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): April 18, 2000.
E. W. BLANCH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11794 41-1741779
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
500 N. Akard, Suite 4500, Dallas, TX 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214)756-7000
(Former name or former address, if changed since last report.)
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Item 5. Other Events
See attached Press Release
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press release dated April 18, 2000.
Signature
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, thereunto duly authorized.
E. W. BLANCH HOLDINGS, INC.
Date: April 27, 2000
By /s/ Susan Wollenberg
-----------------------------
Susan Wollenberg
Senior Vice President and
Chief Financial Officer
EXHIBIT 99.1
[LOGO] E. W. BLANCH HOLDINGS
EWB CORPORATE SERVICES
FOR IMMEDIATE RELEASE Contact: Chris L. Walker
April 18, 2000 (214) 756-7000
E. W. BLANCH HOLDINGS, INC.
REPORTS FIRST QUARTER 2000 EARNINGS
RESULTS IN LINE WITH PRELIMINARY ESTIMATES
COMPANY RENEWS AND EXPANDS STOCK REPURCHASE PROGRAM
Dallas, TX - E.W. Blanch Holdings, Inc. (NYSE: EWB) today announced first
quarter results for the quarter ended March 31, 2000. Revenues were $56.9
million, compared with $62 million during the same period in 1999, representing
a decline of 8.2 percent. Net income was $2.2 million, compared with $9.5
million in the first quarter of 1999, representing a decline of 77.2 percent.
Basic earnings per share was $0.16 compared to $0.74 in 1999. Diluted earnings
per share was $0.16 compared to $0.70 in 1999.
As previously announced on March 20, 2000, the principal reasons for the decline
in earnings included: the failure to replace $14 million in revenues from
workers compensation reinsurance placements and large non-recurring
transactions; lower than anticipated earnings from international operations
resulting in a shortfall of $3.8 million from revenue projections; and the
timing of certain anticipated significant transactions.
In light of the first quarter's results, the Company said that earnings per
share for the full fiscal year is expected to be approximately $2.50.
Projections for the year take into consideration the potential loss in revenues
from a large account, that appears to be in the process of moving to a
competitor.
Ted Blanch, Chairman and Chief Executive Officer, said "While we are clearly
disappointed in our first quarter results, we are more focused than ever on our
core brokerage and service revenues and generating additional revenue from
significant transactions.
"In addition, we have taken a number of steps in response to this situation to
ensure that it does not occur again. We have now fully implemented our
previously announced reorganization of our business, designed to bring us closer
to our customers. I'm pleased to say that this new structure is working. Our
relationship managers are
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spending more time with clients and we are bringing enhanced expertise to
transactions. We expect this will help drive additional revenues and lead to
further opportunities. In addition, we have formalized our internal reporting
systems so that we are getting more reports and updates of customers needs and
issues in a more timely fashion," continued Blanch.
"On the expense side, we have taken a number of steps to become more efficient.
Internationally, we have realized the cost synergies we anticipated from the
Crawley Warren acquisition - the positive financial impact of which will be felt
in our second quarter earnings. We are also scrutinizing our ongoing expenses
even more closely than before to ensure the dollars we do spend are focused on
generating revenues.
"Despite the relatively poor market conditions within the insurance industry,
our core reinsurance brokerage business has demonstrated consistent earnings and
growth both domestically and abroad. We are encouraged by the price firming we
are seeing, and believe it will enhance our financial performance. In addition,
we have made a number of financial investments of which we expect to reap the
benefits during this fiscal year," concluded Blanch.
Consistent with the commitment to enhance shareholder value, the Board of
Directors of E.W. Blanch has authorized a stock repurchase program under which
up to twenty percent (20%) of the Company's current outstanding Common Stock may
be repurchased. The Company said that such purchases may be made from
time-to-time at prevailing prices in the open market, by block purchases or in
private transactions. The Board of Directors approved the Stock Repurchase
Program for a two-year period, subject to possible renewal at the end of that
period. The Company has approximately 13.3 million shares of Common Stock
outstanding. The shares repurchased will be available for reissuance to satisfy
employee stock plans and for other corporate purposes.
Operations
During the quarter ended March 31, 2000, revenues from the company's domestic
operations decreased $10.4 million, or 22 percent compared with the prior year's
quarter. Revenues from the company's foreign operations increased $5.3 million
compared with the prior year's quarter, primarily as a result of the acquisition
of Crawley Warren.
Interest Income
Interest income from domestic operations for the quarter ended March 31, 2000,
increased to $2.2 million, compared with $1.8 million in the prior year's
quarter. Interest income from foreign operations increased to $1.0 million for
the quarter ended March 31, 2000, compared with $0.5 million in the prior year's
quarter.
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Operating Expenses
Domestic operating expenses increased $3.4 million to $34.4 million, or 11.1
percent for the quarter ended March 31, 2000, compared to $31.0 million the
prior year's quarter. This is primarily a result of the operating expenses of
$2.9 million related to the acquisitions of JD Warren and Crawley Warren US.
Foreign operating expenses increased $7.5 million to $19.4 million, or 63.5
percent for the quarter ended March 31, 2000 compared to $11.8 million the prior
year. The reason for the increase is primarily due to a delay in achieving cost
synergies in connection with the acquisition of Crawley Warren. The Company
noted that these synergies have been achieved and will accrue to the Company's
second fiscal quarter.
Profit Margins
Operating profit margins, calculated as income before taxes and allocation of
central costs as a percentage of total revenues, were 8.6 percent for domestic
operations for the quarter ended March 31, 2000, compared to 35.5 percent for
the same period in the prior year. For foreign operations, operating profit
margins, calculated as income before taxes and allocation of central costs as a
percentage of total revenues, were (0.5) percent for the three months ended
March 31, 2000, compared to 15.2 percent for the same period in the prior year.
Except for the historical information contained herein, the matters discussed in
this news release are forward looking statements that involve risks and
uncertainties, many of which are outside the Company's control and, accordingly,
actual results may differ materially. The Company's Form 10-K filed with the SEC
on March 30, 2000 includes a discussion of these risk factors and is
incorporated herein by reference.
E.W. Blanch Holdings, Inc. is a leading provider of integrated risk management
and distribution services, including reinsurance intermediary services, risk
management consulting and administration services and primary distribution
services. The Company is headquartered in Dallas, Texas with branch offices
throughout the United States and strategic locations in Europe, Latin America
and the Pacific Rim. For more information, check the Internet at www.ewb.com.
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E. W. BLANCH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
<S> <C> <C>
Revenues:
Operations $ 53,743 $ 59,668
Interest income 3,172 2,344
-------------------------------
Total revenues $ 56,915 62,012
Expenses:
Salaries and benefits 32,549 25,885
Travel and marketing 4,670 3,503
General and administrative 13,689 12,212
Amortization of intangibles 1,440 896
Interest expense 1,432 320
-------------------------------
Total expenses 53,780 42,816
-------------------------------
Income before taxes 3,135 19,196
Income taxes 1,300 7,894
Minority interest, net of tax (45) 231
Equity interest in (gain) loss of unconsolidated
subsidiaries, net of tax (280) 1,581
-------------------------------
Net income $ 2,160 $ 9,490
===============================
Net income per share, basic $ 0.16 $ 0.74
===============================
Wtd. average number of shares outstanding, basic 13,184 12,773
Net income per share, assuming dilution $ 0.16 $ 0.70
===============================
Wtd. Average number of shares outstanding,
assuming dilution 13,815 13,553
</TABLE>
CERTAIN PRIOR YEAR AMOUNTS HAVE BEEN RECLASSIFIED TO CONFORM WITH CURRENT YEAR
PRESENTATION.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
-------------------------------
<S> <C> <C>
ASSETS
Current assets $ 79,875 $ 77,905
Other assets 181,766 184,118
Fiduciary accounts - assets 819,989 969,842
-------------------------------
Total Assets 1,081,630 1,231,865
===============================
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities 95,312 97,916
Other liabilities 7,734 7,058
Fiduciary accounts - liabilities 819,989 969,842
-------------------------------
Total Liabilities 923,035 1,074,816
Minority Interest 64 114
Shareholders' Equity 158,531 156,935
-------------------------------
Total Liabilities & Shareholders' Equity $ 1,081,630 $ 1,231,865
===============================
</TABLE>
