Warrantech Corporation has reported net income of $692,383 or $0.05 per diluted share for the company's second quarter 2001 which is the three month period ended Sept. 30, 2000, compared to a net loss of $2.5 million or $0.17 per diluted share in the same period a year ago.

For the six month period, net income was $932,983 or $0.06 per diluted share compared to a net loss of $6.0 million or $0.40 per diluted share for the same period a year ago.

"This is the fifth consecutive quarterly improvement in our return to profitability and our second consecutive quarter in the black," said Joel San Antonio, Warrantech chairman and CEO. "As a part of our strategy, we closed our U.K. operation at the end of this quarter, in which we took a one-time charge for discontinued operations of $1.05 million. Without this one-time charge and the related tax benefits, net income for the quarter would have been $1.7 million.

"Throughout the quarter, we have signed several new agreements in all business lines," San Antonio said. "We are very focused with our goal to provide greater value to our shareholders throughout the year by continuing to bring to market exciting new products while at the same time leveraging new technology to reduce cost and improve customer service."

Net Administrative Fee

The net earned administrative fee for the quarter ended Sept. 30, 2000 increased to $12.8 million compared to $10.1 million for the same period a year ago. This was a quarter-to-quarter increase of $2.7 million or 27%.

For the six months, net earned administrative fee was $25.3 million, compared to $19.6 million of the same period a year ago.

The change was primarily attributed to improved margins in the automotive segment and increased revenues recognized from prior periods in the consumer products segment. These results were partially offset by lower volumes in the international segment.

The South American and Puerto Rican markets continued to contribute higher volumes from existing and new customers although the net earned administrative fees from the total international segment declined from $0.7 million for the quarter ended Sept. 30, 1999 to $0.5 million for the current quarter due to the closing of the U.K. operations. The automotive segment had an increase in net earned administrative fee of $3.0 from $1.9 million last year to $4.9 million this year.

Service, selling, general and administrative SG&A expenses for the second quarter of 2001 decreased 22.5% to $9.7 million from $12.6 million for the second quarter in 2000. For the six months, SG&A decreased 22.4% to $19.9 million, compared to $25.6 million for the six months of fiscal year 2000.

Pre-tax Profit

Warrantech defines its business in three business segments: Automotive, Consumer Products and International. Automotive reported a pre-tax profit for the second quarter of 2001 of $2.1 million from a loss of $1.4 in the same period a year ago. Consumer Products pre-tax profit increased in the second quarter of 2001 to $0.5 million from a net loss of $1.2 million in the second quarter of 2000. Excluding the one time charge of closing the U.K. operations, International reported a pre-tax loss of $1.4 million for the second quarter of 2001 from a loss of $1.3 in the same period a year ago resulting primarily from the loss in the U.K. operation.

Warrantech Corporation, through its subsidiaries, 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, Mexico, Puerto Rico and Latin America.