PHOENIX, May 15, 2001 (PRIMEZONE) -- Frontier Adjusters of America, Inc. ("the Company") (AMEX:FAJ), a nationwide franchisor and licensor of claims adjusters, reported an increase in net income for the third quarter and first nine months of its 2001 fiscal year.
For the three months ended March 31, 2001, net income increased $149,000, or 48.8%, to $454,000 compared to $305,000 in the same period of the prior year. Revenue was $1,556,000, up $74,000 or 5.0% this quarter from $1,482,000 in the same quarter of the prior fiscal year. Earnings per share increased to $.05 per share as compared to $.03 per share in the same of the prior year. Gross billings of franchisees and licensees increased $967,000 to $12,107,000 from $11,140,000 in the same three-month period of the previous year.
For the nine months ended March 31, 2001, net income increased $486,000, or 55.8%, to $1,357,000 compared to $871,000 in the same period of the prior fiscal year. Although revenue was down $103,000, or 2.2%, during the nine months ended March 31, 2001, earnings per share increased to $.15 per share from $.10 per share for the same period in fiscal year 2000. For the nine-month period, gross billings of franchisees and licensees increased $1,198,000 or 3.5% to $35,393,000 in the current year compared to $34,195,000 in the nine-month period of the prior year.
The largest item impacting net income during the nine months ended March 31, 2001 was a $556,000 decrease in compensation and fringe benefits from $1,682,000 in the prior year to $1,126,000 in the current year. This is the result of a decrease in officer compensation costs resulting from the resignation of an executive officer in January of 2000 and a decrease in compensation paid to commission-based adjusters. Also, compensation paid to employees decreased due to the departure and non-replacement of certain salaried personnel.
Net income was also affected by the $103,000 decrease in revenue from $4,725,000 in the nine-month period ending March 31, 2000 to $4,622,000 in the current fiscal year. While the Company's revenue from continuing licensee and franchisee fees increased $223,000 or 5.8% from $3,842,000 in the nine months ended March 31, 2001 to $4,065,000 in the current nine-month period, revenue from adjusting and risk management fees declined $326,000 or 36.9% from $883,000 in the prior year to $557,000 in the current nine-month period. This decrease is due to lower volume in the Phoenix and Las Vegas/Henderson, Nevada offices and the sale of the Tucson, Ariz. office in January of 2000. In April of 2001, the Company entered into agreements to sell its Phoenix and Las Vegas/Henderson adjusting offices effective April 30, 2001 and May 31, 2001, respectively. Therefore, the Company expects adjusting and risk management fees to decrease to zero with a corresponding decrease in related expenses.
Frontier Adjusters of America, Inc. licenses and franchises independent claims adjusters throughout North America, with 686 advertised locations in the U.S. and Canada.
From time to time, the Company makes forward-looking statements in its public disclosures. This press release includes statements with respect to operations and expenditures of the Company that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Important risks and uncertainties that could cause the Company's results to differ materially from those contained in such forward-looking statements are contained in the Company's filings with the Securities and Exchange Commission, including Frontier's Annual Report on Form 10-K for the year ended June 30, 2000. In addition, the Company terminated its service agreement with United Financial Adjusting Company ("UFAC") effective April 30, 2001. Under the UFAC agreement, the Company paid $25,000 per month for various services including management and marketing. The Company believes that it will incur additional expense in replacing these services and that this may have an adverse effect on the Company's results of operations.
FRONTIER ADJUSTERS OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
3/31/01 3/31/00 3/31/01 3/31/00
Gross Billings
of Licensees $12,107,000 $11,140,000 $35,393,000 $34,195,000
Revenue 1,556,000 1,482,000 4,622,000 4,725,000
Income from
Operations 672,000 468,000 2,021,000 1,311,000
Income before
Taxes 714,000 509,000 2,195,000 1,439,000
Net Income 454,000 305,000 1,357,000 871,000
Net Income per
Common Share:
Basic & Diluted $ 0.05 $ 0.03 $ 0.15 $ 0.10
Weighted Average
Shares
Outstanding:
Basic & Diluted 8,957,660 8,957,564 8,957,660 8,957,561