NEW YORK, April 3, 2006 (PRIMEZONE) -- Bexil Corporation (AMEX:BXL) today reported its financial results for the year ended December 31, 2005.
Overview
Bexil's primary holding is, and for the last three years has been, its fifty percent interest in privately held York Insurance Services Group, Inc. ("York"). York is an insurance services business process outsourcing company. Since the 1930's, York (through predecessor companies) has served as both an independent adjustment company and third party administrator providing comprehensive claims, data, and risk related services to insurance companies, self-insureds, and intermediaries throughout the United States. York's business units include the program management, licensed private investigation, recovery, environmental consulting, retail logistics and large/complex loss adjusting. The Company's fifty percent interest in York is accounted for using the equity method and, therefore, our financial results are not consolidated with York's.
Sale of interest in York Insurance Services Group
On December 23, 2005, the Company entered into an agreement for the sale (the "Proposed Sale") of its fifty percent interest in York to York Insurance Acquisition, Inc. ("York Buyer"), a newly formed entity controlled by Odyssey Investment Partners, LLC ("Odyssey") and certain other investors for approximately $39 million in cash. A special committee of independent directors, have evaluated the fairness of the transaction, and the Board of Directors of Bexil have approved the transaction, which is subject to the approval of the holders of at least 50% of Bexil's outstanding common stock. Holders of approximately 32% of Bexil's stock have entered into an agreement in which they have agreed to vote their shares in favor of the sale and against any action that would reasonably be expected to prevent the transactions contemplated by the sale. On March 27, 2006, proxy material was mailed to stockholders seeking approval of the Proposed Sale at a special meeting of stockholders scheduled for April 27, 2006. Completion of the transaction is also subject to the consummation of an agreement by the other fifty percent owner of York, Thomas C. MacArthur, to sell a portion and rollover a portion of his shares to York Buyer, and other conditions to closing.
If the sale does not receive shareholder approval, the agreement for the Proposed Sale will be terminated. The agreement obligates the Company to pay York Buyer its reasonable out-of-pocket expenses (including without limitation, all fees and expenses of counsel, accountants, investment bankers, experts, and consultants to York Buyer and its affiliates) incurred by York Buyer or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of the Proposed Sale agreement and the agreement by the other fifty percent owner of York up to a maximum of $1,750,000 if the Proposed Sale agreement is terminated for certain reasons, including if the sale of the Company's fifty percent interest in York is not approved by the stockholders of the Company.
2005 Financial Results
Total revenues of $308,432 in 2005 increased $144,689 or 88.4% compared to 2004. Revenues from consulting and other fees earned from York increased $59,000 due primarily to an increase in the consulting arrangement to $150,000 per annum in 2005 from $100,000 per annum in 2004. Dividend and interest income increased $85,689 or 168.9% due to larger investable cash balances and rising yields on our money market fund investment. Cash balances were larger primarily as a result of receiving $12,670,691 in cash dividends from York in 2005.
Total expenses of $2,352,262 in 2005 increased $1,325,505 or 129.1% compared to total expenses of $1,026,757 in 2004. Compensation and benefits increased $742,350 or 121.6% in 2005 compared to 2004. The increase was due to bonus payments totaling $815,625 paid to the Chief Executive Officer and the Executive Chairman as a result of the Company having entered into an agreement for the Proposed Sale. This was partially offset by a decrease of approximately $100,000 in base salary expense in 2005 from 2004. Professional expenses increased $571,615 or 252.0% in 2005. This was due to an increase in audit and audit related expenses of approximately $226,000 as a result of the change in auditors in 2005. Legal expenses increased approximately $116,000 and other professional services increased approximately $208,000 arising from the Proposed Sale. The decrease in occupancy expenses was due to a decrease in allocated rent and occupancy expenses for jointly used office space and administrative support functions from affiliate Winmill & Co. Incorporated of $31,729. Communications expenses increased $42,008 or 74.7% due to expenses incurred from the Proposed Sale.
The Company recognized an impairment loss of $325,000 related to an investment in the common stock of a non-public entity in 2005. A valuation committee established by the Company determined that the decrease in fair value of the investment was other than temporary based upon the financial condition and near term prospects of the underlying investee.
The Company's income tax benefit decreased $110,673 or 41.4% in 2005 due primarily to a reduction in deferred tax assets.
The Company's equity in the earnings of York increased $800,343 or 28.5% in 2005, from $2,812,088 in 2004 to $3,612,431 in 2005. This increase is attributable to York's net income from 2004 to 2005.
Net income in 2005 was $1,400,222 compared to net income of $2,219,785 in 2004, representing a 36.9% decrease year to year. Net income on a per-share diluted basis was $1.59 in 2005, compared with $2.52 in 2004, representing a 37.1% decrease year to year.
BEXIL CORPORATION
UNAUDITED STATEMENTS OF INCOME
For the Years Ended December 31, 2005 and 2004
2005 2004
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Revenues
Consulting and other $ 172,000 $ 113,000
Dividends and interest 136,432 50,743
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308,432 163,743
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Expenses
Employee compensation and benefits 1,352,639 610,289
Professional 798,460 226,845
Occupancy 102,896 133,364
Communications 98,267 56,259
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2,352,262 1,026,757
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Realized gain (loss) on investments (325,000) 3,417
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Loss before income taxes and
equity in earnings of York Insurance
Services Group, Inc. (2,368,830) (859,597)
Income tax benefit (156,621) (267,294)
Equity in earnings of York Insurance
Services Group, Inc. 3,612,431 2,812,088
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Net income $ 1,400,222 $ 2,219,785
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Per share net income:
Basic $ 1.59 $ 2.52
Diluted $ 1.59 $ 2.52
Average shares outstanding:
Basic 879,592 879,591
Diluted 882,521 879,591
York's summarized and unaudited condensed financial information for the years ended December 31, 2005 and 2004 was as follows:
Year ended December 31,
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York Insurance Services Group, Inc. 2005 2004
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Revenues $75,241,609 $71,512,418
Expenses 63,186,888 60,952,590
Net income 7,224,861 6,041,101
Working capital 8,727,146 14,169,125
Total assets 30,444,192 35,481,110
Long term debt 13,834,609 1,209,949
Shareholder's equity 730,452 18,846,973
More information about Bexil may be found at its web site http://www.bexil.com.
This press release may contain "forward looking information" and "forward looking statements" and similar expressions that reflect Bexil's current expectations about its future performance, and are subject to risks, uncertainties and other factors that could cause Bexil's actual performance to differ materially from those expressed in, or implied by, the forward looking information and these forward looking statements.