UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 17, 2000
UGLY DUCKLING CORPORATION
-------------------------
(Exact name of registrant as specified in its charter)
Delaware 000-20841 86-0721358
------------ ------------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2525 E. Camelback Road, Suite 500, Phoenix, Arizona 85016
---------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (602) 852-6600
----------------
Not applicable.
------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events
Attached hereto as Exhibit 99.1 is a copy of Ugly Duckling
Corporation's press release dated February 16, 2000 titled "Ugly Duckling
Reports Financial Results for 1999."
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
EXHIBIT
NUMBER DESCRIPTION
99.1 Ugly Duckling Corporation Press Release dated February 16, 2000 titled
"Ugly Duckling Reports Financial Results for 1999."
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UGLY DUCKLING CORPORATION
Date: February 17, 2000 By: \s\ Jon D. Ehlinger
-----------------------------
Vice President, Secretary and
General Counsel
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
ISSUER TENDER OFFER STATEMENT
UNDER SECTION 14(d)(1) or Section 13(e)(1)OF THE SECURITIES EXCHANGE ACT OF 1934
UGLY DUCKLING CORPORATION
(NAME OF ISSUER)
UGLY DUCKLING CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK
$.001 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
903512101
(CUSIP NUMBER OF CLASS OF SECURITIES)
GREGORY B. SULLIVAN
CHIEF EXECUTIVE OFFICER AND PRESIDENT
UGLY DUCKLING CORPORATION
2525 EAST CAMELBACK ROAD, SUITE 500
PHOENIX, ARIZONA 85016
(602) 852-6600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF
OF THE PERSON(S) FILING STATEMENT)
COPY TO:
STEVEN D. PIDGEON
SNELL & WILMER L.L.P.
ONE ARIZONA CENTER
PHOENIX, ARIZONA 85004-0001
(602) 382-6252
CALCULATION OF FILING FEE
- ---------------------------------- ---------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- ---------------------------------- ---------------------------------------------
- ---------------------------------- ---------------------------------------------
$27,500,000 $5,500.00
- ---------------------------------- ---------------------------------------------
* Assumes purchase of 2,500,000 Shares of Common Stock at $11.00 per share.
**Calculated based on the transaction valuation multiplied by one-fiftieth of
one percent.
<PAGE>
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
|X| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to
which the statement relates:
[ ] third-party tender offer subject to Rules 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting
the results of the tender offer: [ ]
Attached hereto is a copy of Ugly Duckling Corporation's press release
dated February 16, 2000 titled "Ugly Duckling Reports Financial Results for
1999."
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 16, 2000.
UGLY DUCKLING CORPORATION
A Delaware corporation
by: /S/ JON D. EHLINGER
-------------------
Jon D. Ehlinger
Secretary and
General Counsel
FOR IMMEDIATE RELEASE
February 16, 2000
UGLY DUCKLING REPORTS FINANCIAL RESULTS FOR 1999
Company Exits All Cygnet Operations to Focus on Dealership Operations
Company Announces Common Stock Exchange Offer at $11.00 per Share
Fourth Quarter Highlights:
o Net earnings totaled $3.2 million, or $0.21 per diluted share
o Earnings per diluted share from continuing operations totaled $0.17
o Revenues from continuing operations increased 41% to $106.4 million from
$75.6 million in year-ago quarter
o On-balance sheet loan portfolio principal balance reached $358.8 million,
representing an 8% sequential increase over third quarter and a near
four-fold rise over year-ago quarter
o New loan originations reached $80.9 million, a 16% increase over year-ago
quarter
o Acquired five dealerships in the Richmond market, ending year with 72
dealerships
Financial Highlights
(In 000's, except for per share numbers)
<TABLE>
<CAPTION>
<S> <C> <C>
- -------------------------------------------------------- --------------------------- ----------------------------
Three Months Ended Year Ended
--------------------------- ----------------------------
12/31/99 12/31/98 12/31/99 12/31/98
- -------------------------------------------------------- ------------- ------------- -------------- -------------
Total revenues $106,447 $ 75,637 $467,275 $332,553
Operating income (loss) $ 4,643 $(8,405) $ 14,911 $ 5,944
Earnings (loss) - continuing operations $ 2,619 $(5,064) $ 8,687 $ 3,455
Diluted earnings per share - continuing operations $ (0.30) $ 0.57 $ 0.17 $ 0.19
- -------------------------------------------------------- ------------- ------------- -------------- -------------
</TABLE>
PHOENIX -- February 16, 2000 - Ugly Duckling Corporation (Nasdaq NM: UGLY), the
largest and fastest growing used car sales company focused exclusively on the
sub-prime market, today reported significant improvement in its fourth quarter
and full year 1999 financial results.
<PAGE>
Ugly Duckling Corporation
Page 2 of 11
Strong Quarter over Quarter Results
For the three months ended December 31, 1999, Ugly Duckling achieved earnings
from continuing operations of $2,619,000, or $0.17 per diluted share, compared
with a loss from continuing operations for the three months ended December 31,
1998 of $(5,064,000), or a loss of $(0.30) per diluted share.
The company sold 9,731 cars in the fourth quarter of 1999, an increase of 11%
over the 8,766 cars sold in the year-ago quarter. The increased number of cars
sold, together with growth in interest income, resulted in total revenues of
$106,447,000 for the fourth quarter of 1999, an increase of over 41% from total
revenues of $75,637,000 in the fourth quarter of 1998.
Interest income for the fourth quarter of 1999 increased sequentially to
$22,670,000 from $19,775,000 in the third quarter of 1999, a gain of 15%, and
from $5,256,000 in the year-ago period, an increase of over 430%. The increase
in both periods is primarily attributable to rapid growth of the company's
on-balance sheet portfolio, resulting from Ugly Duckling's change to on-balance
sheet financing transactions.
New loan originations for the fourth quarter of 1999 reached $80,900,000,
representing a 21% sequential decrease from the $102,600,000 reported in third
quarter of 1999, and a 16% increase over the $69,500,000 reported in the fourth
quarter of 1998. The quarter over quarter increase is primarily the result of an
increased number of Ugly Duckling dealerships. The company's dealerships
increased in number to 72 in the fourth quarter of 1999 from 56 in the year-ago
fourth quarter. The decrease in new loan originations in the fourth quarter of
1999 versus the third quarter 1999 is a function of seasonality, as the fourth
quarter is historically the company's weakest sales quarter of the year.
Operating expenses for the fourth quarter of 1999 reached $27,909,000, or 26% of
total revenues, compared with operating expenses of $25,941,000, or 34% of total
revenues, for the year-ago quarter. The stability in operating expense
expenditures and the substantial decline in operating expenses as a percentage
of total revenues, is primarily the result of improved efficiencies from the
company's new computer system, and dealership growth in existing markets
requiring little additional indirect support services.
Loan Servicing
The company made good progress in lowering delinquencies during the fourth
quarter of 1999. "The fourth quarter is traditionally the toughest in terms of
servicing sub-prime loans," said Gregory B. Sullivan, President and Chief
Executive Officer of Ugly Duckling Corporation. "Nonetheless, we made
significant progress in lowering delinquencies from 10.3% at the end of the
third quarter of 1999 to 9.0% at the end of the fourth quarter. Net charge-offs
were higher than we would have liked but about where we would have thought based
on the third quarter delinquencies. We successfully addressed the servicing
issue that led to the higher delinquencies and feel that those challenges have
been overcome. As evidence of this, at the end of the third quarter I expressed
confidence that we would have delinquencies down to 8.0% by the end of the first
quarter of 2000. I'm pleased to report that we ended January with delinquencies
at 7.6%."
<PAGE>
Substantial Gains in 1999
For the year ended December 31, 1999, the company reported earnings from
continuing operations of $8,687,000, or $0.57 per diluted share, compared with
earnings from continuing operations of $3,455,000, or $0.19 per diluted share,
for the year ended December 31, 1998. Results for 1998 included pre-tax earnings
of $12,093,000 ($7,135,460 net of income taxes), or $0.39 per diluted share,
from the gain on sale of loans. No gains on the sale of loans were recorded in
1999 as the company restructured its financing transactions which eliminated
gain-on-sale accounting treatment beginning in the fourth quarter of 1998.
Used car sales totaled $389,908,000 in 1999, an increase of 36% over sales of
$287,618,000 in 1998. The company sold 46,120 cars in 1999, an increase of 28%
over the 35,964 sold in 1998. The increased number of cars sold, together with
an increase in interest income, resulted in total revenues of $467,275,000 for
the year, an increase of 41% from total revenues of $332,553,000 in 1998. New
loan originations for 1999 reached $381,500,000, representing a 38% gain over
the $277,300,000 originated in 1998.
Interest income for 1999 increased four-fold to $68,574,000 from $17,287,000 in
1998, resulting from rapid growth of Ugly Duckling's on-balance sheet portfolio
from a change in securitization structure. Operating expenses for the year
reached $112,936,000, or 24% of total revenues, compared with operating expenses
of $92,174,000, or 28% of total revenues, for the prior year.
"Ugly Duckling's record results and substantial gains in 1999 reflect the
growing strength of our unique business model. We are beginning to realize
additional increased operating efficiencies as we expand our nationwide chain of
`buy here-pay here' used car dealerships," said Mr. Sullivan "Our results also
reflect a near 300% increase in interest income resulting from our rapidly
growing on-balance sheet loan portfolio. Our new CLASS central computer system,
which united the four separate computer systems we operated a year ago into one,
also contributed substantially to our control over operations and our record
earnings," said Mr. Sullivan.
Ugly Duckling Continues Expansion of Dealerships:
Continuing its pace to add new dealerships, Ugly Duckling closed the acquisition
of certain assets of a Virginia-based sub-prime automobile sales and finance
company in the fourth quarter of 1999. The assets included five used car
dealerships operating in the greater Richmond market area. These locations
commenced operations as Ugly Duckling in December 1999. The acquisition
represented Ugly Duckling's initial entry into the Virginia market while further
geographically diversifying its presence across the nation.
Including acquisitions the company made in Florida in the third quarter of 1999
and the fourth quarter 1999 Virginia acquisitions, Ugly Duckling has added 31
new dealerships over the past two years, bringing the total number of
dealerships operated by the company at December 31, 1999 to 72.
"We plan to continue with our aggressive, yet controlled acquisition and de
novo opening strategy. To that end, we have opened two dealerships this year and
four more are currently under development. We are operating in a huge and
unconsolidated industry. With more than 58,000 independent dealers in operation,
our opportunities for expansion via acquisition or development are extensive,"
said Mr. Sullivan.
<PAGE>
Company Website-Based Applications and Sales Accelerate
Ugly Duckling's website, located at http://www.uglyduckling.com/, is continuing
to generate a growing stream of new leads and sales. The site provides potential
customers with instant credit applications as well as maps to the company's
dealerships nationwide. From customers initially applying for credit through its
website, 4,900 applications were received in the fourth quarter of 1999
generating $3.9 million in revenue with 415 used car sales. In the third quarter
of 1999 the company's Internet activity generated revenues of over $2.6 million
with 316 cars being sold.
Common Stock Exchange Offer
Ugly Duckling today also announced that it expects to commence an exchange offer
beginning February 22, 2000. The company plans to acquire up to 2.5 million
shares of its common stock in exchange for up to $27.5 million principal amount
of its 11% Subordinated Debentures due 2007. Under the exchange offer, Ugly
Duckling shareholders could exchange shares of common stock for $11.00 principal
amount of debentures. The debentures would bear interest at 11% per year,
payable semi-annually each April 15 and October 15 starting on April 15, 2000.
The principal amount of the debentures would be due on the seventh anniversary
of their issuance date, subject to prepayment at the company's option without
penalty or premium. Issuance of the exchange offer is subject to certain
conditions, including formal approval from company lenders.
All investors are advised to carefully read the tender offer statement when it
becomes available because of the important information it contains. Effective
February 22, 2000 the tender offer statement and other filed reports, proxy and
information statements may be obtained for free by accessing over the Internet
the Security and Exchange Commission's site on the World Wide Web at
http://www.sec.gov. Investors may also contact Ugly Duckling's Information
Agent, Corporate Investor Communications, Inc., at 1-201-896-1900 to obtain free
copies of the Offering Circular and related documents to be utilized in the
exchange offer.
Discontinued Operations
In the fourth quarter of 1999 the company had three separate events which are
reported as discontinued operations.
In December 1999 the company announced that it had sold its Cygnet Dealer
subsidiary to an affiliated entity. Cygnet Dealer results from discontinued
operations are a $(449,000) net operating loss for the fourth quarter of 1999
and net operating earnings of $415,950 for the year. The company recorded a
$175,000 net gain on sale.
Effective December 31, 1999 the company adopted a formal plan to abandon any
effort for Cygnet Servicing to acquire loans or servicing rights to additional
portfolios. Accordingly, the company's Cygnet Servicing and the associated
Cygnet Corporate segment also are reported as components of Discontinued
Operations. The company plans to service to completion the portfolios currently
serviced. For 1999 the Cygnet Servicing and Cygnet Corporate segments incurred
net earnings of $2.3 million and $1.5 million for the fourth quarter and year
ended December 1999, respectively. No loss has been recorded on the disposal of
this segment as the company anticipates that over the run-off period, expected
to be approximately 30 months, it will ultimately realize a net gain.
<PAGE>
In February 1998 the company discontinued its Champion Financial Services
operations. Loan losses and related servicing expenses have exceeded amounts
provided for such activities and in the fourth quarter of 1999 the company
recorded an additional charge of $1.5 million net of tax for the additional
costs and loan losses associated with its remaining portfolio servicing
activities.
Bright Growth Outlook
"Ugly Duckling's outstanding operational and financial performance in 1999
enhances the company's position as the largest and fastest growing
`buy-here-pay-here' used car dealership chain in the United States," said Mr.
Sullivan. "For the first time since 1994, the company is focused exclusively on
its core business of the sale and financing of used cars to sub-prime credit
customers. We are excited about our position in this $60 - $100 billion
industry. We are already the largest dealer in the country focused exclusively
on this market. We have established a firm foundation based on our technological
systems, business practices and procedures, and most importantly our people. We
have established that we can make money in this market, that we can grow in this
market, and that we can make money as we grow. Our profitability for 1999 far
exceeded our expectations going into the year. Now that the company is 100%
focused on this business, we look forward more than ever to growing and making
improvements that strengthen our business and further improve our operating
results."
Ugly Duckling will be holding an investor conference call to discuss the
Company's financial and operational results at 10:30 am eastern (8:30 am
Phoenix) on February 16, 2000. Investors will have the opportunity to listen to
the conference call over the Internet through Vcall at http://www.vcall.com. To
listen to the live call, please go to the web site at least fifteen minutes
early to register, download, and install any necessary audio software. For those
who cannot listen to the live broadcast, a replay will be available shortly
after the call at http://www.vcall.com and on the company's website at
http://www.uglyduckling.com.
Headquartered in Phoenix, Arizona, Ugly Duckling Corporation is the largest and
fastest growing operator of used car dealerships focused exclusively on the
sub-prime market. The company underwrites, finances and services sub-prime
contracts generated at its 74 Ugly Duckling dealerships, located in 11
metropolitan areas in eight states.
(This press release includes statements that constitute forward-looking
statements within the meaning of the safe harbor provisions of the Private and
Securities Litigation Reform Act of 1995. Forward-looking statements are often
characterized by the words "believes," "estimates," "projects," "expects" or
similar expressions. Forward-looking statements in this release relate, among
other matters, to: anticipated financial results, such as continuing growth in
financial performance and improvements in delinquencies; and growth in the
company's dealerships through acquisitions and de novo dealership openings.
Factors that could cause or contribute to differences from these forward-looking
statements include, but are not limited to: any decline in consumer acceptance
of the company's car sales strategies or marketing campaigns; any inability of
the company to finance its operations in light of a tight credit market for the
sub-prime industry; any deterioration in the used car finance industry or
increased competition in the used car sales and finance industry; any inability
of the company to monitor and improve its underwriting and collection processes;
any changes in estimates and assumptions in, and the ongoing adequacy of, the
company's allowance for credit losses; any inability of the company to continue
to reduce operating expenses as a percentage of sales; and any new or revised
accounting, tax or legal guidance that adversely affect used car sales or
financing. Other factors are detailed in the sections entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Risk
<PAGE>
Factors," "Factors That May Affect Future Results and Financial Condition" and
"Factors That May Affect Future Stock Performance" in Ugly Duckling
Corporation's most recent reports on Form 10-K and Form 10-Q (including Exhibit
99 to any such Form 10-Q), and elsewhere in Ugly Duckling Corporation's
Securities and Exchange Commission filings. By making these forward-looking
statements, the company undertakes no obligation to update these statements for
revisions or changes after the date of this press release. References to Ugly
Duckling Corporation as the largest and fastest growing operator of used car
dealerships focused exclusively on the sub-prime market is management's belief
based upon its knowledge of the industry and not on any current independent
third party study.)
For more information on Ugly Duckling, please dial
1-800-PRO-INFO and enter company ticker symbol UGLY.
[Financial Tables Follow]
<PAGE>
UGLY DUCKLING CORPORATION
Consolidated Operating Results
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
--------------------------------- ---------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Cars Sold 9,731 8,766 46,120 35,964
====== ====== ============== ====== ======= ====== ======
Total Revenues $106,447 $ 75,637 $467,275 $332,553
= ========= = ========= = ========= = ========
Sales of Used Cars $82,275 $ 71,542 $389,908 $287,618
Less:
Cost of Used Cars Sold 45,642 41,906 219,071 167,014
Provision for Credit Losses 21,842 20,264 102,955 65,318
--------------- --------------- --------------- ---------------
14,791 9,372 67,882 55,286
--------------- --------------- --------------- ---------------
Other Income (Expense):
Interest Income 22,670 5,256 68,574 17,287
Interest Expense (6,412) (1,187) (17,402) (2,883)
Gain on Sale of Finance Receivables - - - 12,093
Servicing and Other Income 1,503 4,095 8,793 16,335
--------------- --------------- --------------- ---------------
17,761 8,164 59,965 42,832
--------------- --------------- --------------- ---------------
Income before Operating Expenses 32,552 17,536 127,847 98,118
Operating Expenses:
Selling and Marketing 5,175 4,728 23,752 20,285
General and Administrative 20,823 19,835 82,236 66,977
Depreciation and Amortization 1,911 1,378 6,948 4,912
--------------- --------------- --------------- ---------------
27,909 25,941 112,936 92,174
--------------- --------------- --------------- ---------------
Operating Income 4,643 (8,405) 14,911 5,944
Interest Expense 224 138 224 138
--------------- --------------- --------------- ---------------
Earnings before Income Taxes 4,419 (8,543) 14,687 5,806
Income Taxes (Benefit) 1,800 (3,479) 6,000 2,351
--------------- --------------- --------------- ---------------
Earnings (Loss) from Continuing Operations 2,619 (5,064) 8,687 3,455
Earnings (Loss) - Discontinued Operations, net 575 386 580 (9,158)
--------------- --------------- --------------- ---------------
Net Earnings (Loss) $ 3,194 $ (4,678) $ 9,267 $ (5,703)
=============== =============== =============== ===============
Earnings (Loss) per Common Share from Continuing Operations:
Basic $ 0.18 $ (0.30) $ 0.58 $ 0.19
======== ========== ======== =======
Diluted $ 0.17 $ (0.30) $ 0.57 $ 0.19
======== ========== ======== =======
Net Earnings (Loss) per Common Share:
Basic $ 0.21 $ (0.28) $ 0.61 $ (0.32)
======== ========= ======== =========
Diluted $ 0.21 $ (0.28) $ 0.60 $ (0.31)
======== ========= ======== =========
Shares Used in Computation:
Basic 14,889 16,633 15,093 18,082
======= ======= ======= ======
Diluted 15,167 16,633 15,329 18,405
======= ======= ======= ======
</TABLE>
<PAGE>
UGLY DUCKLING CORPORATION
Consolidated Operating Expenses and Related Information
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months ended Year ended
December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- ---------------
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Dealerships - Retail Operations
Selling and Marketing $ 5,175 $ 4,728 $ 23,752 $ 20,285
General and Administrative 11,170 8,867 44,289 32,383
Depreciation and Amortization 1,015 726 3,587 2,581
-------------- -------------- -------------- ---------------
Dealerships - Retail Operations 17,360 14,321 71,628 55,249
-------------- -------------- -------------- ---------------
Loan Servicing - General and Admin. 6,707 5,275 20,653 18,491
Loan Servicing - Dep. and Amort. 300 361 1,141 1,333
-------------- -------------- -------------- ---------------
Loan Servicing 7,007 5,636 21,794 19,824
-------------- -------------- -------------- ---------------
Corporate and Other - General and Admin. 2,946 5,693 17,295 16,103
Corporate and Other - Dep. and Amort. 596 291 2,219 998
-------------- -------------- -------------- ---------------
Corporate and Other 3,542 5,984 19,514 17,101
-------------- -------------- -------------- ---------------
Operating Expense $ 27,909 $ 25,941 $ 112,936 $ 92,174
============== ============== ============== ===============
Total Operating Exp. - % of Total Revenues 26.2% 34.3% 24.2% 27.7%
============== ============== ============== ===============
Other Information:
Dealerships Open - End of period 72 56 72 56
============== ============== ============== ===============
Used Cars Sold 9,731 8,766 46,120 35,964
============== ============== ============== ===============
Dealership Operating Expenses - Per Car Sold:
Selling and Marketing $ 532 $ 539 $ 515 $ 564
General and Administrative 1,148 1,012 960 900
Depreciation and Amortization 104 83 78 72
-------------- -------------- -------------- ---------------
Dealerships - Retail Operations $ 1,784 $ 1,634 $ 1,553 $ 1,536
============== ============== ============== ===============
Loan Servicing Expenses - % of Portfolio Managed:
- -------------------------------------------------
Managed Principal Balances:
Dealership Originations $424,480 $292,683 $424,480 $292,683
Serviced for Others 12,983 47,947 12,983 47,947
-------------- -------------- -------------- ---------------
$437,463 $324,669 $437,463 $324,669
============== ============== ============== ===============
Net Loan Servicing (Annualized) as % of Managed
Principal Balances 6.5% 6.6% 5.0% 5.9%
============== ============== ============== ===============
Corporate and Other Expenses:
Per Car Sold $ 364 $ 683 $ 423 $ 475
============== ============== ============== ===============
As % of Total Revenues - Dealership Operations 3.3% 7.9% 4.2% 5.1%
============== ============== ============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UGLY DUCKLING CORPORATION
Segment Information - Operating Income
(Unaudited)
(In thousands)
Three Months Ended December 31, 1999
Dealership Operations
-----------------------------------------------------------------------
Dealership Corporate
Dealerships Receivables and Other
----------------- ----------------- -----------------
<S> <C> <C> <C>
Sales of Used Cars....................... $ 82,275 $ -- $ --
Cost of Used Cars Sold................... (45,642) -- --
Provision for Credit Losses.............. (17,077) (4,765) --
----------------- ----------------- -----------------
19,556 (4,765) --
----------------- ----------------- -----------------
Other Income:
Interest Income.......................... -- 22,562 108
Interest Expense......................... -- (3,863) (2,549)
Servicing and Other...................... 89 1,345 69
----------------- ----------------- -----------------
Income before Operating Expenses......... 19,645 15,279 (2,372)
----------------- ----------------- -----------------
Operating Expenses:
Selling and Marketing.................... (5,175) -- --
General and Administration............... (11,170) (6,707) (2,946)
Depreciation and Amortization............ (1,015) (300) (596)
----------------- ----------------- -----------------
(7,007) (3,542)
(17,360)
----------------- ----------------- -----------------
Operating Income......................... $ 2,285 $ 8,271 $ (5,914)
================= =================
=================
Total Operating Income................... $ 4,643
=================
Year Ended December 31, 1999
-----------------------------------------------------------------------
Dealership Operations
-----------------------------------------------------------------------
Dealership Corporate
Dealerships Receivables and Other
----------------- ----------------- -----------------
Sales of Used Cars....................... $ 389,908 $ -- $ --
Cost of Used Cars Sold................... (219,071) -- --
Provision for Credit Losses.............. (80,627) (22,327) --
----------------- ----------------- -----------------
90,210 (22,327) --
----------------- ----------------- -----------------
Other Income:
Interest Income.......................... -- 68,118 456
Interest Expense......................... -- (9,250) (8,152)
Servicing and Other...................... 173 8,317 303
----------------- ----------------- -----------------
Income before Operating Expenses......... 90,383 44,858 (7,393)
----------------- ----------------- -----------------
Operating Expenses:......................
Selling and Marketing.................... (23,752) -- --
General and Administration............... (44,289) (20,653) (17,295)
Depreciation and Amortization............ (3,587) (1,141) (2,219)
----------------- ----------------- -----------------
(71,628) (21,794) (19,514)
----------------- ----------------- -----------------
Operating Income......................... $ 18,755 $ 23,063 $ (26,907)
================= =================
=================
Total Operating Income................... $ 14,911
=================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UGLY DUCKLING CORPORATION
Consolidated Balance Sheet Information
(In thousands)
December 31,
1999 1998
-------------------- -------------------
-------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Cash and Cash Equivalents $ 3,683 $ 2,544
Finance Receivables, Net 365,586 126,168
Notes Receivable, Net 12,013 763
Inventory 63,150 44,145
Property and Equipment, Net 31,467 28,631
Intangible Assets, Net 14,741 14,433
Other Assets 13,774 14,625
Net Assets of Discontinued Operations 33,536 106,997
-------------------- -------------------
$ 537,950 $ 338,306
==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable $ 3,185 $ 2,137
Accrued Expenses and Other Liabilities 27,930 16,766
Notes Payable 311,932 117,895
Subordinated Notes Payable 29,217 38,741
-------------------- -------------------
Total Liabilities 372,264 175,539
-------------------- -------------------
Stockholders' Equity
Common Stock 19 19
Additional Paid in Capital 173,273 173,809
Retained Earnings 12,715 3,449
Treasury Stock (20,321) (14,510)
-------------------- -------------------
Total Stockholders' Equity 165,686 162,767
-------------------- -------------------
$ 537,950 $ 338,306
==================== ===================
Net Assets of Discontinued Operations
(In Thousands)
December 31,
1999 1998
-------------------------------------------
(Unaudited)
Finance Receivables, net $ 14,837 $ 65,065
Residuals in Finance Receivables Sold 3,742 10,500
Investments Held in Trust 1,545 3,665
Notes Receivable 6,697 27,495
FMAC Receivable 6,125 --
Other Assets, net of Accounts Payable and Accrued
Liabilities 590 272
-------------------- -------------------
Net Assets of Discontinued Operations $ 33,536 $ 106,997
==================== ===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UGLY DUCKLING CORPORATION
Finance Receivables and Allowance for Credit Losses Information
(In thousands)
December 31,
1999 1998
------------------------------------------
Company Dealerships: (Unaudited)
- --------------------
<S> <C> <C> <C>
Gross Installment Sales Contracts $ 492,937 $ 131,510
Unearned Finance Charges (1) (134,119) (37,574)
------------------- -------------------
Principal Balances 358,818 $ 93,936
Accrued Interest 3,741 877
Loan Origination Costs 5,079 2,237
------------------- -------------------
Principal Balances, net 367,638 97,050
Residuals in Finance Receivables 16,687 33,331
Investments Held In Trust 56,716 20,564
------------------- -------------------
Finance Receivables 441,041 150,945
Allowance for Credit Losses (75,455) (24,777)
------------------- -------------------
Finance Receivables, net $ 365,586 $ 126,168
=================== ===================
Principal Balances: (2): Retained Securitized (3) Managed
- ------------------------ -------- --------------- -------
December 1999 (Unaudited) $ 358,818 $ 65,662 $ 424,480
December 1998 $ 93,936 $ 198,747 $ 292,683
Allowance as % of Remaining Principal Retained Securitized Managed
- ------------------------------------- -------- ----------- -------
December 1999 (Unaudited) 21.0% 10.3% 19.5%
December 1998 26.4% 20.6% 23.4%
Delinquencies, as Percent of Principal: 30 to 60 Days Over 60 Days Over 30 Days
- --------------------------------------- ------------- ------------ ------------
December 31, 1999 (Unaudited) 5.9% 3.1% 9.0%
December 31, 1998 4.6% 1.9% 6.5%
<FN>
(1) Unearned Finance Charges (UFC) for December 31, 1999 are computed from the Company's loan servicing system. Amounts for other
periods are computed amounts using the current ratio of UFC to current principal
(2) Retained - Means loans included on the Company's balance sheet, includes securitized loan accounted for as collaterized
borrowings and non-securitized loans
Securitized - Means loans sold under transactions structured as to recognize "gain on sale"
Managed - Means total of retained and securitized, excluding loans serviced for others
(3) Securitized - Means loans sold under transactions structures as to recognize "Gain on Sale".
</FN>
</TABLE>