Exhibit 99.2
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 1
ASTA FUNDING, INCORPORATED
MODERATOR: GARY STERN
NOVEMBER 23, 2004
10:00 AM CT
Operator: Good morning. My name is (Deshanta) and I will be your
conference facilitator today. At this time, I would like
to welcome everyone to the Asta Funding Fourth Quarter and
Year End Conference Call. All lines have been placed on
mute to prevent any background noise. After the speakers'
remarks, there will be a question and answer period. If
you would like to ask a question during this time simply
press star then the number 1 on your telephone keypad. If
you would like to withdraw your question press the pound
key. Thank you.
Steve Axelrod, of Wolfe Axelrod Weinberger Associates, you
may begin your conference.
Stephen Axelrod: Thank you very much, Operator. Good morning once again,
and thank you all for joining us for Asta Funding's
quarterly conference call to discuss the fourth quarter
and year end results ended September 30, 2004. By now, all
of you should have had the opportunity to review the Press
Release discussing the financial results but if you have
not, please call Wolfe Axelrod Weinberger Associates at
212-370-4500 and we will immediately send it to you either
by fax or by email.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 2
Before I ask our host, Gary Stern, CEO of Asta Funding, to
discuss the current results, let me take a few minutes to
read the forward-looking statements.
Except for historical information contained herein, the
matters set forth in this conference call are
forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Although Asta
Funding, Inc. believes the expectations reflected in such
forward looking statements are based upon reasonable
assumptions there can be no assurance that its
expectations will be realized.
Forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ
materially from Asta Funding, Inc.'s expectations. Factors
that can contribute to such differences include those
identified in Asta Funding's Form 10-K for the fiscal year
ended September 30, 2003, and those described from time to
time in Asta Funding Inc.'s other filings with the
Securities and Exchange Commission, news releases and
other communications, including that Asta may not be able
to purchase consumer receivable portfolios at favorable
prices or on sufficiently favorable terms or at all and
may not be able to continue its quarterly dividend
program.
Asta Funding Inc.'s reports with the Securities and
Exchange Commission are available free of charge through
its Web site at www.AstaFunding.com. And having said that,
let me turn the call over to Gary Stern, President and
Chief Executive Officer of Asta Funding. Gary.
Gary Stern: Thank you, Steve. Good morning, everyone. Before I begin
with my formal remarks, I would like to publicly introduce
Asta's new CFO, Mitchell Cohen. (Mitch) has over 23 years'
experience, including being the CFO of other publicly held
corporations. We welcome him to the Asta team.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 3
Fiscal 2004 was a busy and rewarding year for Asta. Our
revenue on earnings grew substantially and has been fueled
by the growth of our book of business over the last two
years. For the fourth quarter and fiscal year ended
September 30, 2004, we purchased consumer receivable
portfolios with aggregate charge off balances or face
value of approximately $1.4 billion and $2.8 billion and
aggregate cost of $48.1 million and $104.4 million,
respectively.
In addition, fiscal 2005 is off to a great start as we
approach its $509 million in face value of consumer
receivable of portfolios for approximately $18.5 million
in costs to Asta. The majority of our purchases in the
last fiscal year were from credit card portfolios with 80%
of purchases during the year coming from credit card debt
and the remaining 20% coming from telecom. We have seen an
increase in the amount of telecom paper available for
purchase and we have been successful in buying this paper
recently. Although we expect credit card and telecom debt
to remain the bulk of our business, we will not shy away
from new opportunities that fit into our disciplined
purchasing criteria.
With that said, I like to briefly comment on how we view
the current state of debt buying as it relates to Asta
Funding.
First, we are very pleased with the level of portfolio
purchases in recent months and continue to review
opportunities to make additional acquisitions. The price
we are willing to pay for receivables is strictly driven
by our expected returns and we will continue with this
disciplined approach. Deal flow has picked up slightly
since earlier this year. It is important to remember that
pricing is one factor in this business but the quality of
the paper is just as important.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 4
In addition, it is important to remember that if the
economy improves, so does the ability of debtors to pay,
enhancing the returns on our existing book of business. Of
course, we cannot predict the future of the economy or
interest rate changes. We believe that the pipeline of
paper remains generally strong as seen by our recent
purchases and we continue to cultivate our sourcing
capabilities. Our balance sheet continues to be strong. At
the end of the fourth quarter and fiscal year, our capital
structure remained very sound with $114.5 million of
shareholders equity and $20.6 million of unused credit
facilities, leaving Asta with the necessary resources and
flexibility to move swiftly and opportunistically as may
be necessary.
Now I will turn the call over to Mitchell Cohen, our CFO,
to take you through Asta's financial reports. (Mitch).
Mitchell Cohen: Thank you guys for the warm welcome. I'm excited about
Asta's future and I'm glad to be part of the team. I'm
pleased to announce that Asta Funding has continued its
outstanding performance through its fiscal fourth quarter,
reporting record revenues in the earnings for the quarter
and the year ended September 30, 2004.Asta reported record
revenues for the quarter of 14.8 million, a 32% increase
over the revenues of 11.2 million for the fourth quarter
of fiscal '03. This was driven by strong collections of
27.9 million in the quarter, more than 45% increase in the
collections over this period -- over the prior period of
19.1 million.
For the year, Asta recorded or reported record revenues of
51.2 million, a 46.7% increase over the revenues of 34.9
million from fiscal 2003. This was driven by strong cash
collections of 112.1 million in the year, a more than 35%
increase from the prior year of 82.3 million. Of course of
those collections 17.1, million were from fully amortized
pools up from 14.8 million in the prior year. It should be
noted that it is difficult to gauge what percentage of
collections will come from fully amortized pools, and you
should not infer anything from this report for future
results.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 5
Total expenses, excluding interest, increased at 3.6
million as compared to the quarter -- to a year ago
quarter up from 3.5 million in the same quarter one year
ago which included 1.1 million of third party servicing,
an expense which is now absent from the current quarter.
Asta continues to have tight controls as most expenses
remain relatively fixed, another benefit to the
outsourcing model that we have.
As a result of excellent revenue growth and continued
expense control, Asta's pretax income reached 11 million
in the quarter and 37.5 million for the year up 50.7% and
91.3% from the prior year's results respectively. Asta's
tax rate in the quarter and for the year were
approximately 41%. These rates were in line with our
expectations; and we believe those rates will be the same
in '05.
Net income was 6.5 million during the quarter and 22.2
million for fiscal 2004. Increasing 51.2% and 91.4%
compared to the fourth quarter of fiscal 2003. We reported
fully diluted earnings per share of 46 cents, a 48.4%
increase over the prior quarter and $1.57 per share for
fiscal year, a 39% increase. This significant increase
includes the effect of additional shares issued to our
June 2003 follow on stock offering.
As Gary mentioned Asta's balance sheet continues to remain
financially strong. At fiscal year end, shareholders'
equity totaled 114.5 million, up from 92.4 million last
year. Tangible book value per share ended the fiscal year
at 8.52 or $8.52 per share up from $8.01 at the end of the
third quarter ended June 30, 2004, and up from $7.01 per
share at the end of fiscal 2003.
That concludes my formal remarks and now I'd like to turn
it back to Gary.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 6
Gary Stern: Thank you, (Mitch).
As most of you know, Asta's current business model, where
we outsource the majority of our receivables, enables us
to maintain extreme line infrastructure, affording us
tremendous operating leverage and flexibility as we
continue to grow.
In addition, Asta is fully prepared for the new accounting
rule SOP 2003 '03 in respect for accounting for new
portfolios, which goes into effect December 15. We believe
our accounting methods remain conservative and do not
expect any material impact from the adoption of these new
rules. I'm confident that the fruits of our labor will be
reflected in fiscal 2005 and beyond. Now I'd like to open
the discussion for anyone that has any questions.
Operator: At this time I would like to remind everyone in order to
ask a question please press star then the number 1 on your
telephone keypad. We'll pause for just a moment to compile
to Q&A roster. Your first question comes from (Steve)
DeLaney of Ryan Beck.
Steven DeLaney: Good morning and congratulations on an excellent quarter.
Greg Stern: Thank you.
Steven DeLaney: I'd like to ask a question about the G&A expenses and
(Mitch) touched on that as far as the percentage increase
relative to last year. It was, you know, a fairly sharp
jump from the June quarter. And could you tell us if there
is anything unusual any one-time charges, you know,
related to your personnel changes in the quarter? Or would
you just look at this as a good run rate that we should
build off going forward?
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 7
Mitchell Cohen: Well (Steve), this is (Mitch). It's actually a little bit
of both. The accounting -- our legal accounting
professional fees are generally up because of, you know,
the implementation of Sarbanes-Oxley.
Steven DeLaney: Right.
Mitchell Cohen: They're also up because of collect legal expenses being
built into the collections.
Steven DeLaney: So additional funding forwarded to legal and upfront costs
associated with that?
Mitchell Cohen: Yes when utilizing attorneys that take court costs and
generally it's front loaded.
Steven DeLaney: Right and the SOX - the Sarbanes-Oxley expense some of
that was one time although I'm sure you can have ongoing
expenses as well.
Mitchell Cohen: It's ongoing and then at some point it's going to level
off. A slight increase in the number of employees.
Steven DeLaney: Looking forward to 2005, have you guys made any plans at
this point for any significant capital investment or any
additions to the management team that we should factor in,
in building our expense projections?
Mitchell Cohen: Well, I'll let Gary answer one part of the question but we
certainly want to add staff, senior staff in the
accounting department maybe self-serving but that is what
I'd like to do and Gary signed on to that as well.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 8
Steven DeLaney: Good. Okay.
Mitchell Cohen: We are also going to try to upgrade our systems while we
think they're good there's always better systems out there
and...
Steve Delaney: You mean the software, the computer systems?
Mitchell Cohen: Yes.
Steven DeLaney: Okay. So it sounds like there are going to be some
additions, you know, in terms of the...
Mitchell Cohen: I wouldn't say that they would be materially bigger.
Steven DeLaney: Right.
Mitchell Cohen: But at the, you know, off of our current base.
Steven DeLaney: Okay.
Mitchell Cohen: But, again, our overhead is relatively fixed. It will be
one or two one offs. But even the, you know, if we
purchased a new computer system which surely will be
amortized over.
Steven DeLaney: Sure. Gary. Any comments about any management additions?
Gary Stern: Yes. We plan on adding one or two people to our team in
the next six months.
Steven DeLaney: Okay. Very good. I guess one final question and I'll yield
the floor. The finance income, you know, as a percentage
of cash looks stronger this quarter than it has in recent
quarters, up over 50%, and just curious if there are any
positive accounting adjustments? I netted the provision
that you had, assumably writing off an unrecoverable
amount. But are there any positive accounting adjustments
that are included in the 14.8 million?
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 9
Mitchell Cohen: Yes. There are -- as you know, (Steve), we evaluate the
portfolios quarter to quarter and there were a couple of
adjustments on the upside as well as a couple on the
downside. So the answer is yes and no.
Steven DeLaney: All right, but these adjust...
Mitchell Cohen: They will probably up slightly.
Steven DeLaney: There's a downside adjustments are not necessarily
reflective of the provision. The provision was a complete
write off. Right?
Gary Stern: Yes. Yeah we wrote the $300,000 down on the portfolio and
then it was some upward -- there were increases because
the portfolios were performing better than expected.
Steven DeLaney: Okay. And Gary, is that going to be quantified in the 10-K
for us?
Gary Stern: Yes.
Steve Delaney: Okay, all right thank you. That's all thanks very much.
Gary Stern: You're welcome. Thank you (Steve).
Operator: Your next question comes from Audrey Snell of
Brean Murray.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 10
Audrey Snell: Good morning gentlemen.
Gary Stern: Good morning.
Audrey Snell: Congratulations on a nice quarter. Couple of questions for
you. Are you seeing, Gary, any better increased ability to
pay, are liquidation rates are rising and continuing
claims on unemployment flatten out or drop?
Gary Stern: We are seeing a slight increase in abilities for debtors
to pay.
Audrey Snell: And how is that manifesting? Is it -- are you seen
additional cash collections, are you able to collect more
upfront? I mean could you quantify that a little bit?
Mitchell Cohen: Audrey it's (Mitch). We are able to find more assets now.
And I will let Gary pick up on that but a couple of things
that we do here is the technology is getting better.
Audrey Snell: Okay.
Mitchell Cohen: Economy has, allegedly, picked up slightly. So we are
finding more assets. More assets, more jobs. And that
should equate to a translation of, you know, increased
revenue or increased collections for sure.
Audrey Snell: Okay.
Gary Stern: Right. As (Mitch) answered, I was going to give you the
same answer so it's a longer-term collection curve but
we're finding more jobs and more assets.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 11
Audrey Snell: Okay. On the longer-term collection curve, does that mean
that we should anticipate slightly higher zero basis
portfolios and/or slightly higher ROIs on the existing
pools that you own?
Gary Stern: We should see slightly higher, you know, we should see
slightly higher ROIs. We're hoping. We should see that.
Mitchell Cohen: It is a little bit early to tell, but the real answer is,
we should.
Audrey Snell: Okay.
Mitchell Cohen: But it is early.
Audrey Snell: Okay. And you mentioned, Gary, about the mix of what
you're seeing and what you're buying as roughly 80% credit
card 20% telecom. Would you expect that ratio to remain
sort of the same over the next twelve months?
Gary Stern: No. I expect us to buy less credit card paper and more
telecom; and if we find other asset classes that we like,
we might start looking, we might buy those but on a small
scale. For instance, for the most recent quarter, out of
the 1.4 billion, 42% was telecom.
Audrey Snell: Okay.
Gary Stern: So we do expect more telecom. We might look at utilities
as we mentioned before but we have not been successful in
buying any utility paper with it. You know, we are going
to take a very cautious approach on utility, auto
deficiency or any other asset classes. We do have quite a
bit of experience in telecom, going back two to three
years so we're not concerned about that whatsoever but our
approach and other asset classes if they come into play
will be a conservative approach and a slow approach.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 12
Audrey Snell: Sometimes at the end of the calendar year in prior years
we have seen some of the banks, large banks selling an
awful lot of credit card paper just to clean up at the end
of the year. Do you expect the same thing this year?
Gary Stern: It is very possible. We are looking at a large credit card
portfolio at present.
Audrey Snell: And why is it that we should expect less purchasing on
credit card and more on telecom?
Gary Stern: I mean we keep pricing. We are staying to our disciplined
approach. So we have had to pay a little bit more in
certain instances, but we knew we know upfront that there
are more assets to collect on and we are not going to
chase the credit card market. There are certain situations
where one can buy the credit card portfolio where we deem
attractive prices. But we are not going to go overboard.
Audrey Snell: Okay. Did you sell any pools this quarter?
Gary Stern: Yes.
Audrey Snell: Could you quantify that?
Gary Stern: Well, we don't really ever disclose what we sell. We sell
on a regular basis. That is part of our strategy but we're
really never gotten into how much.
Audrey Snell: Okay. Thanks a lot.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 13
Gary Stern: You're welcome.
Operator: Once again if you would like to ask a question please
press star then the number 1 on your telephone keypad.
Your next question comes from (Joe) Chumler of Stephens
Inc.
Joseph Chumler: Hey, congratulations on a great year, guys.
Gary Stern: Thank you.
Joseph Chumler: I think, Gary, on prior calls you had eluded to possibly
the impact of fresh capital on the industry somewhat
plateauing. Are you seeing any signs of that?
Gary Stern: Yes I think the market, the credit card market, is
plateauing although we are never sure exactly what a
portfolio sells for because sometimes you can talk to a
seller and they will tell you the price. You ask them, you
know, sometimes, they may be candid about it and they may
not be, because it is self-serving. But I don't think
there has been a major increase in the last month or so in
credit card paper. With that being said and done, we are
still staying disciplined with our price range. The paper
trades are 6.5 cents and we think it is worth 5.25, we are
going to stick it to 5.25. That is just, you know, one
example, but there is -- I think it is plateauing.
Joseph Chumler: Okay. So it sounds like the challenge really still remains
pricing and not deal size.
Gary Stern: No, there are deals out there. It is pricing and there's
plenty of paper out there. It is a matter of pricing and,
candidly, we feel we have very good systems to identify
assets, which gives us somewhat, you know, the benefit of
being able to know upfront and predict what the
collectibility is. And we're finding in the paper that we
are buying now that there are more -- they are more asset
rich than they were a year ago.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 14
Joseph Chumler: Okay. Are your collections on your recently acquired
portfolios coming in in lined with your expectations or a
little better?
Gary Stern: They are in line. We're in line. They may even be a little
bit better, but certainly in line.
Joseph Chumler: Okay and then on the disclosure side, have you guys got
any plans to maybe enhance your financial disclosure in
terms of asset sales going forward?
Gary Stern: We're still discussing that. Right now, we have decided
not to. But we are discussing that internally and we've
been ask to make a decision shortly before the 10-K comes
out, but at the present time, no.
Joseph Chumler: All right, thank you.
Gary Stern: You're welcome.
Operator: At this time there are no further questions. Are there any
closing remarks?
Gary Stern: Yes. Thank you for participating in our Fourth Quarter
Year End Conference Call. As always, should you have any
additional questions, feel free to call Mitchell Cohen or
myself. On behalf of everyone at Asta Funding, we would
like to wish all of you a happy and healthy holiday season
and we look forward to speaking with all of you again in
early 2005 to discuss Asta's first quarter results. Thank
you.
ASTA FUNDING, INCORPORATED
Moderator: Gary Stern
11-23-04/10:00 am CT
Confirmation # 2332330
Page 15
Operator: This concludes today's Asta Funding Fourth Quarter and
Year End Conference Call. You may now disconnect.
END