Interstate National Dealer Services, Inc. has announced record year-end revenues for the period ended Oct. 31, 2000.

Revenues for the year ended Oct. 31, 2000 increased approximately 10 percent to a record $61,654,625, compared to $56,151,613 for the same period a year earlier. Income from continuing operations for the fiscal years ended Oct. 31, 2000 and Oct. 31, 1999 were $2,870,658, or $0.61 per share on 4,709,794 diluted weighted average shares outstanding and $3,088,560, or $0.62 per share on 4,980,000 diluted weighted average shares outstanding, respectively.

Losses from discontinued operations net of taxes were approximately $803,000, or $0.17 per share for the year ended Oct. 31, 2000, as compared to approximately $274,000, or $0.05 per share during the same period in 1999. The loss from discontinued operations resulted from costs incurred by the company's subsidiary, Uautobid.com, to develop and finance its car buying Web site. "The company made the decision to discontinue this operation due to the rapidly changing and highly competitive Internet car buying landscape which raised the stakes more rapidly than envisioned, bringing a level of risk that was more than was expected or that the company was willing to tolerate," said Chester J. Luby, chairman and CEO of Interstate.

Net income and earnings per share after losses from discontinued operations was $2,067,412, or $0.44 per share in fiscal 2000 compared to net income of $2,814,807, or $0.57 per share for the comparable period a year earlier.

"For the eighth year in a row we have achieved record revenue," Luby said. "Profits were below last year's level as a result of expenses associated with our investment in Uautobid.com, and the decline in gross margins related to a higher level of claims. We continue to attract new dealers and replace those dealers with unsatisfactory claims experience. In addition, we have increased our prices for our service contracts and extended warranties across the board. We believe those steps will help improve our margins.

"Once again we have maintained our selling, general and administrative expenses under tight control and demosntrated that we can handle significant new business efficiently. SG&A was 43 percent of revenue in the most recent fiscal year compared to 44.2 percent in the same period a year ago," Luby said.

"Our rock solid debt free balance sheet continues to strengthen as we increased our cash and investments by approximately $10.3 million, after expending nearly $2.3 million for the repurchase of shares of Interstate's common stock," Luby said. "As of the end of the current fiscal year, Interstate had cash and investments of $13.34 per fully diluted weighted average share outstanding. The benefit to our shareholders is clear when one notes that investment income rose nearly 72 percent to over $3.2 million this fiscal year. Our decision to improve our investment returns by investing significant sums through highly regarded professional investment advisors has proven to be sound."

As of Jan. 23, Interstate has repurchased 514,700 common shares. Management and the board agree that repurchase of common stock at our near book value is an excellent use of Interstate's large cash holdings. The company intends to continue to repurchase shares from time to time in the open market when and if market conditions suggest that such a move is prudent, according to Luby.

Interstate Engages Banking Firm of Legg Mason Wood Walker, Inc.

Interstate has engaged the investment banking firm of Legg Mason Wood Walker, Inc., as its advisor to assist the company in creating strategic opportunities, including but not limited to the development and evaluation of possible acquisitions, joint ventures, or other strategic relationships or transactions, according to Luby.

"We are pleased to announce our association with such a high quality and respected firm as Legg Mason," Luby said. "Legg Mason's outstanding reputation, extensive relationships, and long standing middle market advisory activities should prove to be very advantageous to Interstate and its efforts to maximize shareholder value. We look forward to working closely with them towards that end.

"Our business model has been tested over time and shown to be sound," Luby said. "Over the past five years we have experienced compounded revenue growth of 35 percent and increased our earnings per share from continuing operations to $0.61 from $0.27. We are proud of what we have accomplished and are optimistic about our future."

About Interstate National Dealer Services

Interstate is a nationwide provider of service contracts and extended warranties, primarily for new and used cars and recreational vehicles, as well as watercraft, manufactured housing, motorcycles and other powersport vehicles.

For more informatioin visit www.inds.com and www.warrantydirect.com.

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