The Timeshare Beat Home | Today's Headlines | Back to Previous Page
|
The Timeshare Beat Home | Today's Headlines | Back to Previous Page |
|
|
|
Press Release: Leisure Industries Corporation
November 18, 2002
LAS VEGAS, NV -- Mego Financial Corp. (NasdaqNM:LESR) Friday announced financial results for its third quarter
ended September 30, 2002. Since the change of control and management of the Company in January 2002, new management
has led a turnaround of the Company's core business, an expansion into complementary service offerings and a complete
restructuring of the corporate operations. At the end of the third quarter the turnaround and restructuring were
largely complete. The Company recently changed its year-end to December 31 from its previous August 31 fiscal year-end.
Consistent with SEC regulations, the 2002 third quarter results are compared to the three months ended August 31,
2001.
The Company reported revenues of $15.6 million for the period ended September 30, 2002, as compared to $27.3 million
for the 2001 period. For the third quarter of 2002, the Company reported a net loss of $8.9 million, or $1.42 per
share, as compared to a profit in the 2001 period of $1.9 million or $0.55 per share. For the nine months ended
September 30, 2002, the Company reported revenues of $56.8 million with a net loss of $14.1 million. This compares
to revenues of $79.8 million for the nine months ended August 31, 2001, for a profit of $1.2 million. The number
of shares outstanding at December 31, 2001, was 3,500,557, and at the end of the third quarter, was 6,591,393.
All of the losses during the third quarter of 2002 and for the nine months ended September 30, 2002, were related
to the restructuring of the operations, the development of a scalable technological infrastructure to support future
growth, and the launching of a new subsidiary to provide travel and customer services, Leisure Services Corporation.
The Company also incurred non-recurring costs during the period related to the acquisition of its new land inventory
in Arizona and the Cimarron Golf Resort and Golf Courses.
"The third quarter saw significant results in our program to turnaround existing operations and to launch
new initiatives for the Company. During the quarter we completed the acquisition of two major assets, which provide
us with the inventory for both our vacation ownership operations and our land division. While we are never satisfied
with negative results for any quarter, we are not surprised. The losses for this quarter and the previous quarter
and the loss projected for the year were anticipated as a consequence of significant changes implemented in the
restructuring and building of the Company," said Floyd W. Kephart, Chairman and CEO. "We are making good
progress on our strategy to create an integrated travel and leisure company focused on being a leading vacation
solutions provider.
"I am especially pleased with the results of our primary operating subsidiary, Leisure Homes Corporation,
that develops and sells our vacation ownership and land properties. We knew that our vacation ownership sales would
decline as a result of changing the sales practices, the commencement of new marketing strategies and a depleted
inventory. We also knew that our land sales would decline this year because of a lack of inventory. However, our
objectives were to reduce sales and marketing costs to below 50%, to change our sales practices, to improve our
consumer financial operations and to improve the profitability of this subsidiary. The highlights of this quarter
are that with reduced revenues, we have successfully brought our sales and marketing costs to an operating level
of under 50% and our profits from this subsidiary were $8,610,000 for the nine month period," according to
Kephart. "We accomplished this with the downturn in travel and tourism that affected everyone in the travel
and leisure business this year.
"We will not see the results of new acquisitions or the effect of the launching of our new travel operations
until the first and second quarters of 2003," Kephart continued. "However, in reviewing our third quarter
results, the indications are that our turnaround of the operations as well as the establishment of new products
and services has been effected, positioning the Company to meet its objectives for 2003," according to Kephart.
"We completed the organizational restructuring of the Company during this quarter and we fully expect to complete
the financial restructuring during the fourth quarter, allowing us to produce profitable operations in 2003,"
projected Kephart. "We will continue our effort to reduce our G & A expenses, develop the revenues of
our travel and customer services, improve our products and restructure our financial portfolio," he concluded.
The Company announced on April 12, 2002, the launching of its new corporate identity with a name change to Leisure
Industries Corporation, subject to shareholder approval. Leisure Industries develops and operates vacation ownership
resorts, develops real estate properties into resort properties for sale, and provides consumer financing to purchasers
of vacation ownership interests and land parcels through its wholly owned subsidiary, Leisure Homes Corporation.
Leisure Industries is headquartered in Las Vegas, Nevada, and has properties in Arizona, California, Nevada, New
Jersey, Colorado, Florida and Hawaii.
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 Leisure Industries (Mego Financial)
to be materially different from any future results, performance or achievements expressed 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-KT for the year ended December 31, 2001, and in the Form 10-Q for the quarter ended June 30,
2002, and subsequent documents filed by Mego Financial Corp. with the Securities and Exchange Commission.
MEGO FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
(unaudited)
September 30, December 31,
ASSETS 2002 2001
------------- ------------
Cash and cash equivalents $ 1,308 $ 1,271
Restricted cash 6,835 6,708
Notes receivable, net of allowance of
$11,491 and $14,557 at September 30,
2002 and December 31,
2001, respectively 113,740 109,347
Retained interests in receivables sold 2,549 3,688
Vacation ownerships held for resale 22,470 17,865
Land and improvements inventory 6,312 2,757
Assets available for sale 3,499 3,468
Property and equipment, net 21,666 9,690
Deferred financing costs, net 1,967 2,071
Deferred selling costs 2,506 5,422
Other assets 14,470 15,409
Assets related to discontinued
operations - 15,156
------------- ------------
TOTAL ASSETS $ 197,322 $ 192,852
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note collateralized by receivables $ 98,564 $ 106,599
Notes related to inventory, working
capital and personal property financing 35,569 21,931
Accounts payable 7,147 1,873
Accrued liabilities 14,212 12,274
Interest rate swap liabilities 4,981 2,251
Deferred income 2,917 2,097
Reserve for notes receivable sold with
recourse 2,454 3,560
Customer deposits 1,412 2,831
Deferred income taxes - 1,289
Liabilities related to discontinued
operations - 9,545
------------- ------------
Total liabilities before
subordinated debt 167,256 164,250
============= ============
Subordinated debt - 4,211
Convertible debentures 5,463 3,000
Short-term promissory notes 7,200 -
------------- ------------
Total investor notes 12,663 3,000
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value
(5,000,000 shares authorized, none - -
issued and outstanding)
Common stock, $.01 par value
(50,000,000 shares authorized;
6,591,393 and 3,500,557 shares
issued and outstanding at
September 30, 2002 and December 31,
2001, respectively) 66 35
Additional paid-in capital 24,910 13,068
Retained earnings (4,285) 9,773
Accumulated other comprehensive loss (3,288) (1,485)
------------- ------------
Total stockholders' equity 17,403 21,391
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 197,322 $ 192,852
============= ============
MEGO FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(thousands of dollars, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
-------------------------- -------------------------
September 30, August 31, September 30, August 31,
2002 2001 2002 2001
------------- ----------- ------------- -----------
REVENUES
Vacation
ownership
sales $ 5,759 $ 15,031 $ 23,344 $ 44,471
Land sales 4,301 5,839 17,264 17,570
Interest income 4,078 5,075 12,611 14,284
Travel income 235 - 235 -
Resort income:
Resort management
fees 785 738 2,394 2,194
Golf course, shop
and services 42 - 42 -
Food and beverage 10 - 10 -
Other 397 641 941 1,294
Total revenues 15,607 27,324 56,841 79,813
COSTS AND EXPENSES
Direct cost of:
Vacation ownership
sales 1,183 2,205 4,004 7,729
Land sales 481 849 2,409 2,590
Golf course,
shop and services 4 - 4 -
Food and beverage 4 - 4 -
Interest expense
related to consumer
financing 2,506 2,095 7,068 6,327
Interest expense
related to
inventory, working
capital and personal
property financing 1,732 941 3,356 2,843
Selling and operational
expenses:
Vacation ownership 1,958 4,755 7,850 14,511
Land sales 2,019 2,301 5,779 5,908
Travel related 69 - 69 -
Golf course, shop
and services 114 - 114 -
Food and beverage 10 - 10 -
Software related 34 - 34 -
Marketing expenses 5,378 5,944 14,160 16,898
Portfolio and
funding costs 812 1,061 2,724 2,878
General and
administrative 5,590 1,793 14,209 7,329
Provision for
cancellations 1,216 255 4,440 781
Depreciation 327 3,646 1,301 10,559
Maintenance fees 467 106 1,368 731
Hotel operations,
net 75 (114) 67 (140)
Restructuring
charges - - 2,480 -
Total costs
and expenses 23,979 25,837 71,450 78,944
------------- ----------- ------------- -----------
(LOSS) INCOME FROM
CONTINUING
OPERATIONS (8,372) 1,487 (14,609) 869
BEFORE INCOME TAX
(EXPENSE) BENEFIT
INCOME TAX (EXPENSE)
BENEFIT (559) (419) 292 (455)
(LOSS) INCOME
FROM CONTINUING
OPERATIONS (8,931) 1,906 (14,317) 1,324
Discontinued operations
Income (loss) from
discontinued
operations 17 24 392 (189)
Income tax (expense)
benefit (6) (8) (133) 64
------------- ----------- ------------- -----------
INCOME (LOSS) FROM
DISCONTINUED
OPERATIONS,
NET OF TAX 11 16 259 (125)
NET (LOSS) INCOME
APPLICABLE TO
COMMON STOCK $ (8,920) $ 1,922 $ (14,058) $ 1,199
=========== ========== =========== ===========
NET (LOSS) INCOME PER
COMMON SHARE
Basic and diluted:
From continuing
operations $ (1.42) $ 0.54 $ (2.66) $ 0.38
From discontinued
operations (0.00) 0.01 0.04 (0.04)
Net (loss)
income $ (1.42) $ 0.55 $ (2.62) $ 0.34
=========== ========== =========== ===========
Weighted-
average number
of common
shares 6,304,008 3,500,557 5,373,727 3,500,557
------------- ----------- ------------- -----------
Contact:
Contact: Kella Brown
Company: Leisure Industries Corporation
Voice: 702-737-3732
Email: kbrown@leisureindustries.com
Source: Leisure Industries Corporation