Exhibit 99.1
Company Contact: | Porter, LeVay & Rose, Inc. |
Donald R. Peck, CFO | Cheryl Schneider, VP – Investor Relations |
617-638-2000 | Margarerit Drgos, VP – Media Relations |
| Jeff Myhre, VP – Editorial |
| 212-564-4700 |
FOR IMMEDIATE RELEASE
FIRST MARBLEHEAD REPORTS RECORD FOURTH QUARTER AND
YEAR-END 2004 FINANCIAL RESULTS
—FOURTH QUARTER LOAN FACILITATION VOLUME UP 89% OVER PREVIOUS YEAR—
—FOURTH QUARTER LOANS AVAILABLE FOR SECURITIZATION UP 120%—
BOSTON, MA, August 12, 2004 — First Marblehead Corporation (NYSE: FMD), a leading processor of private, non-governmental, education lending, today announced its financial results for the fourth quarter and fiscal year ended June 30, 2004.
Total service revenue for the fourth quarter of fiscal 2004 was $101.1 million, compared with $36.2 million in the fourth quarter of 2003. The Company's net income for the final quarter of fiscal 2004 was $45.3 million, or $0.68 per diluted share, compared with net income of $14.8 million, or $0.26 per diluted share during the last quarter of fiscal 2003.
Total service revenue for fiscal 2004 increased to $199.3 million, a 118% increase from $91.4 million last year. Net income for fiscal 2004 increased 139% to $75.3 million, or $1.19 per diluted share, from $31.5 million, or $0.55 per diluted share, during the 2003 fiscal year.
In the fourth quarter of fiscal 2004, First Marblehead's loan facilitation volume reached $333.6 million, up 89% from $176.8 million facilitated in the quarter ended June 30, 2003. Of this quarter's facilitation volume, First Marblehead facilitated loans available for securitization of $263.1 million, up 120% from the $119.8 million available for securitization facilitated during the fourth quarter of fiscal 2003.
First Marblehead's 2004 fiscal year loan facilitation volume increased 73% to over $1.8 billion, up from $1.0 billion for the year ended June 30, 2003. Of the $1.8 billion of loans facilitated this year, the volume of loans available for securitization increased 106% to $1.4 billion, compared with $669 million during fiscal 2003.
In June 2004, the Company announced it had closed its largest ever student loan securitization of private student loans. First Marblehead's qualified special purpose entity National Collegiate Student Loan Trust 2004-1 raised $790.1 million to acquire private student loans with a principal and accrued interest balance of $620 million in the transaction.
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Also in June 2004, the Company closed its largest ever securitization of GATE private student loans. First Marblehead's qualified special purpose entity National Collegiate Trust raised $106.4 million to acquire GATE private student loans with a principal and accrued interest balance of $97.8 million. First Marblehead received up-front structural advisory fees of approximately $5.45 million, net of its investment in the Trust. This up-front revenue was 5.6% of the balance of the loans securitized. In addition, over the term of the Trust, First Marblehead expects to receive additional structural advisory fees from the Trust with a discounted present value of approximately $1.0 million, or 1.1% of the loan balance securitized, as well as residual revenue with a discounted present value of approximately $0.7 million, or 0.7% of the loan balance securitized.
Daniel Meyers, First Marblehead's Chairman and CEO, commented, "As a company, First Marblehead has come a very long way in just a year. In October, we became a publicly held company on the New York Stock Exchange. Our facilitation volumes escalated throughout the year at a higher rate than management originally projected, and our securitizations have become larger and more efficient. Our increases in operating margins and net income confirm the strength of our growing business. We completed a successful secondary offering in June, and are now proud to be a component of the Russell 1000 index so early in our life as a public company."
Looking forward to fiscal 2005, Meyers added, "We believe that market conditions should continue to drive the private student loan market upward. Preliminary indications from the National Association of Independent Colleges and Universities suggest that tuition at private colleges will increase on average 6%, while a study from the American Association of State Colleges and Universities indicates an average increase of 10% at public institutions. As grants and public loans have not kept pace with these price increases, it falls to private loan programs to make up the difference. With our expected increases in loan facilitation volume, we plan to securitize loans more frequently next year, and expect to close securitization transactions in the second, third and fourth quarters of fiscal 2005."
First Marblehead Corporation will host a conference call today, Thursday, August 12, at 10:00a.m. (Eastern), which will be simultaneously broadcast live over the Internet. Daniel Meyers, Chairman and Chief Executive Officer, and Donald Peck, Executive Vice President and Chief Financial Officer, will host the call. To access the webcast, please log on to: www.firstmarblehead.com.
A replay will be available on First Marblehead's website for 14 days. A telephone replay will also be available for 14 days by dialing (888) 286-8010 from the U.S., or (617) 801-6888 for international callers, and entering the pass code 31401000.
About First Marblehead Corporation
First Marblehead provides outsourcing services for private, non-governmental, education lending in the United States. The Company helps meet the growing demand for private education loans by providing national and regional financial institutions and educational institutions, as well as businesses and other enterprises, with an integrated suite of design, implementation and securitization services for student loan programs tailored to meet the needs of their respective customers, students, employees and members.
This is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for fiscal year 2004 and beyond, are based upon the Company's historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. These forward-looking statements represent First Marblehead's expectations as of August 12, 2004. Subsequent events may cause our expectations to change, and we disclaim any obligation to update the forward-looking statements in the future. You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory and competitive and other factors that may cause First Marblehead's performance or achievements to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause First Marblehead's actual results to differ from its expectations include the factors set forth under the caption "Factors That May Affect Future Results" in First Marblehead's Prospectus on Form S-1 filed with the Securities and Exchange Commission and dated June 22, 2004. These risks could cause actual results of the industry or our actual results for fiscal year 2005 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company.
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First Marblehead Corporation and Subsidiaries
Condensed Consolidated Statements of Income
For the Fourth Quarters and Fiscal Years Ended June 30, 2004 and 2003
(Unaudited)
| | Three months ended | | Years ended | |
| | June 30, | | June 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Service revenue: | | | | | | | | | |
Structural advisory fees | | $ | 58,011,008 | | $ | 18,833,785 | | $ | 97,194,747 | | $ | 39,336,698 | |
Residuals | | 30,104,448 | | 11,091,913 | | 64,894,913 | | 30,027,105 | |
Administrative and other fees | | 885,861 | | 454,129 | | 2,113,746 | | 1,414,617 | |
Processing fees from TERI | | 12,139,672 | | 5,776,997 | | 35,056,570 | | 20,577,486 | |
| | | | | | | | | |
Total service revenue | | 101,140,989 | | 36,156,824 | | 199,259,976 | | 91,355,906 | |
Operating expenses: | | | | | | | | | |
Compensation and benefits | | 9,336,674 | | 5,731,921 | | 34,839,252 | | 19,815,912 | |
General and administrative expenses | | 13,270,599 | | 4,918,710 | | 35,695,024 | | 16,072,928 | |
Total operating expenses | | 22,607,273 | | 10,650,631 | | 70,534,276 | | 35,888,840 | |
| | | | | | | | | |
Income from operations | | 78,533,716 | | 25,506,193 | | 128,725,700 | | 55,467,066 | |
| | | | | | | | | |
Other (income) expense, net | | (52,990 | ) | 324,558 | | (75,308 | ) | 1,453,923 | |
| | | | | | | | | |
Income before income tax expense | | 78,586,706 | | 25,181,635 | | 128,801,008 | | 54,013,143 | |
| | | | | | | | | |
Income tax expense | | 33,310,856 | | 10,416,720 | | 53,529,727 | | 22,514,388 | |
| | | | | | | | | |
Net income | | $ | 45,275,850 | | $ | 14,764,915 | | $ | 75,271,281 | | $ | 31,498,755 | |
| | | | | | | | | |
Earnings per share, basic | | $ | 0.73 | | $ | 0.28 | | $ | 1.27 | | $ | 0.59 | |
Earnings per share, diluted | | 0.68 | | 0.26 | | 1.19 | | 0.55 | |
Weighted average shares outstanding, basic | | 61,988,682 | | 53,185,680 | | 59,047,914 | | 53,099,116 | |
Weighted average shares outstanding, diluted | | 66,309,867 | | 57,171,428 | | 63,515,662 | | 56,831,049 | |
| | | | | | | | | | | | | | | | | | |
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First Marblehead Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 2004 and June 30, 2003
(Unaudited)
| | June 30, 2004 | | June 30, 2003 | |
Assets | | | | | |
Total cash and cash equivalents | | $ | 168,711,602 | | $ | 18,327,018 | |
Service receivables: | | | | | |
Structural advisory fees | | 34,334,164 | | 10,785,583 | |
Residuals | | 108,495,378 | | 43,600,465 | |
Processing fees from The Education Resources Institute (TERI) | | 6,052,356 | | 2,519,435 | |
| | 148,881,898 | | 56,905,483 | |
Other receivables | | 438,174 | | 142,818 | |
| | | | | |
Property and equipment, net | | 10,830,499 | | 4,415,862 | |
| | | | | |
Goodwill | | 3,176,497 | | 3,176,497 | |
Intangible assets, net | | 3,179,937 | | 3,608,538 | |
Prepaid and other current assets | | 23,030,014 | | 477,019 | |
Other assets | | 1,807,690 | | — | |
Total assets | | $ | 360,056,311 | | $ | 87,053,235 | |
| | | | | |
Liabilities and Stockholders' Equity | | | | | |
Liabilities: | | | | | |
Accounts payable and accrued expenses | | $ | 26,285,374 | | $ | 13,558,897 | |
Net deferred tax liability | | 40,138,125 | | 14,395,985 | |
Notes payable | | 15,182,329 | | 6,674,020 | |
Other liabilities | | 314,127 | | — | |
Total liabilities | | 81,919,955 | | 34,628,902 | |
Commitments and contingencies | | | | | |
Stockholders' equity: | | | | | |
Total stockholders' equity | | 278,136,356 | | 52,424,333 | |
Total liabilities and stockholders' equity | | $ | 360,056,311 | | $ | 87,053,235 | |
| | | | | | | | | | | |
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Appendix (A)
First Marblehead Corporation
Loan Facilitation Metrics
| | FY 2004 | | FY2003 | | % Increase | |
Q4 Loan Facilitation Volume | | $ | 334 million | | $ | 177 million | | 89 | % |
Q4 Volume of Loans Available for Securitization | | $ | 263 million | | $ | 120 million | | 120 | % |
| | | | | | | |
Fiscal 2004 Loan Facilitation Volume | | $ | 1.8 billion | | $ | 1.0 billion | | 73 | % |
Fiscal 2004 Volume of Loans Available for Securitization | | $ | 1.4 billion | | $ | 669 million | | 106 | % |
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