FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarter Ended: June 30, 1997
Commission File Number: 0-14786
AUTOINFO, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-2867481
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(State or other jurisdiction of (I.R.S. Employer Identification number)
incorporation or organization)
One Paragon Drive., Suite 255., Montvale, New Jersey 07645
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(Address of principal executive office)
(201) 930-1800
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES |X| NO |_|
Number of shares outstanding of the registrant's common stock as of
August 11, 1997: 8,018,752 shares of common stock, $.01 par value.
<PAGE>
AUTOINFO, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information:
Item 1. Financial Statements: Page
----
Condensed Balance Sheets -
June 30, 1997 (unaudited) and December 31, 1996.............3
Condensed Statements of Operations (unaudited)-
Three and Six months ended June 30, 1997 and 1996...........4
Condensed Statements of Cash Flows (unaudited)-
Six months ended June 30, 1997 and 1996.....................5
Notes to Unaudited Condensed Financial Statements...........6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................9
Part II. Other Information....................................................13
Signatures....................................................................14
Exhibit 11....................................................................15
2
<PAGE>
AUTOINFO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- ------------
Unaudited Audited
<S> <C> <C>
ASSETS
Gross automobile receivables $ 129,315,763 $ 81,406,679
Unearned interest (32,618,143) (19,867,745)
------------- ------------
Net automobile receivables 96,697,620 61,538,934
Allowance for credit losses (15,207,260) (15,725,390)
------------- ------------
Net automobile receivables after allowance for
credit losses 81,490,360 45,813,544
Cash 2,295,435 4,307,038
Restricted cash 5,572,576 6,380,437
Short-term investments 4,358,484 4,892,199
Fixed assets, net 2,091,833 1,725,774
Goodwill and other intangibles, net 2,810,851 2,906,587
Other assets 4,370,678 4,073,502
Income tax refund, receivable 3,483,731 4,352,000
------------- ------------
$ 106,473,948 $ 74,451,081
============= ============
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities:
Revolving lines of credit $ 57,919,969 $ 18,082,472
Automobile receivables backed notes 21,794,650 31,611,989
Subordinated notes and other debt 10,921,777 10,710,330
Accounts payable and accrued liabilities 1,601,405 1,718,901
------------- ------------
Total liabilities 92,237,801 62,123,692
------------- ------------
Stockholder's Equity
Common stock - authorized 20,000,000 shares
$.01 par value; issued and
outstanding - 8,018,752 as of June 30, 1997 and
7,954,752 as of December 31, 1996 80,188 79,548
Additional paid-in capital 18,260,642 18,171,282
Officer note receivable (466,797) (466,797)
Deferred compensation under stock bonus plan (376,851) (385,930)
Retained earnings (deficit) (3,261,035) (5,070,714)
------------- ------------
Total stockholder's equity 14,236,147 12,327,389
------------- ------------
$ 106,473,948 $ 74,451,081
============= ============
</TABLE>
See notes to condensed unaudited financial statements
3
<PAGE>
AUTOINFO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Interest and other finance
revenue $ 9,394,830 $ 5,078,038 $ 5,143,587 $ 2,747,467
Investment income 213,537 515,019 151,933 230,613
Long distance telephone services 177,646 280,149 85,585 137,083
----------- ----------- ----------- -----------
Total revenues 9,786,013 5,873,206 5,381,105 3,115,163
----------- ----------- ----------- -----------
Costs and expenses:
Interest expense 3,547,779 1,670,531 1,978,381 848,972
Operating expenses 4,830,641 2,757,521 2,506,824 1,542,832
Depreciation & amortization 319,584 489,123 167,513 252,460
Unusual item-provision for
credit losses on acquired
automobile receivables -- 2,000,000 -- 2,000,000
----------- ----------- ----------- -----------
Total operating expenses 8,698,004 6,917,175 4,652,718 4,644,264
----------- ----------- ----------- -----------
Income(loss) before
income tax benefit 1,088,009 (1,043,969) 728,387 (1,529,101)
Income tax benefit (721,670) (506,467) (833,108) (590,050)
----------- ----------- ----------- -----------
Net income (loss) $ 1,809,679 $ (537,502) $ 1,561,495 $ (939,051)
=========== =========== =========== ===========
Net income (loss) per share $ .22 $ (.07) $ .19 $ (.12)
=========== =========== =========== ===========
Weighted average number of
common and common ----------- ----------- ----------- -----------
equivalent shares 8,047,000 7,885,000 8,081,000 7,987,000
----------- ----------- ----------- -----------
</TABLE>
See notes to condensed unaudited financial statements
4
<PAGE>
AUTOINFO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,809,679 $ (537,502)
Adjustments to reconcile net income to net cash provided by
(used in) operations activities:
Depreciation and amortization 319,584 489,123
Amortization of deferred compensation 9,081 9,081
Changes in assets and liabilities:
Automobile receivables, net (35,676,816) (13,900,203)
Other assets (297,176) (1,107,739)
Income tax refund receivable 868,269 (540,041)
Accounts payable and accrued liabilities (117,498) (506,468)
------------ ------------
Net cash (used in) operating activities (33,084,877) (16,093,749)
------------ ------------
Cash flows from investing activities:
Capital expenditures (589,907) (1,229,431)
Proceeds from redemptions of short term investments 6,416,358 21,717,616
Purchases of short term investments (5,882,643) (7,912,141)
------------ ------------
Net cash (used in) provided by investing activities (56,192) 12,576,044
------------ ------------
Cash flows from financing activities:
Increase in borrowings 30,231,605 3,750,948
Issuance of common stock 90,000 390,375
Decrease in restricted cash 807,861 --
------------ ------------
Net cash provided by financing activities 31,129,466 4,141,323
------------ ------------
Net (decrease) increase in cash (2,011,603) 623,618
Cash at beginning of period 4,307,038 964,842
------------ ------------
Cash at end of period $ 2,295,435 $ 1,588,460
============ ============
</TABLE>
See notes to condensed unaudited financial statements
5
<PAGE>
AUTOINFO, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1. - Business and Summary of Significant Accounting Policies
Business
The Company's primary business is to purchase non-prime automobile retail
installment contracts from new and used automobile dealers. The Company services
these dealers through CarLoanCo, its wholly owned operating subsidiary, by
providing specialized financing programs for buyers who typically have impaired
credit histories and are unable to access traditional sources of available
consumer credit. In December 1995, the Company acquired the operating assets of
FALK Finance Company ("FFC"), a Norfolk Virginia based specialty financial
services company. The Company also provides long distance telephone
communication services which are marketed through an independent commissioned
sales force.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All significant intercompany
balances and transactions have been eliminated in consolidation.
Automobile Receivables
Automobile receivables represent retail installment sales contracts purchased
from automobile dealers at discounts ranging up to 20%.
Allowance for Credit Losses
The Company established an allowance for credit losses in the FFC acquired
portfolio as of the date of acquisition based upon an evaluation of a number of
factors including prior loss experience, contractual delinquencies, the value of
underlying collateral and other factors. At the time of the purchase of
installment contracts from dealers an allowance for credit losses is established
based on an analysis of similar factors. The allowance is periodically evaluated
for adequacy based upon a review of credit loss experience, delinquency trends,
static pool loss analysis and an estimate of future losses inherent in the
existing finance receivable portfolio. Subsequent to the purchase of loans, a
provision for losses, if any, is charged to income in order to maintain the
allowance at an adequate level. The Company charges the allowance for loss
account at the time a customer receivable is deemed uncollectable. Any reduction
in the required allowance will be amortized to income prospectively as an
adjustment in the yield on the related loans.
The estimate of the allowance for credit losses requires a high degree of
judgment based upon, among other things, the inherent risk associated with the
portfolio of loans being purchased from dealers. Changes in estimates and
additional losses on portfolios could develop in the future based on changes in
economic factors and other circumstances and such changes could be significant.
The Company estimates and records losses as they become apparent, estimable and
probable.
Concentration of Credit Risks
The Company's primary credit risk relates to lending to individuals who cannot
obtain traditional forms of financing. The Company is currently acquiring
automobile receivables in 13 states and, accordingly, does not believe that its
business is subject to credit risk with respect to geographic concentration.
6
<PAGE>
Repossessed Vehicles Held for Sale
The Company repossesses the collateral when a determination is made that
collection efforts are unlikely to be successful. The value of a repossessed
vehicle is based upon an estimate of the net realizable amount upon liquidation.
As of June 30, 1997, there were 415 repossessed vehicles held for resale with an
aggregate value of approximately $1,162,000.
Revenue Recognition
The Company recognizes interest income from automobile receivables on the
interest method. The accrual of interest income is suspended when a loan is
ninety days contractually delinquent. All discounts on the purchase of
installment contracts from dealers are held in reserve and are considered to
cover future anticipated credit losses.
Short-Term Investments
Debt and equity securities used as part of the Company's investment management
that may be sold in response to cash needs, changes in interest rates, and other
factors have been classified as securities available for sale. Such securities
are reported at cost which approximates fair value and have maturities of less
than one year and included:
June 30, December 31,
1997 1996
---------- ------------
Common stock and bond funds $2,456,541 $2,883,524
Money market instruments 958,887 665,619
Municipal bonds 943,056 1,343,056
========== ==========
$4,358,484 $4,892,199
========== ==========
Gains and losses on disposition of securities are recognized on the specific
identification method in the period in which they occur. Unrealized gains and
losses, if material, would be excluded from earnings and reported as a separate
component of stockholders' equity on an after-tax basis. During the three and
six month periods ended June 30, 1997 and 1996, gains and losses arising from
the disposition of marketable securities as well as unrealized gains and losses
were not material.
Fixed Assets
Depreciation of fixed assets is provided on the straight-line method over the
estimated useful lives of the related assets which range from three to five
years.
Goodwill and Other Intangibles
The excess of cost over the fair value of net assets acquired is allocated to
goodwill and other intangibles and is being amortized using the straight-line
method over periods of up to twenty years. In March 1995, the Financial
Accounting Standards Board issued SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets to Be Disposed Of." The pronouncement is effective for fiscal
years beginning after December 15, 1995. This statement requires that long-lived
assets and certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company
currently uses methods that are consistent with SFAS No. 121 to evaluate the
carrying amount of goodwill and other intangibles including comparing estimated
future cash flows identified with each long-lived asset group. For purposes of
such comparison, portions of unallocated excess of cost over net assets acquired
were attributed to related long-lived assets and identifiable intangible assets
based upon the relative fair values of such assets at acquisition. In the fourth
quarter of 1996, the Company determined that certain components of goodwill and
other intangible assets were impaired resulting in a charge to operations of
$11,193,000.
7
<PAGE>
Net Income (Loss) Per Share
Net income (loss) per share of common stock is based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
the period. The net income (loss) per share and the weighted average number of
common and common equivalent shares represent primary earnings per share data.
Fully diluted earnings per share is not presented since its effect is not
significant.
Use of Estimates
The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets, liabilities and contingent liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the periods
presented. Management estimates that are particularly sensitive to change relate
to the determination of the adequacy of the allowance for credit losses on
automobile receivables. The Company believes that all such assumptions are
reasonable and that all estimates are adequate, however, actual results could
differ from those estimates.
Note 2 - General
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions for Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments consisting of normal recurring
accruals considered necessary for a fair presentation have been included.
Operating results for the three and six months ended June 30, 1997 and 1996 are
not necessarily indicative of the results that may be expected for a full fiscal
year. For further information, refer to the financial statement and footnotes
thereto included in the Company's report on Form 10-K for the year ended
December 31, 1996.
8
<PAGE>
AUTOINFO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition And Results of Operations
Forward Looking Statements
Certain statements made in this Quarterly Report on Form 10-Q are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) regarding the plans and objectives of management
for future operations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties. The Company's plans
and objectives are based, in part, on assumptions involving the continued
expansion of business. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein particularly in view of the Company's early stage operations, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved.
General
The Company, since December 1995, has been a specialized consumer finance
company that acquires and services automobile receivables from automobile
dealers selling new and used vehicles to non-prime customers.
Results of Operations
Three and Six Months Ended June 30, 1997 and 1996
Revenues
Revenues for the three month periods ended June 30, 1997 and 1996 were derived
from the interest and other finance revenue ($5,144,000 and $2,747,000,
respectively), investment income ($152,000 and $231,000, respectively) and the
long-distance telephone service business ($86,000 and $137,000, respectively).
Revenues for the six month periods ended June 30, 1997 and 1996 were derived
from the interest and other finance revenue ($9,395,000 and $5,078,000,
respectively), investment income ($213,000 and $515,000, respectively) and the
long-distance telephone service business ($178,000 and $280,000, respectively).
The increase in the interest and other finance revenue is directly related to
the growth in the Company's portfolio of automobile receivables from $47,326,000
to $96,698,000. The decrease in investment income is the result of the
investment by the Company in the growth of the automobile receivables portfolio.
Net Interest Income on Automobile Installment Contracts Receivable
The Company's principal revenue source is the net interest income, or net
spread, earned on its automobile installment contracts receivable. This net
spread is the differential between interest income received on loans receivable
and the interest expense on related loans payable. The following table
summarizes the pertinent data on the Company's automobile contracts receivable
portfolio for the three and six month periods ended June 30, 1997 and 1996:
9
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
1997 1996 1997 1996
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Average loans receivable $ 76,245,000 $38,071,000 $ 85,270,000 $42,089,000
------------- ----------- ------------- -----------
Average loans payable 71,350,000 30,687,000 78,870,000 31,185,000
------------- ----------- ------------- -----------
Interest income $ 8,261,000 $ 4,870,000 $ 4,449,000 $ 2,611,000
Interest expense 3,472,000 1,595,000 1,941,000 811,000
------------- ----------- ------------- -----------
Net interest income $ 4,789,000 $ 3,275,000 $ 2,509,000 $ 1,800,000
------------- ----------- ------------- -----------
Yield on loans (1) 21.7% 25.6% 20.8% 24.8%
Cost of funds 9.7% 10.4% 9.8% 10.4%
------------- ----------- ------------- -----------
Net interest spread 12.0% 15.2% 11.1% 14.4%
------------- ----------- ------------- -----------
Net interest margin (2) 12.6% 17.2% 11.7% 17.1%
------------- ----------- ------------- -----------
</TABLE>
(1) Percentages are presented on an annualized basis
(2) Net interest margin is net interest income divided by average loans
outstanding
Costs and Expenses
Interest expense for the three month periods ended June 30, 1997 and 1996
($1,978,000 and $849,000, respectively) and for the six month periods ended June
30, 1997 and 1996 ($3,548,000 and $1,671,000, respectively) was primarily
related to the debt outstanding under the Company's senior credit facility,
automobile receivables backed notes and subordinated debt. The increase is
directly related to the increase in total outstanding debt utilized to support
the growth of the automobile receivables portfolio.
Operating expenses for the three months ended June 30, 1997 and 1996 ($2,507,000
and $1,543,000, respectively) and for the six months ended June 30, 1997 and
1996 ($4,831,000 and $2,758,000, respectively) consisted primarily of the
operating expenses of the non-prime automobile finance business and corporate
overhead. The increase is directly related to the opening of the Northeast
Region operating center in July 1996 and the general growth of the Company's
automobile finance business.
Depreciation and amortization expense for the three months ended June 30, 1997
and 1996 ($168,000 and $252,000, respectively) and for the six months ended June
30, 1997 and 1996 ($320,000 and $489,000, respectively) consisted primarily of
the depreciation of fixed assets and the amortization of goodwill and other
intangible assets associated with the acquisition of FFC in December 1995. The
decrease is the result of the write-off of goodwill in the fourth quarter of
1996.
The Unusual item - provision for credit losses on acquired automobile
receivables in the quarter ended June 30, 1996 was the result of the Company
recording additional credit losses of $2,000,000 on the portfolio acquired from
FFC in December 1995.
Income (Loss) from Operations
Income (loss) from operations for the three month periods ended June 30, 1997
and 1996 was $728,000 and ($1,529,000), respectively. Income (loss) from
operations for the six month periods ended June 30, 1997 and 1996 was $1,088,000
and ($1,044,000), respectively. Income tax benefits for the three month periods
ended June 30, 1997 and 1996 were $833,000 and $590,000, respectively. Income
tax benefits for the six month periods ended June 30, 1997 and 1996 were
$722,000 and $506,000, respectively. Income tax benefits are primarily the
result of timing differences in the treatment of net chargeoffs for tax
purposes.
10
<PAGE>
Automobile Receivables
The following table provides information regarding the Company's allowance for
credit losses as of June 30, 1997 and December 31, 1996:
June 30, December 31,
1997 1996
----------- ------------
Allowance for credit losses $15,207,000 $ 15,725,000
Percentage of outstanding automobile receivables 15.7% 25.5%
The following table summarizes the Company's delinquent accounts that were more
than 60 days delinquent as of June 30, 1997 and December 31, 1996:
June 30, December 31,
1997 1996
---------------------------------------
Amount % (1) Amount % (1)
---------------------------------------
60 to 89 days delinquent $3,102,000 2.4% $3,290,000 4.1%
90 days or more delinquent 1,620,000 1.3% 1,739,000 2.2%
---------------------------------------
Total delinquent loans $4,722,000 3.7% $4,744,000 6.3%
=======================================
(1) All percentages are based on gross loans outstanding and are
presented on an annualized basis.
Management has reviewed its past due loans and repossessed collateral as of June
30, 1997 and, in management's opinion, the allowance for credit losses is
adequate to absorb losses in the portfolio.
Liquidity and Capital Resources
Since its entry into the Non-Prime Automobile industry in December 1995, the
Company has funded its operations with payments received from automobile
receivables, borrowings under senior credit facilities and the issuance of asset
backed secured notes.
In October 1996, the Company issued $36.3 million of securitized notes backed by
$40.3 million of automobile receivables to a group of institutional investors in
a private placement transaction. These notes were issued in two classes, $ 34.3
million of 6.53% Class "A" notes rated "AAA" by Standard & Poor's Rating Group
and "Aaa" by Moody's Investors Service and $ 2.0 million of 11.31% Class "B"
notes rated "BB" by Standard & Poor's Rating Group. The Class "A" notes were
credit enhanced with an insurance policy issued by MBIA Insurance Corporation.
The proceeds from the securitization were used to fund cash reserve accounts
($5.6 million) and the balance was used to reduce the amount outstanding under
the Company's senior credit facility. Among other provisions, the notes require
the maintenance of certain performance standards with respect to the portfolio
of loan contracts securitized and certain overall financial considerations of
the Company as a whole, including not realizing a net loss from operations in
any two consecutive quarters and maintenance of minimum tangible net worth, as
defined, of $7 million. At June 30, 1997 the Company was in compliance with all
covenants. The Company expects to maintain compliance with these covenants
through 1997 and beyond.
In December 1996, the Company entered into a financing agreement with a lender
which provides for a $100 million line of credit to be used for the funding of
the acquisition of non-prime automobile receivables. This facility provides for
borrowings at LIBOR plus 300 basis points and replaced the Company's existing
$42 million facility. Among other provisions, this facility requires the Company
to maintain tangible net worth, as defined, of $10 million and is cancelable in
the event of a material adverse change in the Company's business. At June 30,
1997 the
11
<PAGE>
Company was in compliance with all covenants. The Company expects to maintain
compliance with these covenants through 1997 and beyond.
The Company has outstanding $10.2 million of subordinated debt. Of this amount,
$8.2 million of 12% notes was included with the liabilities assumed with the
acquisition of FALK Finance Company, Inc. ("FFC") in December 1995 and $2.0
million of 7.55% notes was issued by the Company in 1994.
The Company's liquid assets amounted to $6.7 million as of June 30, 1997. In
addition, the Company had $5.6 million in Restricted Cash Reserve accounts
established pursuant to the Indenture Agreement executed in conjunction with the
issuance of Securitized Notes issued pursuant to the Private Placement
Memorandum dated October 11, 1996.
The total amount of debt outstanding as of June 30, 1997 and December 31, 1996
was $90.6 million and $60.4 million, respectively. This following table presents
the Company's debt instruments and weighted average interest rates on such
instruments as of June 30, 1997 and December 31, 1996, respectively:
June 30, 1997 December 31, 1996
------------- -----------------
Weighted Weighted
Average Average
Balance Rate Balance Rate
------- ---- ------- ----
Revolving lines of credit $57.9 8.69% $18.1 8.75%
Automobile receivable backed notes $21.8 6.97% $31.6 6.75%
Subordinated debt $10.2 11.14% $10.2 11.14%
The Company's ability to continue to acquire automobile receivables as well as
plan for future expansion is directly related to its ability to secure required
capital. The Company has demonstrated the ability to secure warehouse lines of
credit, issue receivable secured notes and obtain subordinated debt. The Company
plans to continue to meet its capital needs through the cash flow generated from
the payment of principal and interest on its outstanding automobile portfolio,
the utilization of its senior credit facility, the issuance of receivable backed
notes and the issuance of subordinated debt instruments. As of June 30, 1997,
$42.1 million is available under the Company's senior credit facility. The
Company believes that it has sufficient liquid assets and available lines of
credit to meet its short and long-term capital requirements.
The Company is primarily engaged in the acquisition of automobile receivables.
It finances this acquisition program through the utilization of available lines
of credit and other forms of debt. Accordingly, an increase in the cost of
borrowing could adversely impact the results of operations by impacting the
spread between interest earned on existing automobile receivables and the cost
of borrowings which, to some degree, are variable. Inflation and changing prices
had no material impact on revenues or the results of operations for the three
and six months ended June 30, 1997.
12
<PAGE>
AUTOINFO, INC. AND SUBSIDIARIES
Part II - OTHER INFORMATION
Item 1 - 3: Inapplicable
Item 4: Submission of Matters to a Vote of Security Holders:
Pursuant to a Notice of Annual Meeting of
Stockholders and the Proxy Statement dated April 22,
1997, the 1997 Annual Meeting of Stockholders of the
Company was held on May 22, 1997. At the Annual
Meeting the following individuals were elected by an
affirmative vote of approximately 85% of the common
shares eligible to vote in person or by proxy as
directors of the Company: Jason Bacher, Robert
Fagenson, Andrew Gaspar, Howard Nusbaum, Jerome
Stengel and Scott Zecher. In addition, the Company's
1997 Stock Option Plan was approved (3,221,305 votes
in favor, 2,600,932 opposed and 25,788 abstentions)
and the Company's 1997 Non-Employee Directors' Stock
Option Plan was approved (3,564,559 votes in favor,
2,301,561 opposed and 24,988 abstentions).
Item 5: Inapplicable
Item 6 (a): The following exhibits are filed with this report:
Exhibit 11 - Calculation of Earnings Per Share
Item 6 (b): No reports on Form 8-K were filed by the Registrant
during the quarter for which this report is filed.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
authorized.
AUTOINFO, INC.
(Registrant)
/s/ Scott Zecher
-----------------------------------
Scott Zecher
President & Chief Executive Officer
/s/ William I. Wunderlich
-----------------------------------
William I. Wunderlich
Treasurer, Secretary and Principal
Financial Officer
Date: August 13, 1997
14
Exhibit 11
AUTOINFO, INC. AND SUBSIDIARIES
Calculation of Earnings Per Share
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Primarily and fully diluted earnings:
Earnings from operations applicable
to common stock $1,809,679 $ (537,502) $1,561,495 $ (939,051)
---------- ----------- ---------- -----------
Shares:
Weighted average number of
common shares outstanding 8,007,730 7,885,487 8,018,752 7,987,088
Add shares issuable from
assumed exercise of options
and warrants 40,131 -- 62,444 --
---------- ----------- ---------- -----------
Weighted average number of
common shares as adjusted 8,047,861 7,885,487 8,081,196 7,987,088
---------- ----------- ---------- -----------
Primary and fully diluted earnings
per common share: $ .22 $ (.07) $ .19 $ (.12)
---------- ----------- ---------- -----------
</TABLE>
15
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 7,868,011
<SECURITIES> 4,358,484
<RECEIVABLES> 96,697,620
<ALLOWANCES> (15,207,260)
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80,188
0
<COMMON> 0
<OTHER-SE> 14,155,959
<TOTAL-LIABILITY-AND-EQUITY> 106,473,948
<SALES> 9,786,013
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<EPS-PRIMARY> 0.220
<EPS-DILUTED> 0.220
</TABLE>
