Imperial Holdings, Inc. Announces Fourth Quarter and Year End 2012 Results

Before you go, we thought you'd like these...
Before you go close icon

Imperial Holdings, Inc. Announces Fourth Quarter and Year End 2012 Results

Company Closes on $45 Million Bridge Facility

BOCA RATON, Fla.--(BUSINESS WIRE)-- Imperial Holdings, Inc. (NYS: IFT) ("Imperial" or the "Company"), a specialty finance company with a focus on providing liquidity solutions to owners of illiquid financial assets, announced today financial results for its fourth quarter and fiscal year ended December 31, 2012.


Quarter Ended December 31, 2012

Total income was $7.2 million for the three months ended December 31, 2012, compared to total income of ($8.1 million) for the three months ended December 31, 2011, an increase of $15.3 million. Total expenses were $10.9 million for the three months ended December 31, 2012 compared to $31.9 million for the three months ended December 31, 2011, a decrease of $21 million. The majority of the decrease in expenses was attributed to significantly lower legal fees related to a government investigation. The Company posted a net loss of $3.7 million, or ($.17), per fully diluted share for the three months ended December 31, 2012, compared to a net loss of $38.7 million, or ($1.82), per fully diluted share, for the three months ended December 31, 2011.

In the Life Finance business segment, income was $3.1 million for the fourth quarter of 2012 compared to income of ($12.1 million) for the fourth quarter of 2011, an increase of $15.2 million. Income was driven by a $2.7 million increase in the fair value of the Company's portfolio of 214 life insurance policies. At December 31, 2012 the estimated fair value of the Company's life insurance policies was $113.4 million. The weighted average discount rate used in the Company's fair value model was 24.01% at December 31, 2012. The aggregate face value of the Company's portfolio of life insurance policies was $1.1 billion at December 31, 2012. Segment expenses were $4.1 million during the three months ended December 31, 2012 compared to $9.8 million during the three months ended December 31, 2011, a decline of $5.7 million. The decrease in expenses was attributed to lower interest expense, amortization of deferred costs and personnel costs, as well as a decrease in the Company's provision for loan losses. Segment operating loss was $979,000 for the three months ended December 31, 2012, a decrease of $21.0 million over segment operating loss of $22.0 million for the three months ended December 31, 2011.

In the Structured Settlement business segment, income was $4.0 million for the three months ended December 31, 2012 compared to $3.8 million for the three months ended December 31, 2011. Segment expenses decreased by $2.0 million to $4.7 million for the fourth quarter of 2012 compared to $6.7 million in the year ago period. The decrease was attributed to lower marketing costs and general and administrative expenses. Segment operating loss was $660,000 for the three months ended December 31, 2012 compared to a segment operating loss of $2.9 million for the three months ended December 31, 2011. The Company originated 209 transactions during the fourth quarter of 2012 compared to 255 during the same period of 2011.

Full Year Ended December 31, 2012

Total income was $19.1 million for the year ended December 31, 2012, a 57% decrease over total income of $44.2 million for 2011. Total expenses were $63.8 million for the year ended December 31, 2012 compared to total expenses of $83.4 million for 2011, a reduction of $19.6 million, or 24%. Net loss for the year ended December 31, 2012 was $44.6 million, or ($2.10) per share compared to a net loss of $39.2 million or ($2.03) per share for 2011, an increase of $5.5 million or 14%.

As of December 31, 2012, the Company had $20.3 million of cash and cash equivalents, and marketable securities. The book value of the Company at December 31, 2012 was $5.97 per share.

$45 Million Bridge Financing

The Company also announced today it has closed on its previously announced $45 million bridge facility. The facility was provided by affiliates of some of the Company's largest shareholders, including Indaba Capital Management, Nantahala Capital Management, NS Advisors and Brooklyn Capital Management (a/k/a Bulldog Investors).

Antony Mitchell, Chief Executive Officer, commented, "We ended 2012 with positive momentum in both our Life Finance and Structured Settlements business segments. During the quarter we benefited from an increase in the fair value of our life settlement assets, as well as significantly lower legal expenses." Mr. Mitchell added, "More recently, we successfully completed our previously announced $45 million financing facility with some of our major shareholders. It will ensure our ability to make premium payments on our life insurance policies into 2014. The facility also provides us with additional flexibility as we progress towards sourcing a longer term financing solution."

About Imperial Holdings, Inc.

Imperial is a leading specialty finance company that, through its operating subsidiaries, provides customized liquidity solutions to owners of illiquid financial assets. Imperial's primary operating units are Life Finance and Structured Settlements. In its Life Finance unit, Imperial purchases and sells life insurance policies. In its Structured Settlements unit, Imperial purchases from individuals long-term annuity payments issued by highly rated U.S. insurance companies. 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. Imperial's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, unanticipated issues that prevent or delay the Company's independent registered public accounting firm from concluding its procedures for the year ended December 31, 2012 or that require additional efforts, procedures or review; the investigation by the Securities and Exchange Commission, and potential adverse outcomes associated with the investigation, including payments or fines the Company may be required to make, restrictions placed upon the Company and legal proceedings that may relate to these matters; the possibility that payments due to the Company under certain policies may be delayed; the Company's ongoing compliance with the coverage ratios and other covenants in the bridge facility; the Company's ability to repay the bridge facility and to raise other sources of capital; unanticipated issues that prevent or delay the Company from entering into the previously announced settlements of certain shareholder related matters and the amount of legal and indemnification expenses associated with those matters and the investigation into the Company's premium finance business; and the accuracy of actuarial assumptions underlying the Company's models. All forward-looking statements attributable to Imperial or persons acting on its behalf are expressly qualified in their entirety by these factors. 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 AND COMBINED BALANCE SHEETS
December 31,
20122011
(In thousands except share data)
ASSETS
Assets
Cash and cash equivalents$7,001$16,255
Restricted cash1,162691
Certificate of deposit - restricted-891
Investment securities available for sale, at estimated fair value12,14757,242
Deferred costs, net71,874
Prepaid expenses and other assets14,1653,277
Deposits - other2,855761
Interest receivable, net8225,758
Loans receivable, net3,04429,376

Structured settlement receivables at estimated fair value

1,68012,376
Structured settlement receivables at cost, net1,5741,553
Investment in life settlements, at estimated fair value113,44190,917
Fixed assets, net232585

Investment in affiliates

 2,212  1,043 
Total assets$160,342 $222,599 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses$6,606$16,336
Other liabilities20,7964,279
Interest payable-5,505
Notes payable-19,277
Income taxes payable 6,295  6,295 
Total liabilities33,69751,692
Stockholders' Equity

Common stock (80,000,000 authorized; 21,206,121 and 21,202,614
issued and outstanding as of December 31, 2012 and 2011,
respectively)

212212
Additional paid-in-capital238,064237,755
Accumulated other comprehensive loss(3)(66)
Accumulated deficit (111,628) (66,994)
Total stockholders' equity 126,645  170,907 
Total liabilities and stockholders' equity$160,342 $222,599 
 
   
Imperial Holdings, Inc. and Subsidiaries
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
For the Fourth Quarter Ended December 31,
 
20122011
Income(in thousands, except share and per share data)
Agency fee income$-$(94)
Interest income1581,274
Interest and dividends on investment securities available for sale60199
Origination fee income17622
Realized gain on sale of structured settlements3,713360
Gain on forgiveness of debt-143
Unrealized change in fair value of life settlements2,741(14,241)
Unrealized change in fair value of structured settlements2363,157
Servicing fee income228367
Other income92117
  
Total income 7,245  (8,096)
 
 
Expenses
Interest expense361,095
Provision for losses on loans receivable743,876
Loss on loan payoffs and settlements, net111(90)
Amortization of deferred costs1161,164
Personnel costs3,7704,775
Marketing costs5421,919
Department of Justice Settlement-8,000
Legal fees3,1357,910
Professional fees1,6621,533
Insurance618208
Other selling, general and administrative expenses 838  1,548 
Total expenses 10,902  31,938 
Loss before income taxes(3,657)(40,034)
Provision (benefit) for income taxes 6  (1,352)
Net loss$(3,663)$(38,682)
 
 
Loss per share:
Basic$(0.17)$(1.82)
Diluted$(0.17)$(1.82)
Weighted average shares outstanding:
Basic 21,206,121  21,202,614 
Diluted 21,206,121  21,202,614 
 
   
Imperial Holdings, Inc. and Subsidiaries
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
For the Year Ended December 31,
 
20122011
Income(in thousands, except share and per share data)
Agency fee income$-$6,470
Interest income2,0148,303
Interest and dividends on investment securities available for sale391640
Origination fee income5006,480
Realized gain on sale of structured settlements11,5095,817
Realized gain on life settlements, net1515
Gain on forgiveness of debt-5,023
Unrealized change in fair value of life settlements(5,660)570
Unrealized change in fair value of structured settlements1,8235,302
Servicing fee income1,1831,814
Gain on maturities of life settlements with subrogation rights, net6,0903,188
Other income1,082602
  
Total income 19,083  44,214 
 
 
Expenses
Interest expense1,2558,524
Provision for losses on loans receivable5157,589
Loss on loan payoffs and settlements, net1253,837
Amortization of deferred costs1,8676,076
Personnel costs16,08718,933
Marketing costs5,0236,104
Department of Justice Settlement-8,000
Legal fees26,05312,097
Professional fees6,9345,684
Insurance2,330756
Other selling, general and administrative expenses 3,567  5,812 
Total expenses 63,756  83,412 
Loss before income taxes(44,673)(39,198)
Provision (benefit) for income taxes (39) - 
Net loss$(44,634)$(39,198)
 
 
Loss per share:
Basic$(2.10)$(2.03)
Diluted$(2.10)$(2.03)
Weighted average shares outstanding:
Basic 21,205,747  19,352,063 
Diluted 21,205,747  19,352,063 
 
   

Life Finance Segment-Selected Operating Data

 
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Gift Finder Promo
More to Explore