-----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, QImnv76Dr3o9N6VwwC4R91G++xHKMLDxYKX+DDiBY7GwvJhqLKqqfPQRmqihxXnj wwIt7K2IZmSoxOo+p4kj3Q== 0001157523-05-006541.txt : 20050726 0001157523-05-006541.hdr.sgml : 20050726 20050726163147 ACCESSION NUMBER: 0001157523-05-006541 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050726 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050726 DATE AS OF CHANGE: 20050726 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: 05974564 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 a4938468.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) July 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 July 26, 2005, Annaly Mortgage Management, Inc. issued a press release announcing its financial results for the quarter ended June 30, 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 July 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: July 26, 2005 EX-99.1 2 a4938468ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Annaly Mortgage Management, Inc. Announces 2nd Quarter 2005 Earnings NEW YORK--(BUSINESS WIRE)--July 26, 2005--Annaly Mortgage Management, Inc. (NYSE: NLY) today reported net income for the quarter ended June 30, 2005 of $47.0 million, or $0.36 basic net income per share available to common shareholders, as compared to $63.8 million or $0.52 basic net income per share available to common shareholders for the quarter ended June 30, 2004 and $59.3 million, or $0.46 basic net income per share available to common shareholders for the quarter ended March 31, 2005. The Company was able to provide an annualized return on average equity of 11.36% for the quarter ended June 30, 2005, as compared to 15.76% for the quarter ended June 30, 2004 and 14.34% for the quarter ended March 31, 2005. Common dividends declared for the quarter ended June 30, 2005 were $0.36 per share, as compared to $0.48 per share for the quarter ended June 30, 2004 and $0.45 per share for the quarter ended March 31, 2005. The annualized dividend yield on common stock for the quarter, based on the June 30, 2005 closing price of $17.93, was 8.03%. "The short term results of Annaly reflect the persistence of current market conditions," said Michael A.J. Farrell, Chairman, Chief Executive Officer and President of the Company. "Financial institutions of all stripes are finding their performances affected by the steady drumbeat of Federal Reserve rate increases coupled with long-term interest rates remaining in a narrow and low trading range. As legacy portfolios and investment strategies adapt to the lower profit potential in this environment, the return expectations of investors have been managed accordingly. Nevertheless, our company continues to deliver competitive results. We are excited about opportunities for new capital in our strategy, and our success in growing assets under management at FIDAC, our registered investment advisor subsidiary, is a testament to the market's understanding that the opportunities for new capital in our strategy are compelling." For the quarter ended June 30, 2005, the annualized yield on average earning assets was 3.63% and the annualized cost of funds on the average repurchase balance was 3.03%, which equates to an interest rate spread of 0.60%. This is a 94 basis point decrease over the 1.54% annualized interest rate spread for the quarter ended June 30, 2004 and a 58 basis point decrease over the 1.18% annualized interest rate spread for the quarter ended March 31, 2005. For the quarter ended June 30, 2004, the annualized yield on average earning assets was 2.94% and the annualized cost of funds on the average repurchase balance was 1.40%. 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%. At June 30, 2005, the annualized yield on earning assets was 3.78% and the annualized cost of funds on the repurchase balance was 3.20%, which equates to an interest rate spread of 0.58%. For the quarters ended June 30, 2005, June 30, 2004, and March 31, 2005, the Company's gain on sale of Mortgage-Backed Securities was $11.4 million, $2.1 million, and $580,000, respectively . The Constant Prepayment Rate was 27% during the second quarter of 2005, as compared to 33% during the second quarter of 2004, and 25% during the first quarter of 2005. The weighted average purchase price of the Company's portfolio was 102.2 at June 30, 2005, 102.4 at June 30, 2004 and 102.3 at March 31, 2005. The net amortization of premiums and accretion of discounts on investment securities for the quarters ended June 30, 2005, June 30, 2004, and March 31 2005 was $42.7 million, $56.1 million, and $36.1 million, respectively. The total net unamortized premium at June 30, 2005, June 30, 2004, and December 31, 2004 was $401.4 million, $384.7 million, and $416.5 million, respectively. Leverage at June 30, 2005 was 10.1:1, in comparison to 9.9:1 at June 30, 2004 and 10.8:1 at March 31, 2005. "Our team has done a fine job through this challenging environment," said Wellington Denahan-Norris, Vice Chairman and Chief Investment Officer of Annaly. "Our net interest spread narrowed in the quarter as a portion of our repurchase agreements rolled into the new interest rate environment and higher amortization expense lowered yields. We continue to manage the portfolio to perform in a wide range of interest rate environments, including the one we are in, by executing our barbell strategy of maintaining a mix of fixed-rate and adjustable- and floating-rate mortgage-backed securities. In this strategy, there will be short-term volatility in results as the portfolio adapts to changing market conditions, but over the long-term this process of adapting--through coupons resetting, reinvestment of principal and harvesting of gains--is designed to provide returns that are competitive." General and administrative expenses as a percentage of average assets were 0.14%, 0.13%, and 0.14% for the quarters ended June 30, 2005, June 30, 2004, and March 31, 2005, respectively. In addition, the Company's Dividend Efficiency Ratio, calculated as general and administrative expenses divided by dividends paid, was 14.2%, 9.8%, and 11.4% for the quarters ended June 30, 2005, June 30, 2004, and March 31, 2005, respectively. At June 30, 2005, June 30, 2004, and March 31, 2005, the Company had a common stock book value per share of $12.43, $12.07, and $11.81, 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 33% of the Company's portfolio at June 30, 2005. The balance of the portfolio was comprised of 63% adjustable rate mortgages and 4% LIBOR floating rate collateralized mortgage obligations. The Company has continued to avoid the introduction of credit risk into its portfolio. As of June 30, 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 June 30, 2005, FIDAC, Annaly's wholly-owned registered investment advisor, had under management approximately $3.1 billion in net assets and $27.8 billion in gross assets, as compared to $2.3 billion in net assets and $18.6 billion in gross assets at March 31, 2005 and $1.9 billion in net assets and $15.9 billion in gross assets at December 31, 2004. For the quarter ended June 30 2005, FIDAC earned investment advisory and service fees, net of fees paid to distributors, of $7.5 million, as compared to $4.7 million for the quarter ended March 31, 2005. FIDAC, organized as a taxable REIT subsidiary of Annaly, generally receives net investment advisory fees of approximately 10 to 20 basis points of the gross assets it manages, assists in managing or supervises. "With strong momentum in the second quarter, FIDAC's net and gross assets under management have grown since year-end 2004 by 63% and 75%, respectively," said Mr. Farrell. "Growth has come in both existing funds and new funds, as we continue to work to deliver high current income using high credit-quality assets. This investment proposition is finding acceptance with investors in the US and around the world, and we believe we are well-positioned to continue to grow our asset management business." 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 122,554,831 shares of common stock outstanding. The Company will hold the second quarter 2005 earnings conference call on Wednesday, July 27, 2005 at 10:00 a.m. EST. The number to call is 1-866-700-7101 for domestic and 1-617-213-8837 for international calls and the pass code is 63224598. The re-play number is 1-888-286-8010 for domestic and 1-617-801-6888 for international calls and the pass code is 38606574. 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. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in thousands) June 30, March 31, Dec. 31, Sept. 30, June 30, 2005 2005 2004 2004 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ------------------------------------------------------------ ASSETS Cash and cash equivalents $3,669 $2,417 $5,853 $6,772 $4,499 Mortgage-Backed Securities, at fair value 19,165,744 18,702,470 19,038,386 17,571,593 16,142,801 Agency Debentures, at fair value 391,092 388,593 390,509 639,437 978,994 Receivable for Mortgage-Backed Securities sold - - 1,025 - - Accrued interest receivable 87,960 80,172 81,557 74,291 74,874 Receivable for advisory and service fees 4,334 2,883 2,359 1,637 1,644 Intangible for customer relationships 15,552 15,613 15,613 15,613 15,613 Goodwill 23,122 23,122 23,122 23,122 22,905 Other assets 1,472 1,873 1,875 1,371 1,427 --------------------------------------------------------- Total assets $19,692,945 $19,217,143 $19,560,299 $18,333,836 $17,242,757 =========================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Repurchase agreements $17,251,594 $17,438,609 $16,707,879 $15,579,196 $15,342,123 Payable for Mortgage-Backed Securities purchased 659,325 75,165 1,044,683 999,380 263,207 Accrued interest payable 29,654 33,770 35,721 24,483 19,959 Dividends payable 44,120 54,575 60,632 60,618 57,674 Other liabilities 1,241 1,569 2,819 4,061 3,294 Accounts payable 6,523 4,079 8,095 6,508 3,989 ---------------------------------------------------------- Total liabilities 17,992,457 17,607,767 17,859,829 16,674,246 15,690,246 ---------------------------------------------------------- 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 177,088 177,077 177,077 102,708 102,708 Common stock: par value $.01 per share; 500,000,000 authorized, 122,554,831, 121,277,698, 121,263,000, 121,235,702, and 120,148,709 shares issued and outstanding, respectively 1,226 1,213 1,213 1,212 1,201 Additional paid-in capital 1,662,347 1,638,911 1,638,635 1,638,309 1,620,666 Accumulated other comprehensive loss (144,853) (213,280) (120,800) (91,987) (177,489) Retained earnings 4,680 5,455 4,345 9,348 5,425 --------------------------------------------------------- Total stockholders' equity 1,700,488 1,609,376 1,700,470 1,659,590 1,552,511 --------------------------------------------------------- Total liabilities and stockholders' equity $19,692,945 $19,217,143 $19,560,299 $18,333,836 $17,242,757 =========================================================== ANNALY MORTGAGE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (dollars in thousands) For the quarter ended June 30, March 31, December 31, September 30, June 30, 2005 2005 2004 2004 2004 --------------------------------------------------------- Interest income $171,595 $176,289 $156,783 $138,970 $122,234 Interest expense 133,758 113,993 93,992 70,173 55,648 --------------------------------------------------------- Net interest income 37,837 62,296 62,791 68,797 66,586 --------------------------------------------------------- Other income Investment advisory and service fees 9,669 6,309 6,143 4,811 1,558 Gain on sale of Mortgage-Backed Securities 11,435 580 1,144 1,350 2,126 -------------------------------------------------------- Total other income 21,104 6,889 7,287 6,161 3,684 -------------------------------------------------------- Expenses Distribution fees 2,126 1,610 1,538 1,024 298 General and administrative expenses 6,800 6,664 6,862 6,159 5,643 -------------------------------------------------------- Total expenses 8,926 8,274 8,400 7,183 5,941 -------------------------------------------------------- Income before income taxes 50,015 60,911 61,678 67,775 64,329 Income taxes 3,022 1,578 2,384 1,155 494 -------------------------------------------------------- Net income 46,993 59,333 59,294 66,620 63,835 Dividend on preferred stock 3,648 3,648 3,665 2,082 1,998 -------------------------------------------------------- Net income available to common shareholders $43,345 $55,685 $55,629 $64,538 $61,837 ========================================================= Net income per share available to common shareholders: Basic $0.36 $0.46 $0.46 $0.53 $0.52 ========================================================= Diluted $0.36 $0.46 $0.46 $0.53 $0.52 ========================================================= Weighted average number of shares outstanding: Basic 121,740,256 121,270,867 121,246,246 120,802,814 118,276,509 =========================================================== Diluted 122,013,050 121,564,320 121,514,941 120,994,191 118,469,756 =========================================================== Net income $46,993 $59,333 $59,294 $66,620 $63,835 ----------------------------------------------------------- Comprehensive income (loss): Unrealized gain (loss) on available-for- sale securities 79,862 (91,900) (27,669) 86,852 (179,863) Less: reclassification adjustment for net gains included in net income (11,435) (580) (1,144) (1,350) (2,126) ----------------------------------------------------------- Other comprehensive income (loss) 68,427 (92,480) (28,813) 85,502 (181,989) ----------------------------------------------------------- Comprehensive income (loss) $115,420 ($33,147) $30,481 $152,122 ($118,154) =========================================================== ANNALY MORTGAGE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (dollars in thousands) For the six months ended June 30, June 30, 2005 2004 ------------------------ Interest income $347,884 $236,575 Interest expense 247,751 105,951 ------------------------ Net interest income 100,133 130,624 ------------------------ Other income Investment advisory and service fees 15,978 1,558 Gain on sale of Mortgage-Backed Securities 12,016 2,721 ------------------------ Total other income 27,994 4,279 ------------------------ Expenses Distribution fees 3,737 298 General and administrative expenses 13,464 11,008 ------------------------ Total expenses 17,201 11,306 ------------------------ Income before income taxes 110,926 123,597 Income taxes 4,600 919 ------------------------ Net income 106,326 122,678 Dividend on preferred stock 7,297 1,998 ------------------------ Net income available to common shareholders $99,029 $120,680 ======================== Net income per share available to common shareholders: Basic $0.82 $1.05 ======================== Diluted $0.81 $1.04 ======================== Weighted average number of shares outstanding: Basic 121,506,858 115,391,357 ======================== Diluted 121,785,918 115,659,173 ======================== Net income $106,326 $122,678 ------------------------ Comprehensive income (loss): Unrealized gain (loss) on available-for-sale securities (12,037) (127,507) Less: reclassification adjustment for net gains included in net income (12,016) (2,721) ------------------------ Other comprehensive income (loss) (24,053) (130,228) ------------------------ Comprehensive income (loss) $82,273 ($7,550) ======================== CONTACT: Annaly Mortgage Management, Inc. Investor Relations 1-888-8Annaly www.annaly.com -----END PRIVACY-ENHANCED MESSAGE-----