-----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, BywE1R0WORwwedaeBAiXdy3e4Rq72zoMm/3k7Csg14i3i2cF2myR6PbKs8cJkeqB MPhtyCtsKHGoBuvPQnaohQ== 0001157523-04-009739.txt : 20041025 0001157523-04-009739.hdr.sgml : 20041025 20041025132927 ACCESSION NUMBER: 0001157523-04-009739 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041025 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20041025 DATE AS OF CHANGE: 20041025 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: 041093517 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 a4749554.txt ANNALY MORTGAGE MANAGEMENT, INC. _________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) October 25, 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 (Zip Code) Executive Offices) Registrant's telephone number, including area code: (212) 696-0100 No Change --------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition On October 25, 2004, Annaly Mortgage Management, Inc. issued a press release announcing its financial results for the quarter and nine month months ended September 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: October 25, 2004 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 99.1 Press Release, dated October 25, 2004 issued by Annaly Mortgage Management, Inc. EX-99.1 2 a4749554ex991.txt ANNALY MORTGAGE MANAGEMENT, INC. EXHIBIT 99.1 Exhibit 99.1 Annaly Mortgage Management, Inc. Announces 3rd Quarter 2004 Earnings NEW YORK--(BUSINESS WIRE)--Oct. 25, 2004--Annaly Mortgage Management, Inc. (NYSE: NLY) today reported net income for the quarter ended September 30, 2004 of $66,620,000 or $0.53 basic net income per share available to common shareholders, as compared to $28,479,000 or $0.30 basic net income per share available to common shareholders for the quarter ended September 30, 2003 and $63,835,000 or $0.52 basic net income per share available to common shareholders for the quarter ended June 30, 2004. The Company was able to provide an annualized return on average equity of 16.59% for the quarter ended September 30, 2004, as compared to 9.88% for the quarter ended September 30, 2003 and 15.76% for the quarter ended June 30, 2004. Dividends declared for the quarter ended September 30, 2004 were $0.50 per share, as compared to $0.28 per share for the quarter ended September 30, 2003 and $0.48 for the quarter ended June 30, 2004. The annualized dividend yield for the quarter, based on the September 30, 2004 closing price of $17.13, was 11.68%. Michael A.J. Farrell, Chairman, Chief Executive Officer and President of Annaly, said, "While I am pleased with the performance delivered by our team in this particularly challenging quarter, I want to reiterate that it is our long-term approach to management that rewards our investors. Careful observers of our track record of delivering consistently strong returns understand that what differentiates us from other participants in the market place is the resiliency of our barbell strategy, our non-correlation with mortgage origination cycles and our industry-low cost structure. Furthermore, the recent addition of our growing asset management business has been immediately accretive to shareholders, adds a smoothing, tax-efficient component to our earnings stream and will serve to further set us apart going forward as we continue to operate in this volatile, low interest rate market." For the quarter ended September 30, 2004, the yield on average earning assets was 3.36% and the cost of funds on the average repurchase balance was 1.80%, which equates to an interest rate spread of 1.56%. This is an 87 basis point increase over the 0.69% interest rate spread for the quarter ended September 30, 2003 and a 2 basis point increase over the 1.54% interest rate spread for the quarter ended June 30, 2004. For the quarter ended September 30, 2004, the Company's gain on sale of Mortgage-Backed Securities was $1.4 million as compared to $9.7 million for the quarter ended September 30, 2003 and $2.1 million for the quarter ended June 30, 2004. General and administrative expenses as a percentage of average assets were 0.14%, 0.12%, and 0.13% for the quarters ended September 30, 2004, September 30, 2003, and June 30, 2004, respectively. In addition, the Company's dividend efficiency ratio, calculated as general and administrative expenses divided by dividends declared, was 9.8%, 15.3% and 9.5% for the quarters ended September 30, 2004, September 30, 2003, and June 30, 2004, respectively. The Constant Prepayment Rate was 25% during the third quarter of 2004, as compared to 48% during the third quarter of 2003, and 33% during the second quarter of 2004. The weighted average purchase price of the portfolio was 102.4 at September 30, 2004, 102.6 at September 30, 2003 and 102.4 at June 30, 2004. The net amortization of premiums and accretion of discounts on investment securities for the quarters ended September 30, 2004, September 30, 2003, and June 30, 2004 was $39.7 million, $72.0 million, and $56.1 million, respectively. Leverage at September 30, 2004 was 9.4:1, in comparison to 9.8:1 at September 30, 2003 and 9.9:1 at June 30, 2004. "In the third quarter, the Fed continued its 'measured' pace of interest rate hikes," said Wellington Denahan-Norris, Vice Chairman and Chief Investment Officer of Annaly, "however our interest rate spread improved over the prior quarter since our increased cost of financing was more than offset by the decline in amortization expense due to slowing prepayment speeds as well as the upward resetting of coupons on our adjustable-rate and floating-rate assets. Looking ahead to the fourth quarter, we are likely to see prepayments increase somewhat in response to lower mortgage rates, but our portfolio is designed to adjust to each new interest rate scenario. While we see the opportunity to put capital to work in these volatile markets, we continue to be prudent in our use of leverage and in our asset selection." At September 30, 2004, September 30, 2003, and June 30, 2004, the Company had a common stock book value per share of $12.84, $11.94, and $12.07, respectively. The Company classifies all investment securities as "available for sale," thus requiring the Company to record the entire portfolio at market value. Fixed rate securities comprised approximately 29% of the Company's portfolio at September 30, 2004. The balance of the portfolio was comprised of 61% adjustable rate mortgages and 10% LIBOR floating rate collateralized mortgage obligations. The Company has continued to avoid the introduction of credit risk into its portfolio. As of September 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. FIDAC operates 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 September 30, 2004, FIDAC had under management approximately $1.7 billion in net assets and $13.9 billion in gross assets, compared to $1.7 billion in net assets and $12.8 billion in gross assets at June 30, 2004 and $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 121,235,702 shares of common stock outstanding. The Company will hold the third quarter 2004 earnings conference call on Tuesday, October 26, 2004 at 10:00 a.m. EST. The number to call is 1-800-510-0146 and the pass code is 91350454. The re-play number is 1-888-286-8010 for domestic calls and 617-801-6888 for international calls and the pass code is 89162800. 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) SEPT. 30, 2004 JUNE 30, 2004 MARCH 31, 2004 (Consolidated (Consolidated and Unaudited) and Unaudited) (Unaudited) --------------------------------------------- ASSETS Cash and cash equivalents $6,772 $4,499 $738 Mortgage-Backed Securities, at fair value 17,571,593 16,142,801 17,046,117 Agency Debentures, at fair value 639,437 978,994 1,033,481 Receivable for preferred stock proceeds - - 102,903 Receivable for Mortgage- Backed Securities sold - - 81,200 Accrued interest receivable 74,291 74,874 71,446 Receivable for advisory and service fees 1,637 1,644 - Intangible for customer relationships 15,613 15,613 - Goodwill 23,122 22,905 - Other assets 1,371 1,427 2,808 ---------------------------------------------- Total assets $18,333,836 $17,242,757 $18,338,693 ============================================== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Repurchase agreements $15,579,196 $15,342,123 $14,689,300 Payable for Mortgage- Backed Securities purchased 999,380 263,207 1,873,813 Accrued interest payable 24,483 19,959 21,299 Dividends payable 60,618 57,674 58,942 Other liabilities 4,061 3,294 4,664 Accounts payable 6,508 3,989 2,087 ---------------------------------------------- Total liabilities 16,674,246 15,690,246 16,650,105 ---------------------------------------------- Stockholders' Equity: 7.875% Series A Cumulative Redeemable Preferred Stock: 9,000,000 authorized, 4,250,000 shares issued and outstanding 102,708 102,708 102,870 Common stock: par value $.01 per share; 500,000,000 authorized, 121,235,702, 120,148,709, 117,866,932, 96,074,096, and 95,964,915 shares issued and outstanding, respectively 1,212 1,201 1,179 Additional paid-in capital 1,638,309 1,620,666 1,578,778 Accumulated other comprehensive income (loss) (91,987) (177,489) 4,500 Retained earnings 9,348 5,425 1,261 ---------------------------------------------- Total stockholders' equity 1,659,590 1,552,511 1,688,588 ---------------------------------------------- Total liabilities and stockholders' equity $18,333,836 $17,242,757 $18,338,693 ============================================== SEPT. 30, 2003 DEC. 31, 2003 (Unaudited) ------------------------------ ASSETS Cash and cash equivalents $247 $3,381 Mortgage-Backed Securities, at fair value 11,956,512 11,628,271 Agency Debentures, at fair value 978,167 976,814 Receivable for preferred stock proceeds - - Receivable for Mortgage-Backed Securities sold - 177,304 Accrued interest receivable 53,743 53,955 Receivable for advisory and service fees - - Intangible for customer relationships - - Goodwill - - Other assets 1,617 1,233 ---------------------------- Total assets $12,990,286 $12,840,958 ============================ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Repurchase agreements $11,012,903 $11,201,897 Payable for Mortgage-Backed Securities purchased 761,115 445,148 Accrued interest payable 14,989 13,868 Dividends payable 45,155 26,876 Other liabilities 4,017 4,294 Accounts payable 2,887 3,147 ---------------------------- Total liabilities 11,841,066 11,695,230 ---------------------------- Stockholders' Equity: 7.875% Series A Cumulative Redeemable Preferred Stock: 9,000,000 authorized, 4,250,000 shares issued and outstanding - - Common stock: par value $.01 per share; 500,000,000 authorized, 121,235,702, 120,148,709, 117,866,932, 96,074,096, and 95,964,915 shares issued and outstanding, respectively 961 960 Additional paid-in capital 1,194,159 1,192,819 Accumulated other comprehensive income (loss) (47,261) (51,870) Retained earnings 1,361 3,819 ---------------------------- Total stockholders' equity 1,149,220 1,145,728 ---------------------------- Total liabilities and stockholders' equity $12,990,286 $12,840,958 ============================ ANNALY MORTGAGE MANAGEMENT, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (dollars in thousands) For the Quarters Ended September 30, June 30, March 31, 2004 2004 2004 (Consolidated) (Consolidated) ---------------------------------------- Interest income $138,970 $122,234 $114,341 Interest expense 70,173 55,648 50,303 ---------------------------------------- Net interest income 68,797 66,586 64,038 ---------------------------------------- Other income Investment advisory and service fees 4,811 1,558 - Gain on sale of Mortgage- Backed Securities 1,350 2,126 595 ---------------------------------------- Total other income 6,161 3,684 595 ---------------------------------------- Expenses Distribution fees 1,024 298 General and administrative expenses 6,159 5,643 5,365 ---------------------------------------- Total expenses 7,183 5,841 5,365 ---------------------------------------- Net income before income taxes 67,775 64,329 59,268 Income taxes 1,155 494 425 ---------------------------------------- Net income 66,620 63,835 58,843 Dividend on preferred stock 2,082 1,998 - ---------------------------------------- Income available to common shareholders $64,538 $61,837 $58,843 ======================================== Net income per share available to common shareholders: Basic $0.53 $0.52 $0.52 ======================================== Diluted $0.53 $0.52 $0.52 ======================================== Weighted average number of shares outstanding: Basic 120,802,814 118,276,509 112,506,206 ======================================== Diluted 120,994,191 118,489,470 112,804,001 ======================================== Net income $66,620 $63,835 $58,843 ---------------------------------------- Comprehensive income (loss): Unrealized gain (loss) on available-for-sale securities 86,852 (179,863) 52,356 Less: reclassification adjustment for net gains included in net income (1,350) (2,126) (595) ---------------------------------------- Other comprehensive income (loss): 85,502 (181,989) 51,761 ---------------------------------------- Comprehensive income (loss) $152,122 ($118,154) $110,604 ======================================== December 31, September 30, 2003 2003 -------------------------- Interest income $89,186 $66,855 Interest expense 42,264 43,922 -------------------------- Net interest income 46,922 22,933 -------------------------- Other income Investment advisory and service fees - - Gain on sale of Mortgage-Backed Securities - 9,656 -------------------------- Total other income - 9,656 -------------------------- Expenses Distribution fees General and administrative expenses 4,225 4,110 -------------------------- Total expenses 4,225 4,110 -------------------------- Net income before income taxes 42,697 28,479 Income taxes - - -------------------------- Net income 42,697 28,479 Dividend on preferred stock - - -------------------------- Income available to common shareholders $42,697 $28,479 ========================== Net income per share available to common shareholders: Basic $0.44 $0.30 ========================== Diluted $0.44 $0.30 ========================== Weighted average number of shares outstanding: Basic 96,027,468 94,685,685 ========================== Diluted 96,232,899 95,500,486 ========================== Net income $42,697 $28,479 -------------------------- Comprehensive income (loss): Unrealized gain (loss) on available-for-sale securities 4,609 (43,405) Less: reclassification adjustment for net gains included in net income - (9,656) -------------------------- Other comprehensive income (loss): 4,609 (53,061) -------------------------- Comprehensive income (loss) $47,306 ($24,582) ========================== ANNALY MORTGAGE MANAGEMENT, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (dollars in thousands) For the nine-months ended September 30, September 30, 2004 2003 (Consolidated) --------------------------- Interest income $375,545 $248,247 Interest expense 176,124 139,740 --------------------------- Net interest income 199,421 108,507 --------------------------- Other income Investment advisory and service fees 6,369 - Gain on sale of Mortgage-Backed Securities 4,071 40,907 --------------------------- Total other income 10,440 40,907 --------------------------- Expenses Distribution fees 1,322 - General and administrative expenses 17,167 12,008 --------------------------- Total expenses 18,489 12,008 --------------------------- Income before income taxes 191,372 137,406 Income taxes 2,074 - --------------------------- Net income 189,298 137,406 Dividend on preferred stock 4,080 - --------------------------- Net income available to common shareholders $185,218 137,406 =========================== Net income per share available to common shareholders: Basic $1.58 $1.51 =========================== Diluted $1.58 $1.50 =========================== Weighted average number of shares outstanding: Basic 117,208,336 90,929,196 =========================== Diluted 117,439,248 91,750,472 =========================== Net income 189,298 137,406 --------------------------- Comprehensive income: Unrealized loss on available-for-sale securities (40,655) (86,474) Less: reclassification adjustment for net gains included in net income (4,071) (40,907) --------------------------- Other comprehensive loss (44,726) (127,381) --------------------------- Comprehensive income $144,572 $10,025 =========================== CONTACT: Annaly Mortgage Management, Inc. Investor Relations, 1- (888) 8Annaly www.annaly.com -----END PRIVACY-ENHANCED MESSAGE-----