Ameritrans Amends Quarterly Results to Reflect Change in
Accounting Treatment of Holding Company Restructuring Costs; Will Omit 4th
Qtr. Dividend; Adjusts Merger Price
New York, NY, September 22, 2000 -- Ameritrans Capital Corporation (NASDAQ:
AMTC) announced today that it has amended its previously announced financial
results for the quarters ended December 31, 1999, and March 31, 2000.
The amendment reflects a change in the accounting treatment under GAAP of
certain expenses incurred in connection with the restructuring of Elk Associates
Funding Corporation and the formation of its parent company, Ameritrans Capital
Corporation. The new holding company was formed and the restructuring was
approved by the company's shareholders in December, 1999, to enable the company
to diversify its business into non-government regulated investment/lending while
continuing the operations of Elk, its wholly-owned SBIC subsidiary. The company
previously completed a financing for purposes which included payment of the
anticipated restructuring expenses and subtracted the restructuring costs from
those proceeds. During the preparation of the company's audited financial
statements for the year ended June 30, 2000, however, the company's auditors
advised the company that the costs associated with the restructuring and
previously subtracted from the company's capital, which were $345,941 and taken
as a reduction of capital during the quarter ended December 31, 1999, and
$77,104 for the quarter ended March 31, 2000, should be charged to earnings for
those periods. As a result, the company has amended and increased its capital by
$345,941, for the six months ended December 31, 1999, and by $77,104 for the
nine months ended March 31, 2000. The company has also charged these
restructuring costs to its earnings for the same periods. This resulted in a
loss of $26,116 or $0.015 per share for the three months ended December 31,
1999. For the six month period ended December 31, 1999, net income as adjusted
was $310,608 or $0.1779 per share. For the three months ended March 31, 2000,
net income as adjusted was $252,911 or $0.1449 per share, and for the nine
months ended March 31, 2000, net income as adjusted was $563,519 or $0.3228 per
share. These adjustments are non-recurring, and are not expenses incurred in the
company's active business operations. It should also be noted that the
adjustments have no effect on the company's net worth, as the restructuring
expenses were previously subtracted from the company's capital in its previously
filed financial statements.
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The company further announced today that it does not intend to pay a quarterly
dividend to shareholders for the three months ended June 30, 2000, because it
will incur certain bad debt expenses and will take write-offs of certain prepaid
offering expenses previously incurred in connection with a proposed secondary
public offering which the company intended to complete prior to entering into a
merger agreement with Medallion Financial Corp (NASDAQ: TAXI) dated as of May 4,
2000. The company anticipates that the total charge-off for bad debts for the
quarter ended June 30, 2000, will be approximately $445,000 and write-offs for
prepaid offering expenses will be $256,000.
The Company previously filed a Form 8-K with the Securities and Exchange
Commission on September 6, 2000, to reflect an amendment to the merger agreement
with Medallion Financial Corp. pursuant to which the parties reduced the per
share purchase price by Medallion of the company's shares of common stock by
$0.46. For example, if Medallion's share price is $17.00 at the time of closing,
Ameritrans stockholders would receive $9.43 per share or 0.5547 shares of
Medallion for each Ameritrans share. If Medallion's share price is $22.00,
Ameritrans shareholders would receive $10.68 per share or 0.4855 shares of
Medallion for each share of Ameritrans. The merger is subject to approval by
Ameritrans' shareholders and the satisfaction of certain other conditions set
forth in the merger agreement.
Ameritrans Capital Corporation is a specialty finance company engaged in making
loans to and investments in small businesses. Ameritrans' wholly-owned
subsidiary, Elk Associates Funding Corporation, has been licensed by the United
States Small Business Administration (SBA) as a Small Business Investment
Company since 1980. The company maintains its offices at 747 Third Avenue, 4th
Floor, New York, New York 10017.
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This announcement contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those presently anticipated or projected. Ameritrans
Capital Corporation cautions investors not to place undue reliance on
forward-looking statements, which speak only as to management's expectations on
this date.
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