revenues and results from operations for the second quarter ended June 30, 2002.
The Company reported a net loss of $(2.7) million for the second quarter of 2002 compared with a net loss of $(1.8) million for the second quarter of 2001. The net loss of $(2.7) million included an extraordinary gain on the extinguishment of debt of $5.3 million or $0.25 per diluted share related to the Company's repurchase of $19.0 million aggregate principal amount of its Senior Subordinated Notes (the "Notes") during the second quarter of 2002 for a purchase price of $13.1 million. The net loss for the second quarter of 2002 also included a charge of $(3.9) million or $(0.19) per share for settlement of litigation related to the sale of Neff Machinery, Inc. in December of 1999.
The Company reported second quarter revenues of $48.6 million, compared to revenues of $57.7 million for the second quarter of 2001. Same store rental revenues decreased by 10.3%. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the quarter decreased by 28.0% to $14.5 million, compared to EBITDA of $20.1 million for the quarter ended June 30, 2001.
Consolidated debt at June 30, 2002 was approximately $292.7 million, including approximately $137.3 million of debt outstanding under the Company's revolving credit facility. For the six months ended June 30, 2002, the Company has reduced total outstanding debt by $24.4 million through the repurchase of Notes and applying free cash flow to repay amounts outstanding under the Company's revolving credit facility.
The Company reported revenues of $92.0 million for the six months ended June 30, 2002, a decrease of 21.3% from revenues of $116.9 million for the six months ended June 30, 2001. EBITDA for the six months ended June 30, 2002 decreased by 28.6% to $26.3 million, compared to EBITDA of $36.8 million for the six months ended June 30, 2001. The Company reported a net loss of $(1.2) million or $(0.06) per diluted share for the six months ended June 30, 2002, compared to a net loss of $(16.5) million or $(0.78) per diluted share for the same period last year. The reported net loss for the six months ended June 30, 2002 includes an extraordinary gain on the extinguishment of debt of $12.3 million, or $0.58 per diluted share, related to the Company's repurchase of $24.7 million in an aggregate principal amount of Notes. The reported net loss for the six months ended June 30, 2001 includes a charge of $(9.1) million or $(0.43) per diluted share recorded in the first quarter for branch closure and other related costs.
The Company adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142") effective January 1, 2002. SFAS 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. As part of the adoption of SFAS 142, the Company changed its accounting for goodwill and other indefinite-lived intangible assets from an amortization methodology to an impairment-only methodology. SFAS 142 provided for a six month transitional period from the effective date of adoption to June 30, 2002, for the Company to perform an initial assessment of whether there was an indication that the carrying value of its goodwill was impaired. The Company has completed the initial assessment by comparing its fair value, as determined in accordance with SFAS 142, to its carrying value and has concluded that its goodwill was impaired at January 1, 2002.
The Company is now performing the second step of the impairment testing, which will be completed no later than December 31, 2002. In accordance with the transitional implementation guidance of SFAS 142, once the charge is determined it will be recorded as a cumulative effect of change in accounting principle, retroactive to January 1, 2002. The transitional impairment charge is a one time non- cash charge and will not have an effect on the Company's existing bank covenants. In future periods, the assessment must be performed annually, and any such impairment must be recorded as a charge to operating earnings.
Juan Carlos Mas, President and Chief Executive Officer, stated: "We continue to operate in a challenging business environment. We continue to experience reduced demand for our rental equipment and have seen a further decline of 4-5% in rental rates compared to the same quarter last year. Our operations continue to generate free cash flow and our strategy remains to preserve cash flow and reduce debt. During 2002 we have reduced our total debt outstanding by more than 7% or $24.4 million."
Neff Corp. is one of the largest equipment rental companies in the United States, with 74 locations in 16 states at June 30, 2002. |
