Asta Funding Inc. (ASFI, Financial) filed Quarterly Report for the period ended 2009-03-31.
Asta Funding Inc. is a consumer finance company specializing in the business of purchasing selling and servicing retail automobile installment contracts originated by dealers in the sale primarily of used automobiles. Through its purchases the company provides indirect financing to borrowers with limited credit histories lower than average incomes or past credit problems. Asta Funding Inc. has a market cap of $53.2 million; its shares were traded at around $3.73 with a P/E ratio of 1.2 and P/S ratio of 0.5. The dividend yield of Asta Funding Inc. stocks is 2.2%. Asta Funding Inc. had an annual average earning growth of 42.6% over the past 5 years.
During the first six months of fiscal year 2009, gross collections decreased 30.3% to $123.2 million from $176.7 million for the six months ended March 31, 2008. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $24.7 million for the six months ended March 31, 2009 as compared to the same period in the prior year and averaged 35.9% of collections for the six months ended March 31, 2009 as compared to 39.1% in the same prior year period. Net collections decreased by 26.7% to $79.0 million from $107.7 million for the six months ended March 31, 2008. The Company pays a third party servicer a fee of $275,000 per month for twenty-five months for its consulting and skiptracing efforts in connection with the Portfolio Purchase. This fee, which began in May 2007 and ends in May 2009, is recorded as part of general and administrative expenses.
General and Administrative Expenses. During the six months ended March 31, 2009, general and administrative expenses increased $0.5 million, or 3.4% to $13.4 million from $12.9 million for the six months ended March 31, 2008, and represented 22.9% of total expenses (excluding income taxes) for the six months ended March 31, 2009 as compared to 22.1% for the six month period ended March 31, 2008. The increase in general and administrative expenses was primarily due to an increase in collection expenses that resulted from the higher cost of maintaining the increased number of debtor accounts acquired in the past several years. In addition, professional fees increased during the six-month period ended March 31, 2009 resulting from work related to the bank amendments that were finalized on February 20, 2009. Also, amortization increased during the six-month period ended March 31, 2009 as compared to the same prior year period, reflecting increased amortization expense related to the fees on the loan amendments. The increased collection and amortization expenses were partially offset by lower postage and lower salary and salary -related expenses in fiscal year 2009 compared to the prior year. The reduced postage expense resulted from the reduced portfolio purchases in fiscal year 2009. The reduced salary expense reflected lower average number of employees during the six-month period ended March 31, 2009 compared to the same prior year period, in part, the result of the closing of the Pennsylvania collection facility. The cost of closing the Pennsylvania call center in February 2009 was approximately $250,000 and was included in general and administrative expense in the three month period ended March 31, 2009. This action is estimated to save the Company approximately $1.5 million annually.
Finance income. For the three months ended March 31, 2009, finance income decreased $15.8 million or 46.6% to $18.1 million from $33.9 million for the three months ended March 31, 2008. The Portfolio Purchase was accounted for using the interest method for the three-month period ended March 31, 2008, during which time $8.8 million in finance income was recognized. The Portfolio Purchase was transferred to the cost recovery method effective in the third quarter of fiscal year 2008. As a result of the transfer, no finance income was recognized on the Portfolio Purchase for the three-month period ended March 31, 2009. In addition, receivables under the interest method of accounting, excluding the Portfolio Purchase, declined $105 million from $242.6 million at March 31, 2008 to $137.5 million at March 31, 2009. The decrease in the average level of consumer receivables is largely attributable to the impairments recorded, amortization of the portfolios and the decrease in portfolio purchases down from $155 million of face value receivables at a cost of $3.8 million during the three-month period ended March 31, 2008, to $44.0 million of face value receivables at a cost of $1.6 million during the three-month period ended March 31, 2009. This decline results in the further reduction of finance income by $7.0 million.
During the second quarter of fiscal year 2009, gross collections decreased 34.3% to $57.4 million from $87.4 million for the three months ended March 31, 2008. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $17.2 million, or 45.6%, for the three months ended March 31, 2009 as compared to the same period in the prior year and averaged 35.7% during the three-month period ended March 31, 2009. Net collections decreased by 25.8% to $36.9 million from $49.8 million for the three months ended March 31, 2008. The Company pays a third party servicer a monthly fee of $275,000 per month for twenty-five months for its consulting and skiptracing efforts in connection with the Portfolio Purchase. This fee, which began in May 2007, is recorded as part of general and administrative expenses. The final payment is due in May 2009.
On February 20, 2009, the Company entered into the Seventh Amendment to the Credit Facility in order to, among other items, reduce the level of the loan commitment, redefine certain financial covenant ratios, revise the requirement for an unqualified opinion on annual audited financial statements, and permit certain encumbrances relating to restructuring of the BMO Facility. Pursuant to the Seventh Amendment, the loan commitment has been revised down from $175.0 million to the following schedule: (1) $90.0 million until March 30, 2009, (2) $85.0 million from March 31, 2009 through June 29, 2009, and (3) $80.0 million from June 30, 2009 and thereafter. In addition, the Company shall pay interest to the Bank Group at the following rates: the lesser of LIBOR plus an applicable margin or the prime rate plus an applicable margin per annum or, at the election of the Company, the applicable LIBOR Rate plus the Applicable LIBOR Margin per annum, based on the aggregate Advances outstanding from time to time; provided, however, at no time shall the interest rate be less than five hundred (500) basis points per annum. Beginning with the fiscal year ending September 30, 2008 (and for each period included in calculating fixed charge coverage ratio for the fiscal year ending September 30, 2008) and continuing thereafter for each reporting period thereafter (and for each period included in calculating fixed charge coverage ratio for such reporting period), EBITDA and fixed charges attributable to Palisades XVI shall be excluded from the computation of the fixed charge coverage ratio for Asta Funding and its Subsidiaries. In addition, the fixed charge coverage has been revised to exclude impairment expense of portfolios of consumer receivables acquired for liquidation and increase the ratio from a minimum of 1.50 to 1.0 to a minimum of 1.75 to 1.0. In addition, the Seventh Amendment provides that a qualification on the Companys audited financial statements, as consolidated, resulting solely from the Bank Group maturity date being scheduled to occur in less than one year shall not be deemed to violate the Credit Agreement. The permitted encumbrances under the Credit Agreement were revised to include certain encumbrances incurred by the Company in connection with certain guarantees and liens provided to BMO Facility and the Family Entity. Further, individual portfolio purchases in excess of $7.5 million will now require the consent of the agent and portfolio purchases in excess of $15.0 million in the aggregate during any 120 day period will require the consent of the Bank Group. The Company and the Bank Group are in the beginning phase of discussions to renew the current Loan Agreement. If, however, a renewal cannot be ultimately agreed to, the Company, at maturity, will consider the sale of assets collateralized by this loan agreement, to satisfy its obligations after July 11, 2009.
Read the The complete ReportASFI is in the portfolios of Bruce Sherman of Private Capital Management.
Asta Funding Inc. is a consumer finance company specializing in the business of purchasing selling and servicing retail automobile installment contracts originated by dealers in the sale primarily of used automobiles. Through its purchases the company provides indirect financing to borrowers with limited credit histories lower than average incomes or past credit problems. Asta Funding Inc. has a market cap of $53.2 million; its shares were traded at around $3.73 with a P/E ratio of 1.2 and P/S ratio of 0.5. The dividend yield of Asta Funding Inc. stocks is 2.2%. Asta Funding Inc. had an annual average earning growth of 42.6% over the past 5 years.
Highlight of Business Operations:
Finance income. For the six-month period ended March 31, 2009, finance income decreased $31.5 million or 46.3% to $36.5 million from $68.0 million for the six-month period ended March 31, 2008. The purchase of the $6.9 billion in face value receivables for a purchase price of $300 million in March 2007 (the Portfolio Purchase) was accounted for using the interest method for the six month period ended March 31, 2008, during which time $17.7 million in finance income was recognized. The Portfolio Purchase was transferred to the cost recovery method effective at the beginning of the third quarter of fiscal year 2008. As a result of the transfer, no finance income was recognized on the Portfolio Purchase for the six month period ended March 31, 2009. In addition, receivables under the interest method of accounting, excluding the Portfolio Purchase, declined $105 million from $242.6 million at March 31, 2008 to $137.5 million at March 31, 2009. The decrease in the average level of consumer receivables is attributable impairments recorded, amortization of the portfilos and portfolio purchases down from $1.3 billion of face value receivables at a cost of $41.3 million during the six-month period ended March 31, 2008, to $91.5 million of face value receivables at a cost of $2.7 million during the six-month period ended March 31, 2009. This decline results in the further reduction of finance income by $13.8 million.During the first six months of fiscal year 2009, gross collections decreased 30.3% to $123.2 million from $176.7 million for the six months ended March 31, 2008. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $24.7 million for the six months ended March 31, 2009 as compared to the same period in the prior year and averaged 35.9% of collections for the six months ended March 31, 2009 as compared to 39.1% in the same prior year period. Net collections decreased by 26.7% to $79.0 million from $107.7 million for the six months ended March 31, 2008. The Company pays a third party servicer a fee of $275,000 per month for twenty-five months for its consulting and skiptracing efforts in connection with the Portfolio Purchase. This fee, which began in May 2007 and ends in May 2009, is recorded as part of general and administrative expenses.
General and Administrative Expenses. During the six months ended March 31, 2009, general and administrative expenses increased $0.5 million, or 3.4% to $13.4 million from $12.9 million for the six months ended March 31, 2008, and represented 22.9% of total expenses (excluding income taxes) for the six months ended March 31, 2009 as compared to 22.1% for the six month period ended March 31, 2008. The increase in general and administrative expenses was primarily due to an increase in collection expenses that resulted from the higher cost of maintaining the increased number of debtor accounts acquired in the past several years. In addition, professional fees increased during the six-month period ended March 31, 2009 resulting from work related to the bank amendments that were finalized on February 20, 2009. Also, amortization increased during the six-month period ended March 31, 2009 as compared to the same prior year period, reflecting increased amortization expense related to the fees on the loan amendments. The increased collection and amortization expenses were partially offset by lower postage and lower salary and salary -related expenses in fiscal year 2009 compared to the prior year. The reduced postage expense resulted from the reduced portfolio purchases in fiscal year 2009. The reduced salary expense reflected lower average number of employees during the six-month period ended March 31, 2009 compared to the same prior year period, in part, the result of the closing of the Pennsylvania collection facility. The cost of closing the Pennsylvania call center in February 2009 was approximately $250,000 and was included in general and administrative expense in the three month period ended March 31, 2009. This action is estimated to save the Company approximately $1.5 million annually.
Finance income. For the three months ended March 31, 2009, finance income decreased $15.8 million or 46.6% to $18.1 million from $33.9 million for the three months ended March 31, 2008. The Portfolio Purchase was accounted for using the interest method for the three-month period ended March 31, 2008, during which time $8.8 million in finance income was recognized. The Portfolio Purchase was transferred to the cost recovery method effective in the third quarter of fiscal year 2008. As a result of the transfer, no finance income was recognized on the Portfolio Purchase for the three-month period ended March 31, 2009. In addition, receivables under the interest method of accounting, excluding the Portfolio Purchase, declined $105 million from $242.6 million at March 31, 2008 to $137.5 million at March 31, 2009. The decrease in the average level of consumer receivables is largely attributable to the impairments recorded, amortization of the portfolios and the decrease in portfolio purchases down from $155 million of face value receivables at a cost of $3.8 million during the three-month period ended March 31, 2008, to $44.0 million of face value receivables at a cost of $1.6 million during the three-month period ended March 31, 2009. This decline results in the further reduction of finance income by $7.0 million.
During the second quarter of fiscal year 2009, gross collections decreased 34.3% to $57.4 million from $87.4 million for the three months ended March 31, 2008. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $17.2 million, or 45.6%, for the three months ended March 31, 2009 as compared to the same period in the prior year and averaged 35.7% during the three-month period ended March 31, 2009. Net collections decreased by 25.8% to $36.9 million from $49.8 million for the three months ended March 31, 2008. The Company pays a third party servicer a monthly fee of $275,000 per month for twenty-five months for its consulting and skiptracing efforts in connection with the Portfolio Purchase. This fee, which began in May 2007, is recorded as part of general and administrative expenses. The final payment is due in May 2009.
On February 20, 2009, the Company entered into the Seventh Amendment to the Credit Facility in order to, among other items, reduce the level of the loan commitment, redefine certain financial covenant ratios, revise the requirement for an unqualified opinion on annual audited financial statements, and permit certain encumbrances relating to restructuring of the BMO Facility. Pursuant to the Seventh Amendment, the loan commitment has been revised down from $175.0 million to the following schedule: (1) $90.0 million until March 30, 2009, (2) $85.0 million from March 31, 2009 through June 29, 2009, and (3) $80.0 million from June 30, 2009 and thereafter. In addition, the Company shall pay interest to the Bank Group at the following rates: the lesser of LIBOR plus an applicable margin or the prime rate plus an applicable margin per annum or, at the election of the Company, the applicable LIBOR Rate plus the Applicable LIBOR Margin per annum, based on the aggregate Advances outstanding from time to time; provided, however, at no time shall the interest rate be less than five hundred (500) basis points per annum. Beginning with the fiscal year ending September 30, 2008 (and for each period included in calculating fixed charge coverage ratio for the fiscal year ending September 30, 2008) and continuing thereafter for each reporting period thereafter (and for each period included in calculating fixed charge coverage ratio for such reporting period), EBITDA and fixed charges attributable to Palisades XVI shall be excluded from the computation of the fixed charge coverage ratio for Asta Funding and its Subsidiaries. In addition, the fixed charge coverage has been revised to exclude impairment expense of portfolios of consumer receivables acquired for liquidation and increase the ratio from a minimum of 1.50 to 1.0 to a minimum of 1.75 to 1.0. In addition, the Seventh Amendment provides that a qualification on the Companys audited financial statements, as consolidated, resulting solely from the Bank Group maturity date being scheduled to occur in less than one year shall not be deemed to violate the Credit Agreement. The permitted encumbrances under the Credit Agreement were revised to include certain encumbrances incurred by the Company in connection with certain guarantees and liens provided to BMO Facility and the Family Entity. Further, individual portfolio purchases in excess of $7.5 million will now require the consent of the agent and portfolio purchases in excess of $15.0 million in the aggregate during any 120 day period will require the consent of the Bank Group. The Company and the Bank Group are in the beginning phase of discussions to renew the current Loan Agreement. If, however, a renewal cannot be ultimately agreed to, the Company, at maturity, will consider the sale of assets collateralized by this loan agreement, to satisfy its obligations after July 11, 2009.
Read the The complete ReportASFI is in the portfolios of Bruce Sherman of Private Capital Management.
