AMTPQ Ameritrans Capital Corporation (CE)

Ameritrans Capital Corporation (NASDAQ: AMTC, AMTCP) today reported financial results for its fourth quarter and year ended June 30, 2009.

Financial Highlights

                      Q4-2009   Q4-2008   FY 2009   FY 2008     Total  

PerShare

  Total  

PerShare

  Total  

PerShare

  Total  

PerShare

Investment Income   $258,742   $ 0.08   $1,424,281   $0.42   $3,344,324   $0.99   $6,260,277   $1.84 Net Investment loss   $(1,265,330)   $(0.37)   $(201,011)   $(0.06)   $(2,939,960)   $(0.87)   $ (46,250)   $(0.01) Net decrease in net assets from operations   $(2,906,900)   $(0.85)   $(311,876)   $(0.09)   $(5,462,453)   $(1.61)   $ (535,571)   $(0.16) Net decrease in net assets available to common shareholders   $(2,906,900)   $(0.85)   $(396,251)   $(0.12)   $(5,715,578)   $(1.68)   $(875,071)   $(0.26)  

Total fair value of investments:

    June 30, 2009: $26.4 million June 30, 2008: $59.6 million  

Net assets value per common share:

June 30, 2009: $3.40 June 30, 2008: $5.06  

Stockholders' equity:

June 30, 2009: $15.1 million June 30, 2008: $20.8 million  

Number of portfolio company investments:

June 30, 2009: 78 June 30, 2008: 381

OPERATING RESULTS

For the fiscal year ended June 30, 2009 Ameritrans Capital Corporation (the “Company”) reported a decrease in net assets from operations available to common shareholders of $5,715,578, or a decrease of $1.68 per outstanding share of Common Stock. This compares with the fiscal year ended June 30, 2008 where the Company reported a decrease in net assets from operations available to common shareholders of $875,071 or $0.26 per share.

For the quarter ended June 30, 2009, Ameritrans Capital reported a net investment loss of $1,265,330 or approximately $0.37 per share. Net investment loss for the fourth quarter of Fiscal 2008 was $201,011 or approximately $0.06 per share. Net investment income can vary substantially from period to period for various factors, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, quarterly comparisons of net income may not be meaningful.

For the fiscal year ended June 30, 2009 the Company reported a decrease in net assets from operations of $5,462,453, or a decrease of $1.61 per outstanding share of Common Stock. The factors contributing to this decrease were: an operating loss of $2,939,960, an unrealized write-down of $1,095,408 in the Company’s life settlement portfolio, a $604,693 realized loss on an investment in a sanitary ware distributor, a $339,371 realized loss on the sale of the Company’s taxicab medallion loan portfolio, a $250,000 reduction in the value of the fair value of a loan, a $195,000 reduction in the value of a loan due to the subsequent sale of the foreclosed property, a $95,000 reduction in the value of an LLC equity investment in a condominium conversion construction project, an approximate $94,000 write off of collateral previously acquired, and a total of approximately $455,000 of losses associated with fair value adjustments in other portfolio investments. Offsetting these amounts were increases to the fair value of the Company’s corporate loan portfolio of approximately $185,000 and other miscellaneous increases of $420,000 to reflect realize values for assets acquired and certain other fair value adjustments.

As of June 30, 2009, total assets were approximately $28.2 million, stockholders' equity was approximately $15.1 million and net asset value per share was $3.40.

The following table shows the Company’s portfolio by security type at June 30, 2009 and June 30, 2008:

            June 30, 2009   June 30, 2008 Security Type Cost   Fair Value   % (1)   Cost   Fair Value   % (1) Medallion Loans $ 362,611 $ 356,700 1.3 % $ 29,609,325 $ 29,870,342 50.0 % Commercial Loans 12,094,430 11,293,132 42.8 % 14,244,545 13,833,085 23.3 % Corporate Loans 12,007,939 12,193,255 46.2 % 11,578,846 11,507,970 19.3 % Life Settlement Contracts 2,859,489 1,764,081 6.7 % 2,842,458 2,842,458 4.8 % Equity Securities   1,444,927     802,300   3.0 %     2,156,008     1,544,432   2.6 % Total $ 28,769,396   $ 26,409,468   100.0 %   $ 60,431,182   $ 59,598,287   100.0 %  

(1)  Represents percentage of total portfolio at fair value.

The fair value of the Company’s investments at June 30, 2009 was approximately $26.4 million. These portfolio investments (which exclude cash and cash equivalents) were comprised of approximately 46.2% in Corporate Loans (100% of which were first lien), 42.8% in Commercial Loans (approximately 78% of which are secured by real estate), approximately 6.7% in Life Settlement Contracts, approximately 3.0% in Equity Securities, and approximately 1.3% in taxicab medallion loans. As of June 30, 2009, the weighted average yield of debt and income producing securities at fair value was approximately 7.8% and approximately 97% of the Company's assets were in floating rate debt securities.

Michael Feinsod, CEO and President of Ameritrans, stated "We had anticipated Fiscal 2009 would be a transformation year for the Company as we moved out of the taxicab medallion loan business and scaled up our portfolio of Corporate Loans. While we were able to successfully close the sale of our medallion portfolio and pay down substantially all of our bank debt to date, due to the credit market difficulties over the past year, the Company has been unable to secure additional debt financing to grow its investment portfolio. During the year, we pursued various capital raising opportunities, but were unable to put any financing in place. In December, 2008, our SBIC subsidiary submitted an application for additional SBA guaranteed debentures. Over the past months, we have had significant communications with SBA. As of today however, SBA has not made a formal determination regarding Elk’s debenture application. Based upon our continued discussions, we remain cautiously optimistic that Elk’s request for additional debentures will be approved.

Our portfolio quality deteriorated over the year with loans on non accrual status increasing to $3,249,070 as of June 30, 2009, as compared to $175,008 as of June 30, 2008. Since the end of the fiscal year, we have worked with our borrowers to maximize and protect the value of our portfolio. We believe our portfolio remains well positioned with significant weightings in widely diversified industries. Although we experienced our most significant quarter of net unrealized depreciation mostly resulting from marking our assets lower to reflect fair value, we experienced only one new non-accruing loan during the fourth quarter."

"While Fiscal 2009 was challenging, we remain focused on strengthening our balance sheet and liquidity, managing and reducing our cost structure and aggressively managing credit quality in our Commercial and Corporate Loan portfolios and opportunistically exploring initiatives to enhance shareholder value,” Mr. Feinsod added.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2009, Ameritrans Capital had $885,434 in cash and cash equivalents and $370,000 in total bank debt outstanding. The Company also had $12 million of SBA guaranteed debentures outstanding, and an application pending for additional debentures.

PREFERRED DIVIDEND

On July 28, 2009, the Board of Directors announced that the Company decided not to pay the dividend of $0.28125 per share on its Preferred Stock for the period April 1, 2009 through June 30, 2009. The dividend on the Preferred Stock for the period April 1, 2009 through June 30, 2009 will remain in arrears and will be paid to shareholders, when and as declared by the Board of Directors of the Company.

ABOUT AMERITRANS CAPITAL CORPORATION

Ameritrans Capital Corporation is an internally managed, closed-end investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended. Ameritrans originates, structures and manages a portfolio of secured business loans and selected equity investments. Ameritrans' wholly owned subsidiary Elk Associates Funding Corporation is licensed by the United States Small Business Administration as a Small Business Investment Company (SBIC). The Company maintains its offices at 747 Third Avenue, 4th Floor, New York, NY 10017.

FORWARD-LOOKING STATEMENTS

Statements included herein or on the webcast/conference call may constitute "forward-looking statements," which relate to future events or our future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and condition may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission. Ameritrans Capital Corporation undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call.

AVAILABLE INFORMATION

Ameritrans Capital Corporation's filings with the Securities and Exchange Commission, press releases, earnings releases and other financial information are available on its website at www.ameritranscapital.com.

 

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

June 30, 2009 and 2008

    2009 2008  

Assets (Note 6)

  Investments at fair value (cost of $28,769,396 and $60,431,182, respectively): Non-controlled/non-affiliated investments $ 25,080,451 $ 56,782,716 Non-controlled affiliated investments 711,000 1,424,264 Controlled affiliated investments   618,017   1,391,307   Net investments at fair value 26,409,468 59,598,287   Cash and cash equivalents 885,434 665,893 Accrued interest receivable 540,213 602,956 Assets acquired in satisfaction of loans 28,325 38,250 Furniture, equipment and leasehold improvements, net 130,217 156,125 Deferred loan costs, net 146,096 186,760 Prepaid expenses and other assets   146,403   733,197   Total assets $ 28,286,156 $ 61,981,468    

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

June 30, 2009 and 2008

  2009 2008

Liabilities and Stockholders’ Equity

  Liabilities: Debentures payable to SBA $ 12,000,000 $ 12,000,000 Notes payable, banks 370,000 28,095,697 Note payable – related party - 100,000 Accrued expenses and other liabilities 562,149 640,576 Accrued interest payable 210,165 262,528 Dividends payable   -     84,375     Total liabilities $ 13,142,314   $ 41,183,176     Commitments and contingencies (Notes 12 and 13)   Stockholders’ equity: Preferred stock 9,500,000 shares authorized, none issued or outstanding - - 9-3/8% cumulative participating redeemable preferred stock $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding 3,600,000 3,600,000 Common stock, $.0001 par value; 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding 341 341 Deferred compensation (Note 15) (29,166 ) (40,921 ) Stock options outstanding (Note 15) 191,040 141,668 Additional paid-in capital 21,139,504 21,139,504 Losses and distributions in excess of earnings (7,327,949 ) (2,895,992 ) Net unrealized depreciation on investments   (2,359,928 )   (1,076,308 ) Total 15,213,842 20,868,292 Less: Treasury stock, at cost, 10,000 shares of common stock   (70,000 )   (70,000 )   Total stockholders’ equity   15,143,842     20,798,292     Total liabilities and stockholders’ equity $ 28,286,156   $ 61,981,468     Net asset value per common share $ 3.40   $ 5.06        

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 2009, 2008 and 2007

  2009 2008 2007 Investment income: Interest on loans receivable: Non-controlled/non-affiliated investments $ 3,023,497 $ 5,663,970 $ 4,960,257 Non-controlled affiliated investments 13,981 21,002 116,675 Controlled affiliated investments   67,776     234,652     141,238   3,105,254 5,919,624 5,218,170 Fees and other income 239,070 340,653 582,117 Leasing income   -     -     76,383   Total investment income   3,344,324     6,260,277     5,876,670   Operating expenses: Interest 1,090,074 2,357,504 2,117,675 Salaries and employee benefits 2,216,963 1,872,228 1,773,167 Occupancy costs 280,502 268,502 232,195 Professional fees 1,808,979 786,021 825,023 Directors fees and expenses 107,715 114,134 60,712 Other administrative expenses 770,126 908,408 971,379 Loss and impairments on assets acquired in satisfactionof loans, net   9,925     -     54,339   Total operating expenses   6,284,284     6,306,797     6,034,490   Net investment loss   (2,939,960 )   (46,520 )   (157,820 ) Net realized gains (losses) on investments: Non-controlled/non-affiliated investments (642,495 ) (349,612 ) 456,402 Non-controlled affiliated investments (604,693 ) - (145,307 ) Controlled affiliated investments   8,315     555,041     -   (1,238,873 ) 205,429 311,095 Net unrealized appreciation (depreciation) on investments   (1,283,620 )   (696,480 )   45,797   Net realized/unrealized gains (losses) on investments   (2,522,493 )   (491,051 )   356,892   Net increase (decrease) in net assets from operations (5,462,453 ) (537,571 ) 199,072 Distributions to preferred shareholders   (253,125 )   (337,500 )   (337,500 ) Net decrease in net assets from operations available tocommon shareholders $ (5,715,578 ) $ (875,071 ) $ (138,428 ) Weighted Average Number of Common Shares Outstanding: Basic and diluted   3,395,583     3,394,981     3,391,208   Net Decrease in Net Assets from Operations Per Common Share: Basic and diluted $ (1.68 ) $ (0.26 ) $ (0.04 )