INDIANAPOLIS, Aug. 13 /PRNewswire-FirstCall/ -- Standard Management Corporation (the “Company”, “Standard Management”, or “SMAN"; Nasdaq: SMAN, http://www.sman.com/) reported the second quarter of 2004 marked the second straight quarter of profitability for our Financial Services Segment, which reported net income of $.8 million or $.10 per diluted share. The continued development of our Health Services segment resulted in a loss of $.28 per diluted share or $2.2 million. The total loss for the period was $.31 per diluted share, or $2.5 million.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010416/STANDARDLOGO ) Chairman’s Comments Financial Services
Ronald D. Hunter, the Company’s Chairman and Chief Executive Officer stated, “Our financial services segment continues to produce strong annuity sales in line with our expectations. In addition, due to increased spread income and operational economies, our margins continue to improve.”
Health Services
“While this segment has required a significant investment as reported in previous quarters, Management believes that with its recently announced acquisition of SVS Optical, with approximately $35 million in revenue along with approximately $4 million in earnings before interest, taxes, depreciation and amortization, will significantly contribute to the achievement of $200 to $300 million in revenue over the next 36 months,” stated Ronald D. Hunter, Chairman and CEO.
Net Income
For the quarter ended June 30, 2004, net loss was $2.5 million or $.31 per diluted share, compared to net income of $1.0 million or $.13 per diluted share for the second quarter of 2003.
Financial Services: Net income for the quarter was $.8 million, or $.10 per diluted share, compared to net income of $2.7 million or $.34 per diluted share for the second quarter of 2003. Largely affecting the second quarter of 2004 was an increase in spread income and favorable mortality experience. In comparison the second quarter of 2003 was largely influenced by net realized gains of $.36 per diluted share.
Health Services: The second quarter 2004 net loss was $2.2 million or $.28 per diluted share, compared to a net loss of $.9 million or $.11 per diluted share for the first quarter of 2003. The quarter included expenses associated with the continued development of this segment’s selling, marketing and operating platform of $.07 per diluted share. In addition, no tax benefits were recorded on the second quarter 2004 losses. Comparatively the second quarter of 2003 included tax benefits of $.06 per diluted share.
Other Services: The second quarter 2004 net loss was $1.0 million, or $.13 per diluted share, compared to a net loss of $.8 million, or $.10 per diluted share for the first quarter of 2003.
Assets
Total assets were comparable at $1.97 billion as of June 30, 2004 and December 31, 2003. SMAN has continued to reduce its exposure to below investment grade bonds, moving from 1.3% at year-end to 1.0% as of June 30, 2004. Our overall portfolio quality remains at Aa3 by Moody’s.
Shareholders’ Equity/Book Value
Shareholders’ equity, as reported in the consolidated balance sheet, was $52.3 million at June 30, 2004, compared to $72.4 million at December 31, 2003. Diluted book value per share was reported as $6.60 at June 30, 2004, compared to $8.93 at December 31, 2003.
Standard Management is a financial holding company headquartered in Indianapolis, IN. Information about the company can be obtained by calling the Investor Relations Department at 317-574-2865 or via the Internet at http://www.sman.com/.
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 37A of the Securities Exchange Act of 1934, including statements regarding the company’s hopes, beliefs, intentions, or strategies regarding the future. Forward-looking statements include, but are not limited to, predictions of future revenues, expectation of growth rates, new business, and acquisitions.
STANDARD MANAGEMENT CORPORATION (Unaudited, dollars in thousands, except per share amounts) CONDENSED CONSOLIDATED FINANCIAL INFORMATION Three Months Ended Year to Date June 30 June 30 2004 2003 2004 2003 RESULTS OF OPERATIONS Revenues $28,930 $41,457 $59,364 $74,583 Net income (loss): Financial Services $793 $2,746 $1,948 $5,792 Health Services (2,208) (924) (4,825) (1,479) Other Services (1,052) (790) (1,357) (1,271) Net income (loss) $(2,467) $1,032 $(4,234) $3,042 PER SHARE DATA (Diluted) Net income (loss): Financial Services $0.10 $0.34 $0.24 $0.72 Health Services (0.28) (0.11) (0.60) (0.18) Other Services (0.13) (0.10) (0.17) (0.16) Net income (loss) $(0.31) $0.13 $(0.53) $0.38 Weighted average shares outstanding 7,923,335 8,057,089 8,018,891 7,963,694 Weighted average shares outstanding (Diluted) 7,923,335 8,165,470 8,018,891 8,032,754 June 30 December 31 BALANCE SHEET 2004 2003 (Audited) Total assets $1,972,208 $1,973,871 Senior and subordinated debt 24,373 21,000 Trust preferred securities 20,700 20,700 Shareholders’ equity As reported 52,348 72,447 Book value per share (Diluted) (1) As reported 6.60 8.93 (1) Considers conversion of options and warrants using the treasury stock method and stock price as of respective balance sheet date. STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) ASSETS June December 30 31 2004 2003 (Unaudited) (Audited) Investments: Securities available for sale: Fixed maturity securities, at fair value (amortized cost $1,683,869 in 2004 and $1,638,048 in 2003) $1,660,329 $1,644,837 Mortgage loans on real estate 1,822 3,937 Policy loans 11,613 12,308 Real estate 929 943 Equity-indexed call options 11,393 19,711 Other invested assets 1,278 2,690 Short-term investments 588 590 Total investments 1,687,952 1,685,016 Cash and cash equivalents 2,968 17,296 Accrued investment income 16,540 17,002 Amounts due and recoverable from reinsurers 35,177 36,277 Deferred policy acquisition costs 173,692 166,411 Present value of future profits 20,012 16,508 Goodwill and intangibles 9,053 10,961 Property and equipment (less accumulated depreciation of $6,167 in 2004 and $5,286 in 2003) 12,205 12,770 Federal income tax recoverable 2,046 6,429 Deferred income taxes 5,340 -- Other assets 7,223 5,201 Total assets $1,972,208 $1,973,871 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Insurance policy liabilities $1,859,202 $1,841,545 Accounts payable and accrued expenses 8,584 7,217 Obligations under capital lease 296 551 Mortgage payable 6,705 6,795 Notes payable 24,373 21,000 Deferred income taxes -- 3,616 Payable to subsidiary trust issuer of “company-obligated trust preferred securities” 20,700 20,700 Total liabilities 1,919,860 1,901,424 Shareholders’ Equity: Common stock and additional paid in capital, no par value: Authorized 20,000,000 shares; issued 9,446,191 in 2004 and 9,629,167 in 2003 64,370 68,078 Treasury stock, at cost, 1,515,078 shares in 2004 and 2003 (7,671) (7,671) Accumulated other comprehensive income (loss) (9,455) 2,702 Retained earnings 5,104 9,338 Total shareholders’ equity 52,348 72,447 Total liabilities and shareholders’ equity $1,972,208 $1,973,871 STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited, Dollars in Thousands, Except Per Share Amounts) Three Months Six Months Ended Ended June 30 June 30 2004 2003 2004 2003 Revenues: Premium income $1,827 $2,424 $4,362 $4,301 Net investment income 20,625 20,623 42,095 41,769 Call option income 131 6,087 1,329 2,989 Net realized investment gain 129 8,347 226 18,274 Policy income 4,246 2,740 7,620 4,973 Sales of goods 1,841 739 3,492 1,431 Fees and other income 131 497 240 846 Total revenues 28,930 41,457 59,364 74,583 Benefits and expenses: Benefits and claims 1,950 3,246 4,285 5,600 Interest credited to interest- sensitive annuities and other financial products 13,773 21,123 28,976 32,774 Amortization and depreciation 7,573 4,896 13,302 8,991 Amortization - net realized investment gains 44 3,837 565 9,692 Other operating expenses 5,198 5,375 11,048 9,674 Cost of goods sold 1,363 442 2,564 1,242 Interest expense and financing costs 1,085 989 2,102 2,014 Total benefits and expenses 30,986 39,908 62,842 69,987 Income (loss) before federal income tax expense (2,056) 1,549 (3,478) 4,596 Federal income tax expense 411 517 756 1,554 Net income (loss) $(2,467) $1,032 $(4,234) $3,042 Earnings per share: Basic $(.31) $.13 $(.53) $.38 Diluted (.31) .13 (.53) .38
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CONTACT: Michael B. Berry, Investor Relations of Standard ManagementCorporation, +1-317-574-2865
Web site: http://www.sman.com/
