LAS VEGAS, Feb. 23 /PRNewswire/ -- PDS Financial Corporation
(Nasdaq: PDSF) today announced results for the fourth quarter and year ended
December 31, 1998.
For the fourth quarter ended December 31, 1998 the Company reported a net
loss of $426,000, or $0.12 per diluted share, compared to net income of
$349,000, or $0.09 per diluted share in the prior year quarter. Revenues for
the 1998 quarter totaled $5.5 million, compared to $21.9 million in the prior
year quarter. The fourth quarter of 1997 revenues were favorably impacted by
the early exercise of a purchase option by one lessor of approximately
$13.5 million.
For the year ended December 31, 1998, the Company reported earnings of
$356,000, or $0.09 per diluted share, compared to net income of $942,000, or
$0.28 per diluted share in the prior year. Revenues for 1998 totaled
$36.0 million, compared to $47.6 million in the prior year.
"As we disclosed earlier, the fourth quarter of 1998 was a difficult one
for us," stated Johan P. Finley, President and Chief Executive Officer.
"We had to overcome the delay in the closing of a significant financing
transaction due to circumstances beyond our control. While I am not satisfied
with the overall financial results for this quarter, I believe that we have
made some strategic decisions regarding our portfolio which will strengthen
our core business model and have a positive impact on future earnings, which I
believe puts us in a strong position going into 1999."
Finance Division Reports Strong Fourth Quarter Originations and Portfolio
Growth
The finance division originated $16.6 million in transactions in the
quarter ended December 31, 1998, compared to $11.9 million in the prior year
quarter. Originations for the year totaled $60.3 million, compared to
$84.4 million in the prior year. The lease portfolio stands at $37.4 million
as of December 31, 1998, compared to $24.3 million as of December 31, 1997.
Fee income totaled $507,000 for the quarter ended December 31, 1998,
compared to $341,000 in the prior year quarter. Fee income totaled
$1.7 million for the year ended December 31, 1998, compared to $2.7 million in
the prior year. Finance income, which represents the interest income earned
on the portfolio of interest bearing receivables, increased to $967,000 for
the quarter ended December 31, 1998, compared to $313,000 in the prior year
quarter. The note receivable portfolio increased to $21.9 million as of
December 31, 1998, compared to $3.1 million as of December 31, 1997.
"The originations in the fourth quarter were primarily operating leases,
which helped to restore the lease portfolio to historical levels and put us in
a great position to begin the next year," commented Mr. Finley. "During 1998,
we were able to add operating leases to our portfolio, which lowered the fees
we would have earned had we sold these transactions. This is in keeping with
our business model, which focuses more on recurring revenues."
Slot Source Shows Progress at End of First Full Year of Operations
PDS Slot Source, the Company's reconditioned games division, shipped a
total of 1,465 gaming devices in the quarter ended December 31, 1998, compared
to 860 games in the prior year quarter (which period was the first in which
reconditioned games were sold). Slot Source shipped a total of approximately
6,500 gaming devices for the year ended December 31, 1998. Of the total
devices shipped during the year, approximately 3,100 were games which had been
fully reconditioned, and represent the higher margin games sold by Slot
Source. The gross margin for games shipped was approximately 17% for the year
ended December 31, 1998.
"The game sales in the fourth quarter were down in comparison to the
previous two quarters, which we believe was indicative of the general slowness
industry-wide in this quarter. Making progress in the Slot Source division
has taken more time that had originally been anticipated, but I have high
expectations for this division in 1999," stated Mr. Finley.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain of the statements contained
herein, which are not historical facts, are forward-looking statements with
respect to events, the occurrence of which involve risks and uncertainties.
These forward-looking statements may be impacted, either positively or
negatively, by various factors. Information concerning potential factors that
could affect the Company is detailed from time to time in the Company's
reports filed with the Securities and Exchange Commission.
PDS Financial Corporation, with offices in Las Vegas and Minneapolis,
provides leasing and financing to the gaming industry, and supplies
reconditioned gaming devices to casino operators throughout the United States.
Since 1991, PDS has completed approximately $465 million in gaming finance
transactions and in 1996 introduced SlotLease, a specialized leasing program
for slot machines and other electronic gaming devices. In mid-1997, the
Company established its reconditioned gaming device sales and distribution
line of business, PDS Slot Source, to complement its leasing and financing
activities and to generate equipment sales to casino operators.
PDS FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
(Unaudited)
Three months ended
December 31,
1998 1997
Revenues
Equipment sales $1,654,000 $17,482,000
Sales-type leases 629,000 1,432,000
Rental revenue on operating leases 1,775,000 2,315,000
Fee income 507,000 341,000
Finance income 967,000 313,000
Total revenues 5,532,000 21,883,000
Costs and Expenses
Equipment sales 1,719,000 15,225,000
Sales-type leases 513,000 1,196,000
Depreciation on operating leases 1,202,000 1,791,000
Selling, general and administrative 1,265,000 1,920,000
Interest 1,520,000 948,000
Other 243,000
Total costs and expenses 6,219,000 21,323,000
Income (loss) before income taxes (687,000) 560,000
Provision for income taxes (261,000) 211,000
Net income (loss) $(426,000) $349,000
Earnings (loss) per share:
Basic $ (0.12) $0.10
Diluted (0.12) $0.09
Number of shares used to compute per share amounts:
Basic 3,648,000 3,360,000
Diluted 3,648,000 3,708,000
PDS FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
(Unaudited)
Years ended
December 31,
1998 1997
Revenues
Equipment sales $20,522,000 $17,482,000
Sales-type leases 3,964,000 14,480,000
Rental revenue on operating leases 6,750,000 11,406,000
Fee income 1,746,000 2,670,000
Finance income 3,033,000 1,575,000
Total revenues 36,015,000 47,613,000
Costs and Expenses
Equipment sales 17,257,000 15,225,000
Sales-type leases 3,386,000 13,654,000
Depreciation on operating leases 4,931,000 8,589,000
Selling, general and administrative 4,817,000 4,126,000
Interest 5,049,000 4,260,000
Other -- 240,000
Total costs and expenses 35,440,000 46,094,000
Income before income taxes 575,000 1,519,000
Provision for income taxes 219,000 577,000
Net income $356,000 $942,000
Earnings per share:
Basic $0.10 $0.30
Diluted $0.09 $0.28
Number of shares used to compute per share amounts:
Basic 3,611,000 3,184,000
Diluted 3,784,000 3,620,000
PDS FINANCIAL CORPORATION AND SUBSIDIARIES
Selected Consolidated Balance Sheet Information
(Unaudited)
As of December 31,
1998 1997
Notes receivable, net $21,878,000 $3,141,000
Net investment in leasing operations:
Equipment under operating
leases, net 27,751,000 18,327,000
Direct financing leases 9,668,000 5,976,000
Equipment held for
sale or lease, net 10,002,000 6,290,000
Deferred funds for pending
transactions 13,427,000 775,000
Discounted lease rentals 806,000 5,920,000
Notes payable 36,699,000 21,616,000
Subordinated debentures 13,164,000 --
Shareholders' equity 10,534,000 8,629,000
SOURCE PDS Financial Corporation
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CONTACT:
Steve Des Champs, Chief Financial Officer of
PDS Financial Corporation, 702-736-0700
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