PORTLAND, OR -- 03/29/2006 -- Paulson Capital Corp. (NASDAQ: PLCC), parent company to Paulson Investment Company, Inc., today announced its financial performance results for fiscal year 2005, ended December 31, 2005.
2005 Financial Highlights
- -- Total revenues recorded for the year increased 21% to $39.7 million, up from $32.9 million reported for 2004. - -- Investment income, including realized gains from the exercise of underwriter warrants and subsequent sale of the stock, gains and losses from the sale of investment securities and unrealized gains and losses from underwriter warrants and other investment securities, climbed 685% to $15,839,768 from $2,017,940 in the prior year. - -- Trading income more than doubled, rising to $2.9 million from $1.4 million for the comparable year-over-year periods. - -- Sales commissions revenue declined 10% to $16.5 million, down from $18.3 million in the previous year. - -- Expenses in 2005 modestly declined to $26.4 million from $27 million in 2004. - -- Pre-tax earnings for the year were $13.4 million, a 127% increase over $5.9 million recorded in the prior year. - -- Net earnings increased 143% to $8.5 million, or $2.70 diluted earnings per share, compared to $3.5 million, or $1.09 diluted earnings per share, in 2004. - -- As of December 31, 2005, the Company had approximately $12.6 million in cash and receivables; $32.4 million in investment securities; $1.6 million in trading securities; and stockholders' equity of approximately $39.8 million. - -- Net cash provided by Paulson's operating activities in 2005 totaled approximately $1.5 million.Commenting on the results, Chester L.F. Paulson, founder and Chairman of Paulson, stated, "There is no question that we are very pleased with the strong financial performance delivered by Paulson Investment Company in 2005. Last year, the performance of the general market was lackluster, with only modest gains in the Russell 2000 Index and Nasdaq Composite Index. In addition, we did very few IPO and secondary offerings. However, we were able to successfully manage our portfolio of investment and trading securities, resulting in a significant increase in net income."
Continuing, Paulson noted, "Based on our peer assessment and given our continued strong financial performance, we believe that our Company has been undervalued by the Wall Street community. With the successful completion of our forward stock split, which will take effect tomorrow, we hope to attract greater market support from institutional investors -- a key objective for Paulson this year."
Paulson will also host a teleconference on Tuesday, April 4, 2006, beginning at 4:15 PM Eastern, and invites all interested parties to join management in a discussion regarding the Company's financial results, corporate progression and other meaningful developments. The conference call can be accessed via telephone by dialing toll free 1-800-867-0448. For those unable to participate at that time, a replay of the teleconference will be available and may be accessed by calling 1-800-405-2236 and entering the passcode 11057522#.
About Paulson Capital Corporation
Paulson Capital Corporation is the parent company to Paulson Investment Company, Inc. Located in Portland, Oregon, Paulson Investment Company is the Northwest's largest independent brokerage firm and a national leader in public offerings of small and emerging growth companies with capital needs of $5 million to $45 million. Founded by Chet Paulson in 1970, it has managed or underwritten more than 150 public offerings and has generated more than $1 billion for client companies.
Paulson Capital Corp. and Subsidiary CONSOLIDATED BALANCE SHEETS December 31, 2005 2004 ASSETS Cash and cash equivalents $ 129,549 $ 132,845 Receivable from clearing organization 12,608,491 7,856,254 Notes and other receivables 1,081,528 442,934 Income taxes receivable - 851,000 Trading securities, at market value 1,558,564 3,029,326 Investment securities, at market value and estimated fair value 32,401,808 20,774,645 Underwriter warrants, at estimated fair value 6,275,000 9,416,000 Prepaid and deferred expenses 674,328 1,583,346 Furniture and equipment, net 265,791 239,028 Total assets $ 54,995,059 $ 44,325,378 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Accounts payable and accrued liabilities $ 1,243,866 $ 2,138,856 Payable to clearing organization 3,182,347 1,021,860 Compensation, employee benefits and payroll taxes 2,105,259 2,108,056 Securities sold, not yet purchased, at market value 23,033 50,144 Dividends payable - current 929,317 - Income taxes payable - current 2,338,218 - Deferred income taxes payable 5,408,000 5,436,000 Total liabilities 15,230,040 10,754,916 COMMITMENTS AND CONTINGENCIES - - SHAREHOLDERS' EQUITY Preferred stock, no par value; authorized, 500,000 shares; issued and outstanding, no shares - - Common stock, no par value; authorized, 10,000,000 shares; issued and outstanding, 3,097,724 shares and 3,190,300, respectively 1,817,100 1,745,824 Retained earnings 37,947,919 31,824,638 Total shareholders' equity 39,765,019 33,570,462 Total liabilities and shareholders' equity $ 54,995,059 $ 44,325,378 Paulson Capital Corp. and Subsidiary CONSOLIDATED STATEMENT OF INCOME Years ended December 31, 2005 2004 2003 Revenues Commissions $16,517,709 $18,304,103 $16,597,119 Corporate finance 3,259,092 11,213,195 6,801,330 Investment income 15,839,768 2,017,840 3,359,973 Trading income 2,926,440 1,350,816 1,245,018 Interest and dividends 51,062 27,686 52,764 Other 1,142,277 1,635 2,955 39,736,348 32,915,275 28,059,159 Expenses Commissions and salaries 18,701,260 19,263,085 16,959,056 Underwriting expenses 227,412 876,981 528,397 Rent, telephone and quotation services 1,281,293 1,211,383 1,156,402 Interest expense 421 10,093 16,813 Professional fees 1,456,649 1,029,800 650,831 Bad debt expense 299,745 684,429 367,796 Travel and entertainment 229,055 368,044 250,973 Depreciation and amortization 90,814 96,914 136,876 Advertising and promotion expense 273,430 302,486 280,387 Settlement expense 870,535 1,274,540 96,849 Other 2,925,674 1,901,054 1,470,766 26,356,288 27,018,809 21,915,146 Earnings before income taxes 13,380,060 5,896,466 6,144,013 Income tax expense 4,888,000 2,406,866 2,103,736 NET EARNINGS $ 8,492,060 $ 3,489,600 $ 4,040,277 Basic earnings per share $ 2.71 $ 1.10 $ 1.30 Diluted earnings per share $ 2.70 $ 1.09 $ 1.29 Weighted average common shares outstanding: Basic 3,131,443 3,183,194 3,116,786 Diluted 3,147,632 3,186,889 3,131,605
This release may contain "forward-looking statements" based on current expectations but involving known and unknown risks and uncertainties. Actual results of achievements may be materially different from those expressed or implied. The Company's plan and objectives are based on judgments with respect to future conditions in the securities markets as well as general assumptions regarding the economy and competitive environment in the securities industry, which can be volatile and out of our control. In particular, we make assumptions about our ability to complete corporate finance transactions and increase the volume and size of our securities trading operations, which are difficult or impossible to predict accurately and often beyond the control of the Company. Therefore, there can be no assurance that any forward-looking statement will prove to be accurate.
FOR MORE INFORMATION, PLEASE CONTACT: Dodi Handy President and CEO Elite Financial Communications Group 407-585-1080 email: plcc@efcg.net