Exhibit 99.1
------------
WATERSIDE CAPITAL CORPORATION
300 E. Main Street, Suite 1380
Norfolk, VA 23510
CONTACTS: Waterside Capital Corporation:
Gerald T. McDonald
Chief Financial Officer
757-626-1111 Ext. 309
info@watersidecapital.com
-------------------------
Waterside Announces Stock Repurchase Program and Earnings Release
NORFOLK, VA -- February 5, 2002 -- Waterside Capital Corp. (Nasdaq:WSCC), A
SMALL BUSINESS INVESTMENT CORPORATION (SBIC) today announced that its Board of
Directors had approved a stock repurchase program.
The company will repurchase up to two percent of its currently outstanding
common stock over the next year in open market and in privately negotiated
transactions. The repurchase program does not obligate Waterside to acquire any
particular number of shares and may be suspended at any time at the company's
discretion. President and Chief Executive Officer J. Alan Lindauer said, "The
company believes that a stock repurchase at the current market prices represents
an excellent use of cash resources to enhance value for our shareholders."
The company additionally announced that net operating loss was $39,000 or $0.02
per share for the second quarter of 2002 compared to income of $275,000 or $0.17
per share for the same period of the previous fiscal year. The net decrease in
stockholders' equity resulting from operations for the second quarter of fiscal
2002 (which includes operating income plus realized and unrealized gains and
(losses) on investments) was $1,968,000 or $1.24 per share compared to a loss of
$1,095,000 or $0.69 per share for the same period of fiscal 2001. The company
recognized numerous gains and losses during the quarter with a $1,043,000
unrealized gain recognized from the Delta Education's Systems, Inc. investment
and a $750,000 unrealized gain on the ISR Solutions, Inc. investment. These
gains were offset by write-downs on two investments consisting of $2,350,000 on
the JMS North America, Inc. investment and $1,350,000 on the DigitalSquare
investment. During the second quarter of 2002, the Company ceased recognizing
deferred tax benefits associated with the generation of net operating losses
from operations and its realized loss.
For the six months ended December 31, 2001, net operating income was $379,000 or
$0.24 per share compared to $656,000 or $0.42 per share reported for the six
months ended December 31, 2000. The net decrease in stockholders' equity
resulting from operations was a decrease of
1
$1,313,000 or $0.83 per share compared to a decrease of $1,423,000 or $0.90 per
share for the six months ended December 31, 2000. At December 31, 2001
Waterside's investment portfolio totaled $30.6 million compared with $33.7
million reported at June 30, 2001. Net asset value declined to $6.76 per share
at December 31, 2001 from the $7.59 per share reported June 30, 2001. Waterside
originated new investments of $2.7 million for the six months ended December 31,
2001 and received proceeds from the sales of various investments of $4.8 million
during the same six month period.
ABOUT WATERSIDE CAPITAL
Waterside Capital Corporation is a Small Business Investment Company (SBIC),
headquartered in Norfolk, Virginia with a portfolio of $30.6 million of
investments in twenty-nine companies located primarily in the Mid-Atlantic
region.
Visit Waterside's web site at www.watersidecapital.com
Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing are "forward-looking statements" (within
the meaning of the Private Securities Litigation Reform Act of 1995) that
involve a number of risks and uncertainties. It is possible that the assumptions
made by management--including, but not limited to, the average maturity of our
investments, the potential to realize investment gains as these investments
mature, investment opportunities, results, performance or expectations--may not
materialize. Actual results may differ materially from those projected or
implied in any forward-looking statements. In addition to the above factors,
other important factors including the risks associated with the performance of
the Company's portfolio companies, dependencies on key employees, interest
rates, the level of economic activity, and competition, as well as other risks
described from time to time in the Company's filings with the Securities
Exchange Commission, press releases, and other communications.
2
Waterside Capital Corporation
FINANCIAL SUMMARY
(in thousands except per share data)
- ----------------------------------------------------------------------------------------------------------------------
Statement of Operations data: Three Months Ended Six Months Ended
December 31, December 31,
2001 2000 2001 2000
------- ------- ------- --------
Total operating income $ 853 $ 939 $ 2,035 $ 2,032
Interest expense 527 495 1,050 958
Other operating expenses 289 339 606 737
------- ------- ------- -------
Net operating income before income taxes 37 105 379 337
Applicable income taxes 76 (170) - (319)
------- ------- ------- -------
Net operating income(loss) (39) 275 379 656
Realized gains/losses on investments,
net of income tax expense (223) - (1,317) -
Change in unrealized gains/(losses) on investments,
net of income tax expense (benefit) (1,706) (1,370) (375) (2,079)
------- ------- ------- -------
Net increase (decrease) in stockholders'
equity resulting from operations $(1,968) $(1,095) $(1,313) $(1,423)
======= ======= ======= =======
Per share data (basic):
Net operating income(loss) $ (0.02) $ 0.17 $ 0.24 $ 0.42
Net increase/ (decrease) in stockholders' equity
resulting from operations (1.24) (0.69) (0.83) (0.90)
Balance Sheet data:
At December 31, At June 30,
2001 2000 2001
------- ------- -------
Cash $ 3,706 $ 39 $ 1,089
Investment in portfolio companies at fair value:
Equity securities 17,964 22,643 23,147
Debt securities 7,705 8,908 6,514
Options and warrants 4,910 4,347 4,026
------- ------- -------
Total investments 30,579 35,898 33,687
Debentures and notes payable 25,400 23,150 25,400
Stockholders' equity 10,686 15,412 11,999
Net asset value per common share $ 6.76 $ 9.75 $ 7.59
3