INDIANAPOLIS, Aug. 12 /PRNewswire-FirstCall/ -- Standard Management Corporation (“Standard Management” or the “Company”) reported a loss for the period of $.68 per diluted share, or $5.4 million. Included in this loss was an additional $0.8 million or $.10 per diluted share loss from discontinued operations related to Standard Life Insurance Company of Indiana (“Standard Life”) which the Company sold in June 2005.
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Chairman’s Comments
Ronald D. Hunter, Chairman, CEO and President of Standard Management, stated, “With the sale of Standard Life completed, we have been able to concentrate our full resources on the planned expansion of our Health Services business and the transition of Standard Management into a national Health Services organization.”
Mr. Hunter continued, “In the past few weeks we have completed three strategic Health Services acquisitions with combined annual revenues of nearly $40 million. We are excited about these new acquisitions and their immediate impact on shareholder value. The continued execution of our business plan, combined with current operations, should generate annualized revenues of approximately $60 million by year end 2005.”
Sale of Standard Life Insurance Company of Indiana
On June 9, 2005, the Company completed the sale of all outstanding capital stock of Standard Life to Capital Assurance Corporation (“Capital Assurance”). The purchase price was approximately $79.8 million, consisting of $52.5 million in cash, $5 million in a new class of 7% cumulative exchangeable preferred stock of Capital Assurance and the assumption by Capital Assurance of approximately $22.3 million of indebtedness of the Company. In addition, Standard Management purchased certain assets from Standard Life at closing for approximately $5.3 million, paid off senior debt of $17.7 million, and incurred sale related expenses of $4.5 million, resulting in net cash proceeds to Standard Management of $25.0 million.
Operations
For the quarter ended June 30, 2005, net loss was $5.4 million or $.68 per diluted share, compared to a net loss of $2.5 million or $.31 per diluted share for the second quarter of 2004.
Continuing Operations: The second quarter 2005 improved slightly with a net loss of $4.6 million or $.58 per diluted share, compared to a net loss of $4.9 million or $.62 per diluted share for the second quarter of 2004. Comparatively, the current quarter was impacted by an increase in expenses of $.03 per diluted share related to legal reserves and increased gross margin of $.01 per diluted share. Loss of $.02 per diluted share was incurred in the second quarter of 2004 for severance payments.
Discontinued Operations (formerly Financial Services): Net loss for the quarter was $0.8 million, or $.10 per diluted share, compared to net income of $2.5 million or $.31 per diluted share for the second quarter of 2004. Largely impacting the current quarter was an additional loss on the sale of our Financial Services operations of $1.0 million or $.13 per diluted share, primarily associated with the lower than expected earnings performance of Standard Life.
This press release contains “forward-looking statements” within the meaning of section 27 A of the Securities Act of 1933. The use of the words “believe,” “expect,” “anticipate,” “intend,” “may,” “estimate,” “could,” “plans,” and other similar expressions, or the negations thereof, generally identify forward-looking statements. Forward-looking statements in this press release include, without limitation, the performance of our health services segment, potential future acquisitions, and their impact on the segment’s performance. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors, which could cause actual results to be materially different from those contemplated by the forward- looking statements. Such factors include, but are not limited to the ability of our management team to successfully operate a health services business with limited experience in that industry; our ability to expand our health services business both organically and through acquisitions, including our ability to identify suitable acquisition candidates, acquire them at favorable prices and successfully integrate them into our business; general economic conditions and other factors, including prevailing interest rate levels and stock market performance, which may affect our ability to obtain additional capital when needed and on favorable terms; our ability to achieve anticipated levels of operational efficiencies at recently acquired companies, as well as through other cost-saving initiatives; customer response to new products, distribution channels and marketing initiatives; and increasing competition in the sale of our products.
We caution you that, while forward-looking statements reflect our good faith beliefs, these statements are not guarantees of future performance. In addition, we disclaim any obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Standard Management is a holding company headquartered in Indianapolis, IN. Information about the company can be obtained by calling the Investor Relations Department at 317-574-5221 or via the Internet at http://www.SMAN.com .
STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited, dollars in thousands) June 30 December 31 2005 2004 ASSETS Current assets: Cash and cash equivalents $25,972 $1,121 Accounts receivable, net 1,314 1,109 Inventories 1,354 748 Prepaid and other current assets 790 1,009 Assets of discontinued operations - 1,921,550 Total current assets 29,430 1,925,537 Property and equipment, net 11,245 11,299 Assets held for sale 738 738 Deferred financing fees, net 2,211 1,767 Officer and other notes receivable, less current portion 878 912 Investments in unconsolidated subsidiaries 5,160 160 Intangible assets, net 1,155 1,312 Goodwill 3,725 3,725 Other noncurrent assets 1,542 2,295 Total assets $56,084 $1,947,745 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $950 $401 Accrued expenses 1,698 2,236 Current portion of long-term debt 2,556 3,597 Liabilities of discontinued operations 1,585 1,829,606 Total current liabilities 6,789 1,835,840 Long-term debt, less current portion 36,345 50,714 Other long-term liabilities 1,148 1,159 Total liabilities 44,282 1,887,713 Shareholders’ equity: Common stock, no par value, and additional paid in capital, 20,000,000 shares authorized, 9,479,524 shares and 9,446,191 shares issued in 2005 and 2004, respectively 64,789 64,369 Retained deficit (45,352) (1,529) Treasury stock, at cost, 1,525,078 shares (7,703) (7,703) Accumulated other comprehensive income from continuing operations 68 68 Accumulated other comprehensive income from discontinued operations - 4,827 Total shareholders’ equity 11,802 60,032 Total liabilities and shareholders’ equity $56,084 $1,947,745 STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, dollars in thousands, except per share amounts) Three Months Ended Six Months Ended June 30 June 30 2005 2004 2005 2004 Net revenues $2,489 $1,841 $4,691 $3,492 Cost of sales 1,957 1,363 3,738 2,564 Gross profit 532 478 953 928 Selling, general and administrative expenses 3,451 3,710 7,423 6,529 Depreciation and amortization 486 530 1,014 1,058 Loss related to sale of a business - - - 964 Operating loss (3,405) (3,762) (7,484) (7,623) Interest expense 1,186 1,166 2,310 2,183 Loss before income taxes (4,591) (4,928) (9,794) (9,806) Income tax expense (benefit) - - - - Net loss from continuing operations (4,591) (4,928) (9,794) (9,806) Income (loss) from discontinued operations, net of income taxes of $233, $411, $212 and $1,006, respectively (772) 2,461 (34,029) 5,572 Net loss $(5,363) $(2,467) $(43,823) $(4,234) Loss per share - basic and diluted Loss from continuing operations $(0.58) $(0.62) $(1.23) $(1.22) Income (loss) from discontinued operations (0.10) 0.31 (4.29) 0.69 Net loss available to common shareholders $(0.68) $(0.31) $(5.52) $(0.53) Weighted average shares outstanding 7,954,446 7,923,335 7,937,780 8,018,891
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CONTACT: Michael B. Berry, Investor Relations of Standard ManagementCorporation, +1-317-574-5221
Web site: http://www.sman.com/
