PHOENIX, Sept. 5, 2000 (PRIMEZONE) -- Frontier Adjusters of America, Inc. ("Company") (AMEX:FAJ), a nationwide franchiser and licenser of claims adjusters, reported a decrease in revenue but a significant increase in net income for the fourth quarter and the twelve months of its fiscal year ended June 30, 2000. The decrease in revenue relates to the Company-owned adjusting offices, while the increase in net income is attributed to the large decrease in compensation expenses.
For the three months ended June 30, 2000, revenue decreased by $80,000, or 5 percent, from $1,612,000 in the previous year to $1,532,000. Gross billings of franchisees and licensees increased $209,000, or 2 percent, to $11,615,000 for the three months ended June 30, 2000 compared to $11,406,000 from the same period of the prior year. Net income increased $466,000, or 480%, from a net loss of $97,000, or $.02 per share, in the prior year to a net income of $369,000, or $.04 per share.
For the twelve months ended June 30, 2000, revenue decreased $85,000, or 1 percent, from $6,342,000 in the previous year to $6,257,000. For the 12 months ended June 30, 2000, gross billings of franchisees and licensees increased $1,080,000, or 2 percent, to $45,810,000 compared to $44,730,000 in the prior year. Net income increased by $694,000, or 127 percent, from $546,000, or $.12 per share, in the previous year to $1,240,000, or $.14 per share, in the current year.
The decrease in revenue is largely due to a client in the Phoenix office acquired in November 1997 and lost in early fiscal 2000. Furthermore, the Company sold its Tucson office in January 2000. Prior to the sale, the Company received 100 percent of the revenue generated by the Tucson office. Effective January 1, 2000, the Company sold the Tucson office to a franchisee and now receives the standard commission rate as licensee and franchisee fee revenue. Although adjusting revenue decreased by $319,000 compared to the prior year, the Company experienced an increase of $234,000 over the prior year in licensee and franchisee fees.
Although total revenue decreased, net income increased by 127 percent over the prior year. This increase is largely due to the $1,263,000, or 39 percent, decrease in employee compensation and benefits, resulting from severance packages paid in fiscal 1999. Compensation expenses decreased accordingly in fiscal 2000. Other notable differences in fiscal 2000 as compared to the prior year include the $250,000 increase in service fees paid to United Financial Adjusting Company (the Company's majority shareholder), a $261,000 decrease in expenses other than compensation and service fees, and a $42,000 decrease in other income.
Frontier Adjusters of America, Inc. licenses and franchises independent claims adjusters throughout North America, with more than 670 advertised locations in 50 states, the District of Columbia, and Canada. The Company also owns and operates independent insurance adjusting businesses in Arizona and Nevada.
From time to time, Frontier makes forward-looking statements in its public disclosures. This press release includes statements with respect to future operations that may constitute forward-looking statements 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.
FRONTIER ADJUSTERS OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
3 Mos. Ended 12 Mos. Ended
6/30/00 6/30/99 6/30/00 6/30/99
------- ------- ------- -------
Gross Billings of
Licensees $11,615,000 $11,406,000 $45,810,000 $44,730,000
Revenue 1,531,742 1,611,930 6,256,896 6,341,584
Income from
Operations 571,946 (214,740) 1,882,482 753,577
Income before
Taxes 630,846 (85,161) 2,069,455 982,142
Net Income 369,472 (97,179) 1,240,369 546,452
Net Income Per
Common Share:
Basic &
Diluted $ .04 $ (.02) $ .14 $ .12
Weighted Average Shares Outstanding:
Basic 8,957,660 4,459,723 8,957,586 4,569,049
Diluted 8,957,660 4,459,723 8,957,586 4,570,113