-----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, E0i/M9g8G11oMAeVVLcEO7UagIiMsi44ScjfFuxPqyXfu2BjEoDjcgrPCjyrWDWg 69OLb+z23+MHd5no866i8g== 0001157523-05-003807.txt : 20050426 0001157523-05-003807.hdr.sgml : 20050426 20050426154905 ACCESSION NUMBER: 0001157523-05-003807 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050426 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050426 DATE AS OF CHANGE: 20050426 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: 05773072 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 a4873432.txt ANNALY MORTGAGE MANAGEMENT, INC. 8-K _________________________________________________ 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) April 26, 2005 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) 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 April 26, 2005, Annaly Mortgage Management, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2005. A copy of the press release is furnished as Exhibit 99.1 to this report. Item 9.01 Financial Statements and Exhibits (c) Exhibits 99.1 Press Release, dated April 26, 2005, issued by Annaly Mortgage Management, Inc. 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: April 26, 2005 EX-99.1 2 a4873432ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Annaly Mortgage Management, Inc. Announces 1st Quarter 2005 Earnings NEW YORK--(BUSINESS WIRE)--April 26, 2005--Annaly Mortgage Management, Inc. (NYSE: NLY) today reported net income for the quarter ended March 31, 2005 of $59.3 million or $0.46 basic net income per share available to common shareholders, as compared to $58.8 million or $0.52 basic net income per share available to common shareholders for the quarter ended March 31, 2004 and $59.3 million or $0.46 basic net income per share available to common shareholders for the quarter ended December 31, 2004. The Company was able to provide an annualized return on average equity of 14.34% for the quarter ended March 31, 2005, as compared to 16.59% for the quarter ended March 31, 2004 and 14.12% for the quarter ended December 31, 2004. Common dividends declared for the quarter ended March 31, 2005 were $0.45 per share, as compared to $0.50 per share for each of the quarters ended March 31, 2004 and December 31, 2004. The annualized dividend yield on common stock for the quarter, based on the March 31, 2005 closing price of $18.76, was 9.59%. Michael A.J. Farrell, Chairman, Chief Executive Officer and President of Annaly, commented on the Company's results. "The Company continues to manage through volatile markets and deliver superior absolute and relative results. During the quarter the Federal Funds rate was raised twice, the 10-year Treasury yield swung from a low of 3.99% to a high of 4.64%, and most asset classes--investment grade fixed income, speculative grade bonds and equities--had negative returns. With this type of economic and investment background going forward, we expect to continue to perform well in comparison to other investment categories." For the quarter ended March 31, 2005, the annualized yield on average earning assets was 3.75% and the annualized cost of funds on the average repurchase balance was 2.57%, which equates to an interest rate spread of 1.18%. This is a 50 basis point decrease over the 1.68% annualized interest rate spread for the quarter ended March 31, 2004 and a 9 basis point decrease over the 1.27% annualized interest rate spread for the quarter ended December 31, 2004. For the quarter ended March 31, 2004, the annualized yield on average earning assets was 3.16% and the annualized cost of funds on the average repurchase balance was 1.48%. For the quarter ended December 31, 2004, the annualized yield on average earning assets was 3.50% and the annualized cost of funds on the average repurchase balance was 2.23%. "Market conditions are challenging but the fundamentals in the mortgage market are positive," said Wellington Denahan-Norris, Vice Chairman and Chief Investment Officer of Annaly. "Our cost of funds continues to rise with each tightening by the Federal Reserve, and our portfolio is designed to respond over time to the change in short-term rates through the resetting of coupons on our floating-rate and adjustable-rate assets and the reinvestment of amortizing principal into the new interest rate environment." For the quarters ended March 31, 2005, March 31, 2004, and December 31, 2004, the Company's gain on sale of Mortgage-Backed Securities was $580,000, $595,000, and $1.1 million, respectively. General and administrative expenses as a percentage of average assets were 0.14%, 0.15%, and 0.14% for the quarters ended March 31, 2005, March 31, 2004, and December 31, 2004, respectively. In addition, the Company's Dividend Efficiency Ratio, calculated as general and administrative expenses divided by dividends paid, was 11.4%, 9.4%, and 11.8% for the quarters ended March 31, 2005, March 31, 2004, and December 31, 2004, respectively. The Constant Prepayment Rate was 25% during the first quarter of 2005, as compared to 31% during the first quarter of 2004, and 27% during the fourth quarter of 2004. The weighted average purchase price of the Company's portfolio was 102.3 at March 31, 2005, 102.5 at March 31, 2004 and 102.3 at December 31, 2004. The net amortization of premiums and accretion of discounts on investment securities for the quarters ended March 31, 2005, March 31, 2004, and December 31, 2004 was $36.1 million, $41.5 million, and $42.3 million, respectively. The total net unamortized premium at March 31, 2005, March 31, 2004, and December 31, 2004 was $416.5 million, $412.5 million, and $425.8 million, respectively. Leverage at March 31, 2005 was 10.8:1, in comparison to 8.7:1 at March 31, 2004 and 9.8:1 at December 31, 2004. At March 31, 2005, March 31, 2004, and December 31, 2004, the Company had a common stock book value per share of $11.81, $13.45, and $12.56, 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 March 31, 2005. The balance of the portfolio was comprised of 63% adjustable rate mortgages and 8% LIBOR floating rate collateralized mortgage obligations. The Company has continued to avoid the introduction of credit risk into its portfolio. As of March 31, 2005, 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. At March 31, 2005, FIDAC, Annaly's wholly-owned registered investment advisor, had under management approximately $2.3 billion in net assets and $18.6 billion in gross assets, as compared to $1.9 billion in net assets and $15.9 billion in gross assets at December 31, 2004. For the quarter ended March 31, 2005, FIDAC earned investment advisory and service fees, net of fees paid to distributors, of $4.7 million, as compared to $4.6 million for the quarter ended December 31, 2004. FIDAC, organized as a taxable REIT subsidiary of Annaly, generally receives investment advisory fees of approximately 10 to 15 basis points of the gross assets it manages, assists in managing or supervises. "In our FIDAC-managed funds, we aim to generate high current income for investors using low credit-risk, short duration assets," said Mr. Farrell. "These are compelling investment attributes, particularly in the current market environment. During the March quarter, we saw steady growth in net assets in our FIDAC-managed funds, and subsequent to the end of the quarter we launched two new exchange-listed funds on the London and Toronto stock exchanges. The full-run rate of the fee income from these will be evidenced in forthcoming quarters." Annaly manages assets on behalf of institutional and individual investors worldwide through Annaly and through the funds managed by its wholly-owned registered investment advisor, FIDAC. The Company's principal business objective is to generate net income for distribution to investors from the spread between the interest income on its mortgage-backed securities and the cost of borrowing to finance their acquisition and from dividends Annaly receives from FIDAC, which earns investment advisory fee income. The Company, a Maryland corporation that has elected to be taxed as a real estate investment trust ("REIT"), currently has 121,277,698 shares of common stock outstanding. The Company will hold the first quarter 2005 earnings conference call on Wednesday April 27, 2005 at 10:00 a.m. EST. The number to call is 1-800-599-9795 for domestic and 1-617-786-2905 for international calls and the pass code is 28853622. The re-play number is 1-888-286-8010 for domestic and 1-617-801-6888 for international calls and the pass code is 57136260. There will be a web cast of the call on www.annaly.com which will be available for 48 hours. 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, 2004. 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) MARCH 31, DEC. 31, 2005 2004 (Consolidated (Consolidated) and Unaudited) ------------ -------------- ASSETS Cash and cash equivalents $2,417 $5,853 Mortgage-Backed Securities, at fair value 18,702,470 19,038,386 Agency Debentures, at fair value 388,593 390,509 Receivable for preferred stock proceeds - - Receivable for Mortgage-Backed Securities sold - 1,025 Accrued interest receivable 80,172 81,557 Receivable for advisory and service fees 2,883 2,359 Intangible for customer relationships 15,613 15,613 Goodwill 23,122 23,122 Other assets 1,873 1,875 ------------ -------------- Total assets $19,217,143 $19,560,299 ============ ============== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Repurchase agreements $17,438,609 $16,707,879 Payable for Mortgage-Backed Securities purchased 75,165 1,044,683 Accrued interest payable 33,770 35,721 Dividends payable 54,575 60,632 Other liabilities 1,569 2,819 Accounts payable 4,079 8,095 ------------ -------------- Total liabilities 17,607,767 17,859,829 ------------ -------------- Stockholders' Equity: 7.875% Series A Cumulative Redeemable Preferred Stock: 8,000,000 authorized, 7,412,500, 7,412,500, 4,250,000, 4,250,000, and 4,250,000 shares issued and outstanding, respectively 177,077 177,077 Common stock: par value $.01 per share; 500,000,000 authorized, 121,277,698, 121,263,000, 121,235,702, 120,148,709, and 117,866,932 shares issued and outstanding, respectively 1,213 1,213 Additional paid-in capital 1,638,911 1,638,635 Accumulated other comprehensive income (loss) (213,280) (120,800) Retained earnings 5,455 4,345 ------------ -------------- Total stockholders' equity 1,609,376 1,700,470 ------------ -------------- Total liabilities and stockholders' equity $19,217,143 $19,560,299 ============ ============== SEPT. 30, JUNE 30, MARCH 31, 2004 2004 2004 (Consolidated (Consolidated (Unaudited) and 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: 8,000,000 authorized, 7,412,500, 7,412,500, 4,250,000, 4,250,000, and 4,250,000 shares issued and outstanding, respectively 102,708 102,708 102,870 Common stock: par value $.01 per share; 500,000,000 authorized, 121,277,698, 121,263,000, 121,235,702, 120,148,709, and 117,866,932 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 ============ ============ ============ ANNALY MORTGAGE MANAGEMENT, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (dollars in thousands) For the quarter ended March 31, December 31, 2005 2004 (Consolidated)(Consolidated) ------------- -------------- Interest income $176,289 $156,783 Interest expense 113,993 93,992 ------------- -------------- Net interest income 62,296 62,791 ------------- -------------- Other income Investment advisory and service fees 6,309 6,143 Gain on sale of Mortgage-Backed Securities 580 1,144 ------------- -------------- Total other income 6,889 7,287 ------------- -------------- Expenses Distribution fees 1,610 1,538 General and administrative expenses 6,664 6,862 ------------- -------------- Total expenses 8,274 8,400 ------------- -------------- Income before income taxes 60,911 61,678 Income taxes 1,578 2,384 ------------- -------------- Net income 59,333 59,294 Dividend on preferred stock 3,648 3,665 ------------- -------------- Net income available to common shareholders $55,685 $55,629 ============= ============== Net income per share available to common shareholders: Basic $0.46 $0.46 ============= ============== Diluted $0.46 $0.46 ============= ============== Weighted average number of shares outstanding: Basic 121,270,867 121,246,246 ============= ============== Diluted 121,564,320 121,514,941 ============= ============== Net income $59,333 $59,294 ------------- -------------- Comprehensive income (loss): Unrealized gain (loss) on available-for- sale securities (91,900) (27,669) Less: reclassification adjustment for net gains included in net income (580) (1,144) ------------- -------------- Other comprehensive income (loss) (92,480) (28,813) ------------- -------------- Comprehensive income (loss) ($33,147) $30,481 ============= ============== For the quarter 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 ------------- ------------- ------------ 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 - ------------- ------------- ------------ Net 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 ============= ============= ============ CONTACT: Annaly Mortgage Management, Inc. Investor Relations: 1-888-8Annaly www.annaly.com -----END PRIVACY-ENHANCED MESSAGE-----