eliminate $4.5 million of additional interest and fees on notes payable that would not have been incurred if the transaction had been completed at the beginning of the period (interest savings from paydown of $67.8 million x average rate of 7.62% x .75 = $3,874 and amortization of loan fees of $602). |
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