Press Release: Mego Financial Corp.
January 16, 2002
LAS VEGAS, NV -- Mego Financial Corp. (Nasdaq: MEGO) announced Monday financial results for the first quarter of
fiscal year 2002, ended November 30, 2001.
Total revenues for the Company were $20.3 million during the three months ended November 30, 2001 versus $24.3
million during the three months ended November 30, 2000. The net decrease was primarily due to a net decrease of
$4.5 million to $14.3 million in timeshare interest and land sales during the quarter, compared to $18.8 million
during the year ago period. A pretax loss of $1.9 million was recorded during the fiscal 2002 first quarter compared
to pretax income of $306,000 earned during the fiscal 2001 first quarter. Net loss applicable to common stock amounted
to $1.3 million during the fiscal 2002 first quarter, or a loss of $0.36 per share, compared to net income applicable
to common stock of $946,000, or $0.27 per share, during the fiscal 2001 first quarter.
The Company noted that first quarter performance was adversely affected by the economic downturn in the tourism
industry following the September 11, 2001 terrorist attacks. The Company expects the market to slowly recover.
On December 13, 2001, the Company announced that it had entered into an agreement with an investor, LC Acquisition
Corp., of New York, NY, for the purchase by the investor from the Company of 750,000 shares of its common stock
at $4.00 per share. In addition, LC Acquisition Corp. has entered into an agreement with certain officers, directors
and other shareholders for the purchase of an aggregate of 1,269,634 shares of the Company's common stock at a
price of $4.00 per share. The consummation of all of these agreements is conditioned on approval by the Company's
shareholders. The Company has also entered into an agreement with Doerge Capital Management for the purchase of
500,000 shares of the Company's common stock at $4.00 per share. This agreement is conditioned on the approval
by the Company's shareholders and the filing of an S-3 Registration Statement. A shareholder vote on these matters
will be held at a meeting on January 17, 2002.
Mego Financial is a developer and operator of timeshare properties and a provider of consumer financing to purchasers
of timeshare interests and land parcels through its wholly owned subsidiary, Preferred Equities Corporation, established
in 1970. Mego Financial is headquartered in Las Vegas, Nevada and has properties it operates under the banner of
``Ramada Vacation Suites'' in Nevada, New Jersey, Colorado, Florida and Hawaii. Mego Financial also owns Central
Nevada Utilities, serving a large portion of the fast-growing Palrump Valley, near Las Vegas.
This press release contains ``forward-looking statements'' within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward- looking statements involve known and unknown risks, uncertainties or other factors
which may cause actual results, performance or achievements of Mego Financial to be materially different from any
future results, performance or achievements express or implied by such forward-looking statements. Factors that
might cause such a difference, include, but are not limited to those discussed in the Management's Discussion and
Analysis of Financial Condition and Results of Operations in Mego Financial's Annual Report on Form 10-K for the
year ended August 31, 2001, and in the form 10-Q for the quarter ended November 30, 2001, and subsequent documents
filed by Mego Financial Corp. with the Securities and Exchange Commission.
MEGO FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(thousands of dollars, except per share amounts)
(unaudited)
Three Months Ended
November 30,
---------------------------
2001 2000
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REVENUES
Timeshare interest sales, net $ 10,073 $ 14,018
Land sales, net 4,191 4,742
Interest income 3,977 3,209
Financial income 423 479
Gain on sale of notes receivable - 292
Gain on sale of investments
and other assets 40 8
Incidental operations 547 490
Other 1,037 1,042
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Total revenues 20,288 24,280
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COSTS AND EXPENSES
Direct cost of:
Timeshare interest sales 1,965 3,157
Land sales 740 769
Interest expense 3,377 3,044
Marketing and sales 10,405 11,464
Incidental operations 307 354
Depreciation 430 392
General and administrative 4,975 4,794
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Total costs and expenses 22,199 23,974
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INCOME (LOSS) BEFORE INCOME TAXES (1,911) 306
INCOME TAXES (BENEFIT) (650) (640)
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NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK $ (1,261) $ 946
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INCOME (LOSS) PER COMMON SHARE
Basic and Diluted:
Net income (loss) applicable
to common stock $ (0.36) $ 0.27
=========== ===========
Weighted-average number
of common shares 3,500,557 3,500,557
=========== ==========
and common share equivalents
outstanding
MEGO FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of dollars, except per share amounts)
(unaudited)
ASSETS November 30, August 31,
2001 2001
------------- ----------
Cash and cash equivalents $ 2,483 $ 1,894
Restricted cash 3,329 1,926
Notes receivable, net of allowance
for cancellations and discounts of
$15,005 at November 30, 2001 and
$15,084 at August 31, 2001 109,621 105,127
Retained interests in
receivables sold, at fair value 3,705 3,603
Timeshare interests held for sale 17,543 18,139
Land and improvements inventory 3,036 3,152
Other investments, net of
accumulated depreciation of $77
at November 30, 2001 10,174 10,251
Property and equipment, net of
accumulated depreciation of $17,543
at November 30, 2001 and $17,098
at August 31, 2001 16,646 16,867
Deferred selling costs 5,053 5,466
Prepaid debt expenses 2,270 2,359
Other assets 20,647 17,044
----------- -----------
TOTAL ASSETS $ 194,507 $ 185,828
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and contracts payable $ 131,501 $ 120,238
Accounts payable and
accrued liabilities 25,437 24,337
Reserve for notes receivable
sold with recourse 3,652 3,998
Deposits 2,771 3,201
Deferred income taxes 561 1,617
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Total liabilities
before subordinated debt 163,922 153,391
----------- -----------
Subordinated debt 4,211 4,211
Stockholders' equity:
Preferred stock, $.01 par
value (authorized--5,000,000 shares,
none outstanding) - -
Common stock, $.01 par
value (authorized--50,000,000 shares;
3,500,557 shares issued and
outstanding at November 30, 2001 and
August 31, 2001) 35 35
Additional paid-in capital 13,068 13,068
Retained earnings 15,255 16,516
Accumulated other comprehensive loss (1,984) (1,393)
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Total stockholders' equity 26,374 28,226
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 194,507 $ 185,828
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Contact:
Golin/Harris International, New York
Kelly Keisling, 212/697-9191