Asta Funding Reports 2008 Results; Announces Collection Call Center Closing

Debt buyer Asta Funding, Inc. (Nasdaq: ASFI) filed its delayed annual report with the Securities and Exchange Commission late Friday. Included in the report were earnings for Asta’s fiscal year 2008 and details on the company’s plan to close one of its call centers.

Englewood Cliffs, N.J.-based Asta reported net income of $8.8 million for the fiscal year ended September 31, 2008, a decline of more than 83 percent from the $52.2 million it earned in fiscal 2007.

Revenues for the year were $115.5 million, down nearly 18 percent from 2007. Cash collections fell sharply to $208 million in 2008 from $281.8 million in 2007. Impairments of $53.2 million were recorded by the Asta during 2008, compared to $9.1 million in 2007. The company said in the SEC filing, “Because relative collections with respect to our expectations on these portfolios were deteriorating, and this deterioration was confirmed by our third party collection agencies and attorneys, we believed that impairment charges became necessary.”

Asta’s annual report for the year ended September 31, 2008 had been delayed for some time as it worked on a new credit arrangement with its creditors. A new deal was announced late last week (“Asta Funding Reaches Agreements With Its Lenders and Announces Cost Reduction Program,” Feb. 20).

Asta also announced last week that it will be closing one of its two collection call centers as a part of a cost savings initiative. The office in Bethlehem, Pa. will be shuttered at a cost of around $250,000. According to Asta’s SEC filing, approximately 38 employees will be cut. The company anticipates saving around $1.5 million per year by closing the call center. All of the collection work currently being done there will be shifted to the office in New Jersey or will be outsourced, according to the company.

Asta anticipates taking a restructuring charge for closing the call center in its second fiscal quarter of 2009, which ends March 31, 2009.

The company also said that it plans on reporting results “shortly” for the first fiscal quarter of 2009, ended December 31, 2008.

For its fiscal year of 2008, Asta reported spending $49.9 million to purchase $1.45 billion in face value receivables, a dramatic drop off from purchasing in prior years.