SOURCE: Access Plans, Inc.

Access Plans, Inc.

December 16, 2010 08:28 ET

Access Plans Reports FY2010 Operating Results

Company Earns $3.1 Million, or $0.15 per Diluted Share, in Fiscal Year Ended September 30, 2010

NORMAN, OK--(Marketwire - December 16, 2010) - Access Plans, Inc. (OTCBB: APNC), a leading membership benefits marketing company, today announced its operating results for the quarter and fiscal year ended September 30, 2010.

For the twelve months ended September 30, 2010, revenues increased approximately 41% to $55.3 million, compared with $39.1 million in the previous fiscal year. The increase in revenues was primarily due to the acquisition of the operations of Access Plans USA on April 1, 2009. Operating income increased to $4.8 million in FY2010, versus $4.3 million in FY2009. The provision for income taxes increased 68% to $1.8 million (37% of pretax income) in the 2010 fiscal year, compared with $1.0 million (23.4% of pretax income) in FY2009. Net income for FY2010 totaled $3.0 million, or $0.15 per diluted share, compared with $3.4 million, or $0.19 per diluted share, in FY 2009. The number of weighted average diluted shares outstanding approximated 19.9 million during the most recent fiscal year, compared with 18.2 million shares in the previous fiscal year.

Revenues for the three months ended September 30, 2010 increased approximately 4% to $14.2 million, compared with $13.6 million in the fourth quarter of FY2009. Operating income declined to $0.59 million, versus $1.15 million in the prior-year period, reflecting incremental front-loaded sales and marketing expenses associated with a new program within the Company's Retail Plans division. Net income approximated $0.47 million, or $0.02 per diluted share, in the fourth quarter of FY2010, compared with $1.29 million, or $0.06 in the corresponding period of the previous fiscal year.

"Fiscal 2010 was a transitional year for our Company. We invested significant sales and marketing dollars to expand the product and market opportunities available to our Retail Plans division and position our Insurance Marketing division to mitigate the challenges presented by the reduction in Major Medical Insurance commissions that was mandated by the Healthcare Reform Act enacted last March by offering an expanded array of supplemental products," noted Danny Wright, Chief Executive Officer of Access Plans, Inc. "We believe that these strategies and the investments into new marketing initiatives within the Retail division, along with continued revenue growth and the moderation in involuntary unemployment waiver expenses within the Wholesale Plans division, will produce strong operating results in Fiscal 2011."

Wholesale Plans

Wholesale Plans division revenue increased 15% to $22.4 million in the fiscal year ended September 30, 2010, versus $19.5 million in the previous fiscal year, while operating income increased 100% to $4.0 million, compared with $2.0 million in fiscal 2009.

In the fourth quarter of FY2010, revenues in the Wholesale Plans division increased 21% to $5.8 million, versus $4.8 million in the prior-year period. The increase in fourth quarter revenue was attributable to improved sell-through at existing customer locations, along with the addition of new accounts. Gross margin tripled to $1.9 million, compared with $0.6 million a year earlier, due to the revenue increase and a reduction in involuntary unemployment waiver expenses resulting from lower levels of initial unemployment claims nationally relative to the prior-year period. Operating income at the division increased 650% to $1.5 million in the most recent quarter, versus $0.2 million in the fourth quarter of FY2009. 

Retail Plans

For the fiscal year, Retail Plans revenue increased 37% to $17.5 million, versus $12.8 million in the previous fiscal year. Operating income decreased 33%, from $2.7 million in FY2009 to $1.8 million in FY2010, due to the investments in new products and marketing initiatives discussed above.

Revenues in the Retail Plans division increased 12% in the fourth quarter of FY2010 to $4.6 million, prior to inter-company eliminations, versus $4.1 million in the prior-year period. The increase was attributable primarily to contributions from new programs that offset anticipated revenue declines in the Company's legacy business. Gross margins decreased $1.1 million, due to upfront sales and marketing direct expenses associated with a new product rollout. The division recorded an operating loss of $0.4 million in the fourth quarter of FY2010, versus operating income of $0.9 million in the fourth quarter of FY2009, as a result of expenses related to a new product rollout, as discussed above.

Insurance Marketing

For the fiscal year ended September 30, 2010, Insurance Marketing revenues increased to $20.6 million, versus $11.4 million in FY2009. Division revenues in FY2009 included revenues from Access Plans USA only during the third and fourth quarters of the fiscal year, whereas FY2010 included a full year of revenue contribution from Access Plans USA. Operating income for the Insurance Marketing division decreased from $0.5 million in FY2009 to $0.2 million in FY2010.

Insurance Marketing division revenues decreased to $5.2 million in the final quarter of FY2010, versus $5.8 million in the fourth quarter of FY2009. The decline was due to the loss of two carriers that had higher than average commission rates. The division recorded an operating loss of $0.1 million in the three months ended September 30, 2010, compared with operating income of $0.4 million in last year's fourth quarter. 

Other Matters

The Company generated cash from operating activities of approximately $3.2 million in the most recent fiscal year. Cash, cash equivalents and restricted cash increased 35% to $6.2 million at September 30, 2010, versus $4.6 million at September 30, 2009. The $1.6 million of increased cash balances resulted from net income offset by $1.7 million of debt reduction and $0.5 million in stock repurchase during the fiscal year. The Company has no long-term debt outstanding, and stockholders' equity increased 23% from $11.5 million on September 30, 2009 to $14.2 million on September 30, 2010.

Conference Call Information

Shareholders and other interested parties may participate in the conference call by dialing 877-317-6789 (international/local participants dial 412-317-6789) and asking to be connected to the "Access Plans, Inc. Conference Call" a few minutes before 11:30 a.m. EST on December 16, 2010.

A replay of the conference call will be available one hour after the call through Thursday, December 23, 2010 at 9:00 am EST by dialing 877-344-7529 (U.S.) or 412-317-0088 (international) and entering the conference ID Number 446882.

About Access Plans, Inc.

Access Plans, Inc. (OTCBB: APNC) is a leading membership benefits marketing company with two distribution channels. The Wholesale/Retail Plans distribution channel specializes in turnkey, private-label membership benefit plans that provide discount products and services, protection benefits and retail services to more than 1 million customers in the United States and Canada. America's Health Care Plans (AHCP), the Company's Insurance Marketing distribution channel, is one of the nation's largest independent agent networks and provides major medical, life and supplemental insurance products to individuals. For more information, please visit: www.accessplans.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act:

This press release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, Section 27A of the Securities Act of 1933, as amended and pursuant to the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to financial results and plans for future business activities, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are competitive pressures, loss of significant customers, the mix of revenue, changes in pricing policies, delays in revenue recognition, lower-than-expected demand for the Company's products and services, general economic conditions, and the risk factors detailed from time to time in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and the Company assumes no responsibility for updating such forward-looking statements after the date of this release.

Access Plans, Inc.  
Consolidated Statements of Operations  
(Unaudited and dollars in thousands, except earnings per share)  
                                 
                                 
  For the Three Months Ended September 30,     For the Twelve Months Ended September 30,  
  2010     2009     Change     2010     2009   Change  
Net revenues $ 14,215     $ 13,566     $ 649     $ 55,349     $ 39,081   $ 16,268  
Direct costs   10,654       9,682       972       39,044       26,469     12,575  
Gross profit   3,561       3,884       (323 )     16,305       12,612     3,693  
Operating expenses   2,969       2,733       236       11,474       8,324     3,150  
Operating income   592       1,151       (559 )     4,831       4,288     543  
Net other income (expense)   (41 )     (16 )     (25 )     (21 )     200     (221 )
Provision for income taxes, net   83       (156 )     239       1,763       1,049     714  
Net income $ 468     $ 1,291     $ (823 )   $ 3,047     $ 3,439   $ (392 )
Per Share Data:                                            
  Basic $ 0.02     $ 0.06     $ (0.04 )   $ 0.15     $ 0.19   $ (0.04 )
  Diluted $ 0.02     $ 0.06     $ (0.04 )   $ 0.15     $ 0.19   $ (0.04 )
                                             
Average Shares Outstanding:                                            
  Basic   19,777       21,634       (1,857 )     19,910       18,243     1,667  
  Diluted   19,929       21,636       (1,707 )     20,111       18,248     1,863  
                                             
                                   
  For the Three Months Ended September 30,     For the Twelve Months Ended September 30,  
  2010     2009     Change     2010     2009     Change  
Segment net revenues                                              
  Wholesale Plans $ 5,834     $ 4,814     $ 1,020     $ 22,372     $ 19,522     $ 2,850  
  Retail Plans   4,565       4,115       450       17,458       12,838       4,620  
  Insurance Marketing   5,199       5,779       (580 )     20,641       11,432       9,209  
  Eliminations   (1,383 )     (1,142 )     (241 )     (5,122 )     (4,712 )     (410 )
  $ 14,215     $ 13,566     $ 649     $ 55,349     $ 39,080     $ 16,269  
                                               
                                   
  For the Three Months Ended September 30,     For the Twelve Months Ended September 30,  
  2010     2009     Change     2010     2009     Change  
Segment operating income                                              
  Wholesale Plans $ 1,450     $ 172     $ 1,278     $ 4,034     $ 2,030     $ 2,004  
  Retail Plans   (396 )     871       (1,267 )     1,843       2,734       (891 )
  Insurance Marketing   (114 )     368       (482 )     161       482       (321 )
  Corporate   (348 )     (260 )     (88 )     (1,207 )     (958 )     (249 )
  $ 592     $ 1,151     $ (559 )   $ 4,831     $ 4,288     $ 543  
 
 
Access Plans, Inc.
Condensed Consolidated Balance Sheets
(Unaudited and dollars in thousands)
         
         
        September 30,
        2009
    September 30,   (Derived From
    2010   Audited
    (Unaudited)   Statements)
         
         
Total current assets   $ 16,297   $ 15,270
Total assets   $ 24,852   $ 25,973
Total current and long term liabilities   $ 10,638   $ 14,480
Total stockholders' equity   $ 14,214   $ 11,494
Total liabilities and stockholders' equity   $ 24,852   $ 25,973

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