-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mdcy7h8wvco7ysQa7I/ZN0g5mAWKapniVp+dzJYWhOk7vu7mF0otPwsgVhrS5Qts NzPe+m6rC5NZ67ydweUJtg== 0001157523-04-006777.txt : 20040727 0001157523-04-006777.hdr.sgml : 20040727 20040723134443 ACCESSION NUMBER: 0001157523-04-006777 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040723 ITEM INFORMATION: FILED AS OF DATE: 20040723 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANNALY MORTGAGE MANAGEMENT INC CENTRAL INDEX KEY: 0001043219 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 223479661 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13447 FILM NUMBER: 04928553 BUSINESS ADDRESS: STREET 1: 1211 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 212 696 0100 MAIL ADDRESS: STREET 1: 1211 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 8-K 1 a4687050.txt ANNALY MORTGAGE MANAGEMENT, INC. 8-K _________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 23, 2004 Annaly Mortgage Management, Inc. (Exact Name of Registrant as Specified in its Charter) Maryland 1-13447 22-3479661 - ---------------------------- --------------- -------------------- State or Other Jurisdiction (Commission (I.R.S. Employer Of Incorporation) File Number) Identification No.) 1211 Avenue of the Americas Suite 2902 New York, New York 10036 -------------------- ------- (Address of Principal Executive (Zip Code) Offices) Registrant's telephone number, including area code: (212) 696-0100 No Change --------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 12. Results of Operations and Financial Condition On July 23, 2004, Annaly Mortgage Management, Inc. issued a press release announcing its financial results for the quarter and six month months ended June 30, 2004. A copy of the press release is furnished as Exhibit 99.1 to this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ANNALY MORTGAGE MANAGEMENT, INC. By: /s/ Kathryn Fagan ------------------------------ Name: Kathryn Fagan Title: Chief Financial Officer Dated: July 23, 2004 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press Release, dated July 23, 2004 issued by Annaly Mortgage Management, Inc. EX-99.1 2 a4687050ex991.txt ANNALY MORTGAGE MANAGEMENT, INC. EXHIBIT 99.1 Exhibit 99.1 Annaly Mortgage Management, Inc. Announces 2nd Quarter 2004 Earnings NEW YORK--(BUSINESS WIRE)--July 23, 2004--Annaly Mortgage Management, Inc. (NYSE: NLY) today reported net income for the quarter ended June 30, 2004 of $63,835,000 or $0.52 basic earnings per common share, as compared to $58,152,000 or $0.62 basic earnings per common share for the quarter ended June 30, 2003 and $58,843,000 or $0.52 basic earnings per common share for the quarter ended March 31, 2004. The Company was able to provide an annualized return on average equity of 15.76% for the quarter ended June 30, 2004, as compared to 20.79% for the quarter ended June 30, 2003 and 16.59% for the quarter ended March 31, 2004. Dividends declared for the quarter ended June 30, 2004 were $0.48 per share, as compared to $0.60 per share for the quarter ended June 30, 2003 and $0.50 for the quarter ended March 31, 2004. The annualized dividend yield for the quarter, based on the June 30, 2004 closing price of $16.96, was 11.32%. Michael A.J. Farrell, Chairman, Chief Executive Officer and President of Annaly, said, "The second quarter started with a surprisingly strong employment report and ended with the first rate hike in four years. In between, the bond market suffered some of its worst returns since 1980. In addition, investors in mortgage-backed securities saw a peaking in amortization expense related to the mini refinancing boom of the first quarter--a sequential quarterly increase of 35.2% in our case. Even with this background, I am pleased with our performance in the quarter, as our investment strategy has delivered solid results. We are likely to see more volatility in the bond market going forward as the Federal Reserve changes from its accommodative monetary policy stance, but investors in our strategy should see the benefits of improving mortgage market fundamentals, particularly the decline in refinancing activity." For the quarter ended June 30, 2004, the yield on average earning assets was 2.94% and the cost of funds on the average repurchase balance was 1.40%, which equates to an interest rate spread of 1.54%. This is a 29 basis point increase over the 1.25% interest rate spread for the quarter ended June 30, 2003 and a 14 basis point decrease over the 1.68% interest rate spread for the quarter ended March 31, 2004. For the quarter ended June 30, 2004, the Company's gain on sale of Mortgage-Backed Securities was $2.1 million as compared to $20.2 million for the quarter ended June 30, 2003 and $595,000 for the quarter ended March 31, 2004. General and administrative expenses as a percentage of average assets were 0.13%, 0.12%, and 0.15% for the quarters ended June 30, 2004, June 30, 2003, and March 31, 2004, respectively. In addition, the Company's dividend efficiency ratio, calculated as general and administrative expenses divided by dividends declared, was 9.5%, 7.4% and 9.8% for the quarters ended June 30, 2004, June 30, 2003, and March 31, 2004, respectively. The Constant Prepayment Rate was 33% during the second quarter of 2004, as compared to 44% during the second quarter of 2003, and 31% during the first quarter of 2004. The weighted average purchase price of the portfolio was 102.4 at June 30, 2004, 102.5 at June 30, 2003 and 102.5 at March 31, 2004. The net amortization of premiums and accretion of discounts on investment securities for the quarters ended June 30, 2004, June 30, 2003, and March 31, 2004 was $56.1 million, $57.6 million, and $41.5 million, respectively. Leverage at June 30, 2004 was 9.9:1, in comparison to 10.5:1 at June 30, 2003 and 8.7:1 at March 31, 2004. "During the quarter, the yield on the 2-year Treasury rose 111 basis points, from 1.57% to 2.68%, and the 10-year Treasury rose 75 basis points, from 3.83% to 4.58%," said Wellington Denahan-Norris, Vice Chairman and Chief Investment Officer of Annaly. "Our investment discipline not only served us well during this significant market move, but it also should provide us with the foundation to take advantage of opportunities going forward. Our portfolio is designed to perform in a wide range of interest rate environments. For example, in a rising rate environment, asset yields should be helped by declining amortization expense as well as the adjustable-rate feature of approximately 70% of our portfolio. In addition, principal amortization and new capital can be reinvested into the higher interest rate environment." At June 30, 2004, June 30, 2003, and March 31, 2004, the Company had a common stock book value of $12.07, $12.35, and $13.45, respectively. The Company classifies all investment securities as "available for sale," therefore requiring the Company to record the entire portfolio at market value. Fixed rate securities comprised approximately 30% of the Company's portfolio at June 30, 2004. The balance of the portfolio was comprised of 58% adjustable rate mortgages and 12% LIBOR floating rate collateralized mortgage obligations. The Company has continued to avoid the introduction of credit risk into its portfolio. As of June 30, 2004, all of the assets in the Company's portfolio were FNMA, GNMA, FHLMC mortgage-backed securities, and agency debentures, which carry an actual or implied "AAA" rating. The merger of Fixed Income Discount Advisory Company ("FIDAC"), as approved by the shareholders on May 27, 2004, was completed on June 4, 2004. Annaly issued 2,201,080 shares, based on the December 31, 2003 closing price of $18.40. As was previously disclosed, following completion of the transaction Annaly will continue to operate as a self-managed and self-advised real estate investment trust, and FIDAC will operate as Annaly's wholly-owned taxable REIT subsidiary. FIDAC is a registered investment advisor which generally receives annual net investment advisory fees of approximately 10 to 15 basis points of the gross assets it manages, assists in managing or supervises. At June 30, 2004, FIDAC had under management approximately $1.7 billion in net assets and $12.8 billion in gross assets, compared to $1.5 billion in net assets and $13.6 billion in gross assets at December 31, 2003. The Company is a Maryland corporation which owns and manages a portfolio of mortgage-backed securities. The Company's principal business objective is to generate net income for distribution to stockholders from the spread between the interest income on its mortgage-backed securities and the cost of borrowing to finance their acquisition. The Company has elected to be taxed as a real estate investment trust ("REIT") and currently has 120,348,768 shares of common stock outstanding. The Company will hold the second quarter 2004 earnings conference call on July 26, 2004 at 10:00 a.m. EST. The number to call is 1-800-915-4836. The re-play number is 1-800-428-6051 for domestic calls and 973-709-2089 for international calls and the pass code is 367515. There will be a web cast of the call on www.annaly.com. If you would like to be added to the e-mail distribution list, please visit www.annaly.com, click on E-Mail alerts, enter your e-mail address where indicated and click the Subscribe button. This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond our control) may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "anticipate," "continue," or similar terms or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, changes in interest rates, changes in yield curve, changes in prepayment rates, the availability of mortgage-backed securities for purchase, the availability of financing and, if available, the terms of any financing, FIDAC's clients removal of assets FIDAC manages, FIDAC's regulatory requirements, and competition in the investment management business. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see "Risk factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. ANNALY MORTGAGE MANAGEMENT, INC. STATEMENTS OF FINANCIAL CONDITION (dollars in thousands) JUNE 30, 2004 (Consolidated MARCH 31, and 2004 Unaudited) (Unaudited) ------------------------- ASSETS Cash and cash equivalents $4,499 $738 Mortgage-Backed Securities, at fair value 16,142,801 17,046,117 Agency Debentures, at fair value 978,994 1,033,481 Receivable for preferred stock proceeds - 102,903 Receivable for Mortgage-Backed Securities sold - 81,200 Accrued interest receivable 74,874 71,446 Receivable for advisory fees and services 1,644 - Intangible for customer relationships 15,613 - Goodwill 22,905 - Other assets 1,427 2,808 ------------------------- Total assets $17,242,757 $18,338,693 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Repurchase agreements $15,342,123 $14,689,300 Payable for Mortgage-Backed Securities purchased 263,207 1,873,813 Accrued interest payable 19,959 21,299 Dividends payable 57,674 58,942 Other liabilities 3,294 4,664 Accounts payable 3,989 2,087 ------------------------- Total liabilities 15,690,246 16,650,105 ------------------------- Stockholders' Equity: 7.875% Series A Cumulative Redeemable Preferred Stock: 4,250,000 shares authorized, issued and outstanding 102,708 102,870 Common stock: par value $.01 per share; 500,000,000 authorized, 120,148,709, 117,866,932, 96,074,096, 95,964,915, and 94,030,753 shares issued and outstanding, respectively 1,201 1,179 Additional paid-in capital 1,620,666 1,578,778 Accumulated other comprehensive income (loss) (177,489) 4,500 Retained earnings 5,425 1,261 ------------------------- Total stockholders' equity 1,552,511 1,688,588 ------------------------- Total liabilities and stockholders' equity $17,242,757 $18,338,693 ========================= SEPT. 30, JUNE 30, DEC. 31, 2003 2003 2003 (Unaudited) (Unaudited) ------------------------------------ ASSETS Cash and cash equivalents $247 $3,381 $304 Mortgage-Backed Securities, at fair value 11,956,512 11,628,271 12,887,495 Agency Debentures, at fair value 978,167 976,814 1,375,980 Receivable for preferred stock proceeds - - - Receivable for Mortgage-Backed Securities sold - 177,304 387,218 Accrued interest receivable 53,743 53,955 58,026 Receivable for advisory fees and services - - - Intangible for customer relationships - - - Goodwill - - - Other assets 1,617 1,233 1,104 ------------------------------------ Total assets $12,990,286 $12,840,958 $14,710,127 ==================================== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Repurchase agreements $11,012,903 $11,201,897 $12,162,333 Payable for Mortgage-Backed Securities purchased 761,115 445,148 1,306,238 Accrued interest payable 14,989 13,868 16,788 Dividends payable 45,155 26,876 56,420 Other liabilities 4,017 4,294 4,708 Accounts payable 2,887 3,147 2,202 ------------------------------------ Total liabilities 11,841,066 11,695,230 13,548,689 ------------------------------------ Stockholders' Equity: 7.875% Series A Cumulative Redeemable Preferred Stock: 4,250,000 shares authorized, issued and outstanding - - - Common stock: par value $.01 per share; 500,000,000 authorized, 120,148,709, 117,866,932, 96,074,096, 95,964,915, and 94,030,753 shares issued and outstanding, respectively 961 960 940 Additional paid-in capital 1,194,159 1,192,819 1,157,092 Accumulated other comprehensive income (loss) (47,261) (51,870) 1,190 Retained earnings 1,361 3,819 2,216 ------------------------------------ Total stockholders' equity 1,149,220 1,145,728 1,161,438 ------------------------------------ Total liabilities and stockholders' equity $12,990,286 $12,840,958 $14,710,127 ==================================== ANNALY MORTGAGE MANAGEMENT, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (dollars in thousands) For the quarters ended June 30, March 31, 2004 2004 (Consolidated) -------------------------- Interest income $122,234 $114,341 Interest expense 55,648 50,303 -------------------------- Net interest income 66,586 64,038 Investment advisory and service fees 1,260 - Gain on sale of Mortgage-Backed Securities 2,126 595 General and administrative expenses 5,643 5,790 -------------------------- Net income before income taxes 64,329 58,843 Income taxes 494 - -------------------------- Net income 63,835 58,843 Dividend on preferred stock 1,998 - -------------------------- Net income available to common shareholders $61,837 $58,843 ========================== Net income per share available to common shareholders: Basic $0.52 $0.52 ========================== Diluted $0.52 $0.52 ========================== Weighted average number of shares outstanding: Basic 118,276,509 112,506,206 ========================== Diluted 118,489,470 112,804,001 ========================== Net income $63,835 $58,843 -------------------------- Comprehensive income (loss): Unrealized gain (loss) on available-for- sale securities (179,863) 52,356 Less: reclassification adjustment for net gains included in net income (2,126) (595) -------------------------- Other comprehensive income (loss): (181,989) 51,761 -------------------------- Comprehensive income (loss) ($118,154) $110,604 ========================== For the quarters ended December September June 31, 2003 30, 2003 30, 2003 --------------------------------- Interest income $89,186 $66,855 $93,892 Interest expense 42,264 43,922 51,770 --------------------------------- Net interest income 46,922 22,933 42,122 Investment advisory and service fees - - - Gain on sale of Mortgage-Backed Securities - 9,656 20,231 General and administrative expenses 4,225 4,110 4,201 --------------------------------- Net income before income taxes 42,697 28,479 58,152 Income taxes - - - --------------------------------- Net income 42,697 28,479 58,152 Dividend on preferred stock - - - --------------------------------- Net income available to common shareholders $42,697 $28,479 $58,152 ================================= Net income per share available to common shareholders: Basic $0.44 $0.30 $0.62 ================================= Diluted $0.44 $0.30 $0.62 ================================= Weighted average number of shares outstanding: Basic 96,027,468 94,685,685 93,384,128 ================================= Diluted 96,232,899 95,500,486 93,588,024 ================================= Net income $42,697 $28,479 $58,152 --------------------------------- Comprehensive income (loss): Unrealized gain (loss) on available-for-sale securities 4,609 (43,405) (49,579) Less: reclassification adjustment for net gains included in net income - (9,656) (20,231) --------------------------------- Other comprehensive income (loss): 4,609 (53,061) (69,810) --------------------------------- Comprehensive income (loss) $47,306 ($24,582) ($11,658) ================================= ANNALY MORTGAGE MANAGEMENT, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (dollars in thousands) For the six-months ended June 30, June 30, 2004 2003 (Consolidated) ------------------------- Interest income $236,575 $181,392 Interest expense 105,951 95,818 ------------------------- Net interest income 130,624 85,574 Investment advisory and service fees 1,260 - Gain on sale of Mortgage-Backed Securities 2,721 31,252 General and administrative expenses 11,433 7,898 ------------------------- Net income before income taxes 123,172 108,928 Income taxes 494 - ------------------------- Net income 122,678 108,928 Dividend on preferred stock 1,998 - ------------------------- Net income available to common shareholders $120,680 $108,928 ========================= Net income per share available to common shareholders: Basic $1.05 $1.22 ========================= Diluted $1.04 $1.22 ========================= Weighted average number of shares outstanding: Basic 115,391,357 89,109,821 ========================= Diluted 115,638,943 89,231,272 ========================= Net income $122,678 $108,928 ------------------------- Comprehensive income (loss): Unrealized loss on available-for-sale securities (127,507) (43,069) Less: reclassification adjustment for net gains included in net income (2,721) (31,252) ------------------------- Other comprehensive loss (130,228) (74,321) ------------------------- Comprehensive income (loss) ($7,548) $34,607 ========================= CONTACT: Annaly Mortgage Management, Inc. Investor Relations: 1- (888) 8Annaly www.annaly.com -----END PRIVACY-ENHANCED MESSAGE-----