Company Press Release
SOURCE: Mego Financial Corp.
January 14, 2000
LAS VEGAS, NV -- Mego Financial Corp. (Nasdaq: MEGO) announced yesterday continued gains for the first quarter
of fiscal 2000, ended November 30, 1999.
For the three months ended November 30, 1999, Mego Financial reported total revenues of $20,697,000, up from $16,865,000 in the same period of fiscal 1999. The 22.7% increase in revenues was primarily generated by a 28% net increase in timeshare and land sales at the Company's wholly owned subsidiary Preferred Equities Corporation (PEC).
Income before income taxes for the quarter ended November 30, 1999 was $655,000. This compares to a loss before income taxes of $1,121,000 in the first quarter of fiscal 1999. The significant improvement for the fiscal 2000 first quarter versus the same period last year was due chiefly to higher sales volume of timeshares and land, and significantly lower marketing and sales expense as a percentage of sales.
The Company reported net income applicable to common stock of $655,000, or $0.19 per common share based on 3,500,557 common shares and common share equivalents outstanding for the quarter ended November 30, 1999. In the same period of fiscal 1999, Mego Financial reported a net loss applicable to common stock of $740,000, inclusive of an income tax benefit of $381,000, or a loss of $0.21 per common share based on 3,500,557 common shares and common share equivalents outstanding.
Mego Financial effected a one for six reverse split of its Common Stock on September 9, 1999 with respect to shares of the Company's common stock outstanding as of that date. The reverse split was undertaken in order to meet the listing qualifications of the Nasdaq National Market system.
Management Comments on First Quarter Results and Future Outlook
Commenting on the Company's results and continued turnaround, Jerome J. Cohen, President of Mego Financial, said, ``We are pleased to report positive results for the first quarter of fiscal 2000, building upon the profitable turnaround we effected last year at PEC.
``Our ongoing success, as many of our investors know, is due primarily to certain restructuring and expense control efforts put into place during calendar 1999. In addition, our entire organization has been singularly focused on improving our sales training and customer programs in an effort to better meet the demands of today's timeshare and land sales customers. We are also benefiting from the strong economic environment.''
Going forward, Mr. Cohen reiterated the Company's plans to purchase another 18 units at its Ramada Vacation Suites at Orlando resort. The lease on a new off-site sales office in Houston has been signed and construction contracts are currently being let. Management anticipates that sales of its Florida, Steamboat Springs, Colorado, and Las Vegas resorts will commence from that office on or about March 15, 2000. The Company will then have four off-site sales offices, including West Covina, Calif.; Denver, Colo.; and Dallas, Texas.
``Given the Company's renewed strength and its return to profitability,'' Mr. Cohen said, ``we continue to believe that we can achieve revenues of approximately $85 million in fiscal 2000 -- a 13% increase over fiscal 1999. We also remain committed to the sale of our non-core assets in Pahrump, Nev., including the Central Nevada Utility Company, two golf courses and numerous major parcels of land.''
Mego Financial is a premier 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, Nev. and has properties it operates under the banner of Ramada Vacation Suites in Nevada, New Jersey, Colorado, Florida, Hawaii and Louisiana. Mego Financial also owns Central Nevada Utilities, serving a large portion of the fast-growing Pahrump Valley, near Las Vegas.
To receive Mego Financial's latest news and other corporate documents via FAX -- no cost -- please dial 1-800-PRO-INFO. Use Mego Financial's ticker symbol, MEGO. Or view our pages on FRB's website www.frbinc.com
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, 1999 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,
1999 1998
REVENUES
Timeshare interest sales, net $11,991 $9,050
Land sales, net 4,019 3,491
Interest income 2,871 1,992
Financial income 272 309
Gain on sale of investments -- 513
Incidental operations 624 690
Other 920 820
Total revenues 20,697 16,865
COSTS AND EXPENSES
Direct cost of:
Timeshare interest sales 2,378 1,754
Land sales 556 580
Incidental operations 600 651
Marketing and sales 9,274 8,833
Depreciation 490 520
Interest expense 2,866 2,088
General and administrative 3,878 3,560
Total costs and expenses 20,042 17,986
INCOME (LOSS) BEFORE INCOME TAXES 655 (1,121)
INCOME TAXES (BENEFIT) -- (381)
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK $655 $(740)
EARNINGS (LOSS) PER COMMON SHARE
Basic:
Net income (loss) applicable
to common stock $0.19 $(0.21)
Weighted-average number of
common shares 3,500,557 3,500,557
Diluted:
Net income (loss) applicable
to common stock $0.19 $(0.21)
Weighted-average number of common
shares and common share equivalents
outstanding 3,500,557 3,500,557
MEGO FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of dollars, except per share amounts)
(unaudited)
November 30, August 31,
1999 1999
ASSETS
Cash and cash equivalents $1,725 $1,821
Restricted cash 1,381 1,676
Notes receivable, net of allowance for
cancellations and discounts of $14,368
at November 30, 1999 and $14,340
at August 31, 1999 76,169 69,300
Interest only receivables, at fair value 2,404 2,566
Timeshare interests held for sale 27,793 29,529
Land and improvements inventory 6,240 6,649
Other investments 5,136 5,111
Property and equipment, net of accumulated
depreciation of $16,810 at November 30,
1999 and $16,252 at August 31, 1999 23,345 23,560
Deferred selling costs 4,808 4,285
Prepaid debt expenses 1,795 1,757
Other assets 14,175 12,707
TOTAL ASSETS $164,971 $158,961
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and contracts payable $110,881 $104,555
Accounts payable and accrued
liabilities 17,610 18,141
Reserve for notes receivable sold
with recourse 3,798 4,162
Deposits 2,303 2,287
Accrued income taxes 3,505 3,505
Total liabilities before
subordinated debt 138,097 132,650
Subordinated debt 4,386 4,478
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, 1999 and August 31, 1999) 35 35
Additional paid-in capital 13,068 13,068
Retained earnings 9,385 8,730
Total stockholders' equity 22,488 21,833
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $164,971 $158,961
SOURCE: Mego Financial Corp.