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Clearwater, Florida,
- January 29, 2009
- Nicholas Financial, Inc. (NASDAQ: NICK),
announced that for the three months ended December 31, 2008, net
earnings, excluding non-cash unrealized mark-to-market loss of interest
rate swaps, decreased 43% to $1,267,000 compared to $2,236,000 for the
three months ended December 31, 2007. Per share diluted net earnings,
excluding non-cash unrealized mark-to-market loss of interest rate
swaps, decreased 45% to $0.12 for the three months ended December 31,
2008 as compared to $0.22 for the three months ended December 31, 2007.
See reconciliations of the Non-GAAP measures on page 3
(**
- table below website only). Revenue
increased 5% to $13,254,000 for the three months ended December 31, 2008
as compared to $12,614,000 for the three months ended December 31, 2007.
For the nine months ended December 31, 2008, net earnings, excluding
non-cash unrealized mark-to-market loss of interest rate swaps,
decreased 53% to $3,616,000 as compared to $7,617,000 for the nine
months ended December 31, 2007. Per share diluted net earnings,
excluding non-cash unrealized mark-to-market loss of interest rate
swaps, decreased 53% to $0.35 for the nine months ended December 31,
2008 as compared to $0.74 for the nine months ended December 31, 2007.
See reconciliations of the Non-GAAP measures on page 3
(**
- table below website only). Revenue
increased 7% to $39,878,000 for the nine months ended December 31, 2008
as compared to $37,362,000 for the nine months ended December 31, 2007.
According to Peter L. Vosotas, Chairman and CEO, “the business climate
remains challenging, auto sales are still well below historical levels
and the employment outlook continues to weaken. We expect to see some
seasonal improvement in our business during the fourth quarter but
remain very cautious about the coming year, as we believe the
recessionary pressures embedded in the economy will not subside in the
near-term. During the last two quarters we have been tightening our
credit underwriting guidelines in response to market conditions. We
continue to evaluate markets in which we operate in and we do not
anticipate any significant change from our branch-based methodology. Due
to a combination of tighter underwriting guidelines and a significant
slow down in auto sales during the three months ended December 31, 2008,
we have reduced the size of our loan portfolio by approximately $2.6
million and also decreased our credit line outstanding by approximately
$4.6 million.”
Historically, the Company utilized interest rate swaps to protect the
income statement from variability due to interest rate risk. Borrowings
under the Company’s line of credit facility may be under various LIBOR
or prime pricing options. Prior to October 2008, prime rate based
borrowings were generally less than $5.0 million. These interest rate
swaps were previously designated as cash flow hedges in accordance with
SFAS No. 133, “Derivative Instruments and Hedging Activities, as
amended”. Based on credit market events that transpired in October 2008,
the Company made an economic decision to elect the prime rate pricing
option available under its credit line agreement for the month of
October 2008. This resulted in decreasing interest expense by
approximately $100,000 for the three months ended December 31, 2008. As
a result, the critical terms of the interest rates swaps and hedged
interest payments were no longer identical and the Company undesignated
its interest rate swaps as cash flow hedges. Consequently, beginning in
October 2008 changes in the mark-to-market value of interest rate swaps
are recorded in earnings. Unrealized losses previously recorded in
accumulated other comprehensive loss are now reclassified into earnings
as interest payments affect earnings over the remaining term of the
respective swap agreements. The Company does not use interest rate swaps
for speculative purposes. Such instruments continue to be intended for
use as economic hedges.
Net income and diluted earnings per share (which include a non-cash
pre-tax charge related to the above described interest rate swaps of
approximately $1.7 million for the three months ended December 31, 2008)
were $235,000 and $0.02, respectively. Net income and diluted earnings
per share (which also include a non-cash pre-tax charge related to the
above described interest rate swaps of approximately $1.7 million for
the nine months ended December 31, 2008) were $2,584,000 and $0.25,
respectively. As noted above, net income and diluted earnings per share
for the three months ended December 31, 2007 were $2,236,000 and $0.22,
respectively. Net income and diluted earnings per share for the nine
months ended December 31, 2007 were $7,617,000 and $0.74, respectively.
Nicholas Financial, Inc. is one of the largest publicly traded specialty
consumer finance companies based in the Southeast. The Company presently
operates out of 48 branch locations in both the Southeast and the
Mid-West States. The Company has approximately 10,400,000 shares of
common stock outstanding. For an index of Nicholas Financial Inc.’s news
releases or to obtain a specific release, visit our web site at
www.nicholasfinancial.com.
Download Adobe Acrobat version of this press release.
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