Warrantech Corporation, a specialist in the marketing and administration of service contracts and aftermarket warranties, has reported profits for the tenth consecutive quarter. Net income reached $888,046 or $0.06 per diluted share for the company's fiscal second quarter 2003, which ended Sept. 30, 2002, up 62 percent above net income of $548,247 or $0.04 per diluted share in the same period a year ago.

For the six-month period, net income was $1,597,927 or $0.10 per diluted share, up 135 percent compared to net income of $679,470 or $0.04 per diluted share for the same period a year ago. The increase in earnings for the second quarter 2003 and the six-month period ending Sept. 30, 2002 compared to prior year periods was due to an increase in gross receipts in all business segments.

“We are pleased to report our tenth consecutive quarter of positive earnings, ” Joel San Antonio, Warrantech chairman and chief executive officer, said. “During the second quarter, Warrantech signed a marketing agreement with MARTA Cooperative of America, the largest member-owned retail buying cooperative in the U.S. consumer electronics and appliance industry. In addition, a 10-year lease was signed on our new state-of-the-art world headquarters in Bedford, Texas. For the first time in our company’s history, all of Warrantech’s operations will be under one roof. Warrantech is well positioned for the future. We believe Warrantech has the best people, equipment and management team in our industry,” San Antonio said.

Gross Receipts

Gross Receipts represent total payments from dealers, inclusive of premiums and commissions. For the quarter ended September 30 2002, gross receipts were $38,708,291 compared to $27,435,725 for the same period last year increasing 41 percent. All business segments reported increases in gross receipts this quarter over the same period last year. For the six-month period gross receipts were up 33 percent to $72,358,475 this year compared to $54,538,433 last year. The Automotive segment reported a strong increase of 50 percent to $52,578,238 this year from $35,125,391 last year, while the International segment was flat at $2,513,815 and Consumer Products segment reported a slight increase of 2 percent to $17,432,574 from $17,174,716.

Service, Selling, General and Administrative (SG&A)

SG&A expenses for the second quarter 2003 were $7,894,879, up slightly compared to $7,882,693 in the corresponding period the previous year. While legal fees increased $820,056 payroll and other expenses were down $807,870. For the six months ended Sept. 30, 2002, SG&A expenses were $15,097,222, down 5 percent from $15,848,080 in the same period the previous year. The decrease in SG&A is due to improved call center technologies, and strict adherence to cost cutting programs. Employee and payroll expenses were $4,521,704 down more than 7 percent in the second quarter 2003 compared to $4,840,313 in the second quarter 2002.

Other service-related expenses, including consulting fees were down $218,602 or 37 percent to $371,887 at September 30, 2002 compared to $590,489 during the corresponding period the previous year. During the quarter, telephone expenses were $396,266, down 40 percent from $662,818 in the quarter ended Sept. 30, 2001. For the six months ended Sept. 30, 2002, telephone expenses were $833,437, down 39 percent from $1,364,150 in the prior year period.

Income from Operations

Income from operations for the second quarter 2003 was $1,018,001, up 21 percent compared to $840,440 in the previous year. For the six months ended Sept. 30,2002, income from operations was $1,822,825, up 137 percent compared to $768,074 in the prior year period. The increase in income from operations for the second quarter and the six-month period for fiscal 2003 was primarily the result of increased gross receipts in the Automotive segment, lower SG&A in Consumer Products segment and a reduction in depreciation and amortization expense.

About Warrantech

Warrantech Corporation administers and markets service contracts and after-market warranties on automobiles, automotive components, recreational vehicles, appliances, consumer electronics, homes, computer and computer peripherals for retailers, distributors and manufacturers. The company continues to expand its domestic and global penetration, and now provides its services in the United States, Canada, Puerto Rico and Latin America. For additional information on Warrantech, access www.warrantech.com.