Imperial Holdings, Inc. IFT ("Imperial" or the "Company"), a specialty finance company with a focus on providing liquidity solutions to owners of illiquid financial assets, announced today its financial results for the three months and year ended December 31, 2013.
Three Months Ended December 31, 2013
Total income from continuing operations was $6.5 million for the three months ended December 31, 2013 compared to a total income from continuing operations of $3.1 million for the same period in 2012. The increase in total income was primarily due to an improvement in the fair value of the Company's investment in life settlements. Total expenses were $2.6 million for the three months ended December 31, 2013 compared to $7.3 million for the same period in 2012. The decrease in expenses was primarily due to a downward adjustment of $4.1 million in the estimated fair value of the Company's outstanding note payable and lower legal fees of $2.2 million. These reductions were partially offset by an increase of $1.6 million in interest expense for the Company's outstanding note payable.
The Company reported net income from continuing operations of $3.9 million, or $.18 per fully diluted share, for the three months ended December 31, 2013, compared to a net loss of $4.2 million, or ($0.20) per fully diluted share, for the same period in 2012.
Year Ended December 31, 2013
Total income from continuing operations was $89.1 million for the twelve months ended December 31, 2013, compared to $5.1 million for the same period in 2012, an $84.0 million increase. The increase was primarily driven by a $71.5 million unrealized gain in investment in life settlements associated with the one-time addition of 416 life insurance policies that were acquired during the quarter ended June 30, 2013. Total expenses were $37.2 million for the twelve months ended December 31, 2013 compared to $47.1 million for the same period in 2012, a decrease of $9.9 million.
The Company reported net income from continuing operations of $51.8 million, or $2.44 per fully diluted share, for the twelve months ended December 31, 2013, compared to a net loss of $42.0 million or ($1.98) per fully diluted share, for the same period in 2012.
On October 25, 2013, the Company sold substantially all of the assets comprising its structured settlement business for $12.0 million. As a result of the sale, the Company retrospectively reclassified its structured settlement business operating results as discontinued operations, net of income taxes, for all periods presented and the Company has discontinued segment reporting.
As of December 31, 2013, the Company had $22.7 million of cash and cash equivalents and $13.5 million in restricted cash. As of March 1, 2014, the Company had cash and cash equivalents of approximately $84.9 million, inclusive of net proceeds from its recent convertible Notes offering and elimination of its restricted cash balance. As of December 31, 2013, the Company had 21,237,166 shares outstanding and a book value of $9.11 per share.
Life Settlements Portfolio Highlights
At December 31, 2013, the estimated fair value of the Company's 612 life insurance policies was $303.0 million compared to $113.4 million for 214 life insurance policies at December 31, 2012. The weighted average discount rate used in the Company's fair value model was 19.14% at December 31, 2013 compared to 24.01% at December 31, 2012. The aggregate face value of the Company's portfolio of life insurance policies was approximately $3.0 billion at December 31, 2013.
Antony Mitchell, Chief Executive Officer of Imperial, commented, “In 2013, we were successful in restructuring our balance sheet and substantially increasing shareholder value while simplifying and rationalizing our investment thesis. With the sale of our structured settlements business in the fourth quarter, and our recent $70.7 million capital raise, we have significantly improved our cash position, reduced operating costs, and positioned ourselves to take advantage of unique investment opportunities we are seeing in the Life Finance space.”
Conference Call
The Company will host a conference call today at 5:00 P.M ET. To join the call please dial US Toll Free (877) 312-5529 or from Outside of the US (253) 237-1147 and provide Conference ID 2265201 when prompted.
The conference call will also be broadcast live through a link on the Investor Relations section of the Company's website at www.imperial.com. Please visit the website at least 10 minutes prior to the call to register, download and install any necessary audio software.
About Imperial Holdings, Inc.
Imperial is a leading specialty finance company that provides customized liquidity solutions to owners of illiquid financial assets. More information about Imperial can be found at www.imperial.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of Imperial Holdings, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although Imperial believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Imperial does not assume a duty to update these forward-looking statements.
| Imperial Holdings, Inc. and Subsidiaries | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| December 31, | |||||||||||
| 2013 | 2012 | ||||||||||
| (In thousands except share data) | |||||||||||
| ASSETS | |||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 14,722 | $ | 7,001 | |||||||
| Cash and cash equivalents (VIE) | 7,977 | - | |||||||||
| Restricted cash | 13,506 | 1,162 | |||||||||
| Investment securities available for sale, at estimated fair value | - | 12,147 | |||||||||
| Deferred costs, net | - | 7 | |||||||||
| Prepaid expenses and other assets | 1,331 | 14,165 | |||||||||
| Deposits - other | 1,597 | 2,855 | |||||||||
| Interest receivable, net | - | 822 | |||||||||
| Loans receivable, net | - | 3,044 | |||||||||
| Structured settlement receivables, at estimated fair value | 660 | 1,680 | |||||||||
| Structured settlement receivables at cost, net | 797 | 1,574 | |||||||||
| Investment in life settlements, at estimated fair value | 48,442 | 113,441 | |||||||||
| Investment in life settlements, at estimated fair value (VIE) | 254,519 | - | |||||||||
| Receivable for maturity of life settlements (VIE) | 2,100 | - | |||||||||
| Fixed assets, net | 74 | 217 | |||||||||
| Investment in affiliates | 2,378 | 2,212 | |||||||||
| Assets of segment held for sale | - | 15 | |||||||||
| Total assets | $ | 348,103 | $ | 160,342 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Liabilities | |||||||||||
| Accounts payable and accrued expenses | $ | 2,977 | $ | 6,606 | |||||||
| Accounts payable and accrued expenses (VIE) | 341 | - | |||||||||
| Other liabilities | 21,221 | 20,796 | |||||||||
| Note payable, at estimated fair value (VIE) | 123,847 | - | |||||||||
| Income taxes payable | 6,295 | 6,295 | |||||||||
| Total liabilities | 154,681 | 33,697 | |||||||||
| Commitments and Contingencies | |||||||||||
| Stockholders' Equity | |||||||||||
| Common stock (80,000,000 authorized; 21,237,166 and 21,206,121 issued and | |||||||||||
| issued and outstanding as of December 31, 2013 and 2012, respectively) | 212 | 212 | |||||||||
| Additional paid-in-capital | 239,506 | 238,064 | |||||||||
| Accumulated other comprehensive loss | - | (3 | ) | ||||||||
| Accumulated deficit | (46,296 | ) | (111,628 | ) | |||||||
| Total stockholders' equity | 193,422 | 126,645 | |||||||||
| Total liabilities and stockholders' equity | $ | 348,103 | $ | 160,342 | |||||||
| Imperial Holdings, Inc. and Subsidiaries | |||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| For the Three Months Ended December 31, | |||||||||
| 2013 | 2012 | ||||||||
| Income | (in thousands, except share and per share data) | ||||||||
| Interest income | $ | 1 | $ | 17 | |||||
| Interest and dividends on investment securities available for sale | - | 60 | |||||||
| Origination fee income | - | 16 | |||||||
| Loss on life settlements, net | (281 | ) | - | ||||||
| Change in fair value of life settlements | 6,737 | 2,740 | |||||||
| Servicing fee income | - | 228 | |||||||
| Other income | 15 | 20 | |||||||
| Total income | 6,472 | 3,081 | |||||||
| Expenses | |||||||||
| Interest expense | 1,638 | 36 | |||||||
| Change in fair value of note payable | (4,078 | ) | - | ||||||
| Provision for losses on loans receivable | - | 74 | |||||||
| Loss on loan payoffs and settlements, net | - | 111 | |||||||
| Amortization of deferred costs | - | 115 | |||||||
| Personnel costs | 1,963 | 2,062 | |||||||
| Insurance | 478 | 618 | |||||||
| Legal fees | 446 | 2,677 | |||||||
| Professional fees | 1,717 | 1,201 | |||||||
| Other selling, general and administrative expenses | 410 | 429 | |||||||
| Total expenses | 2,574 | 7,323 | |||||||
| Income (loss) from continuing operations before income taxes | 3,898 | (4,242 | ) | ||||||
| Provision (benefit) for income taxes | 1 | (7 | ) | ||||||
| Net income (loss) from continuing operations | $ | 3,899 | $ | (4,249 | ) | ||||
| Discontinued Operations: | |||||||||
| Income from discontinued operations, net of income taxes | 571 | 585 | |||||||
| Gain on disposal of discontinued operations | 11,311 | - | |||||||
| Net income from discontinued operations | 11,882 | 585 | |||||||
| Net income (loss) | $ | 15,781 | $ | (3,664 | ) | ||||
| Earnings (loss) per share: | |||||||||
| Basic earnings (loss) per common share | |||||||||
| Continuing operations | $ | 0.18 | $ | (0.20 | ) | ||||
| Discontinued operations | $ | 0.56 | $ | 0.03 | |||||
| Net income (loss) | $ | 0.74 | $ | (0.17 | ) | ||||
| Diluted earnings (loss) per common share | |||||||||
| Continuing operations | $ | 0.18 | $ | (0.20 | ) | ||||
| Discontinued operations | $ | 0.56 | $ | 0.03 | |||||
| Net income (loss) | $ | 0.74 | $ | (0.17 | ) | ||||
| Weighted average shares outstanding: | |||||||||
| Basic | 21,219,880 | 21,206,121 | |||||||
| Diluted | 21,226,524 | 21,206,121 | |||||||
| Life Finance Business Segment | |||||||||||
| For the Years Ended | |||||||||||
| December 31, | |||||||||||
| 2013 | 2012 | 2011 | |||||||||
| Period Acquisitions — Policies Owned | |||||||||||
| Number of policies acquired | 432 | 31 | 151 | ||||||||
| Average age of insured at acquisition | 77.7 | 75.5 | 78.0 | ||||||||
| Average life expectancy - Calculated LE (Years) | 12.7 | 13.2 | 10.4 | ||||||||
| Average death benefit | $ | 4,749 | $ | 5,354 | $ | 4,929 | |||||
| Aggregate purchase price | $ | 58,645 | $ | 5,708 | $ | 56,889 | |||||
| End of Period — Policies Owned | |||||||||||
| Number of policies owned | 612 | 214 | 190 | ||||||||
| Average Life Expectancy - Calculated LE (Years) | 11.6 | 10.6 | 10.6 | ||||||||
| Aggregate Death Benefit | $ | 2,954,890 | $ | 1,073,156 | $ | 935,466 | |||||
| Aggregate fair value | $ | 302,961 | $ | 113,441 | $ | 90,917 | |||||
| Monthly premium — average per policy | $ | 7.5 | $ | 10.9 | $ | 10.7 | |||||
| End of Period Loan Portfolio | |||||||||||
| Loans receivable, net | $ | - | $ | 3,044 | $ | 29,376 | |||||
| Number of policies underlying loans receivable | - | 22 | 138 | ||||||||
| Aggregate death benefit of policies underlying loans receivable | $ | - | $ | 89,650 | $ | 653,493 | |||||
| Number of loans with insurance protection | - | 5 | 91 | ||||||||
| Loans receivable, net (insured loans only) | $ | - | $ | 91 | $ | 20,785 | |||||
| Average Per Loan: | |||||||||||
| Age of insured in loans receivable | - | 75.5 | 75.0 | ||||||||
| Life expectancy of insured (years) | - | 15.7 | 15.6 | ||||||||
| Monthly premium | $ | - | $ | 5 | $ | 6 | |||||
| Loan receivable, net | $ | - | $ | 138 | $ | 213 | |||||
| Interest rate | - | 13.0 | % | 12.3 | % | ||||||
Imperial Holdings, Inc.
David Sasso, 561-672-6114
Director-
Investor Relations
IR@imperial.com
www.imperial.com
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