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): March 17, 2005
FINANCIAL INDUSTRIES CORPORATION
(Exact name of Registrant as specified in charter)
Texas 0-4690 74-2126975
(State or other jurisdiction (Commission file number) (I.R.S. employer
of incorporation) identification no.)
6500 River Place Blvd., Building One
Austin, Texas 78730
(Address of principal executive offices)
Registrant's telephone number, including area code: (512) 404-5000
Former name or former address, if changed since last report - Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Item 1.01 Entry into a Material Definitive Agreement.
On March 17, 2005, a subsidiary of Financial Industries Corporation ("FIC")
entered into an agreement to sell its investment in the office building
project known as River Place Pointe to Aspen Growth Properties, Inc. (the
"Purchaser"), an unaffiliated third party, for a cash sale price of $103
million. The project, which is owned by Investors Life Insurance Company of
North America and is located in Austin, Texas, consists of seven office
buildings totaling approximately 600,000 square feet, with associated
parking, drives and related improvements. The land for the project was
purchased by Investors Life in 1998. Construction on the first section of
the project, which consists of four office buildings, an associated parking
garage and related infrastructure, was completed during 2000 and 2001. The
second phase of construction, which included three more office buildings,
an associated parking garage and related infrastructure, was completed in
2002. Since July 2000, FIC and its insurance subsidiaries have occupied
Building One in the project, consisting of approximately 76,143 square feet
of office space. Approximately 66% of the space in the remaining six office
buildings is currently leased to unaffiliated third-parties.
The sale agreement provides for a customary inspection period, during which
the Purchaser may terminate the agreement for any reason, or for no reason,
and receive a refund of its earnest money deposit. At the end of the
inspection period, the agreement is binding on both parties, with closing
to occur shortly thereafter.
The agreement provides that, at the time of closing, Investors Life will
enter into a lease with the Purchaser with respect to all of the space in
Building One, for a five-year term at a rate of $28.00 per square foot,
which was the prevailing rental rate at the time that FIC and its
subsidiaries occupied the building in July 2000. The lease will provide
Investors Life with a right of cancellation of the lease at March 31, 2008.
The Registrant estimates that, if the closing occurs, it will recognize a
realized gain of approximately $8 million, before taxes, in connection with
the transaction. This estimated gain is net of a reduction related to the
rental rate with respect to the space in Building One to be occupied by FIC
and its subsidiaries after the closing. This adjustment to the realized
gain will be deferred and amortized over the portion of the lease prior to
March 31, 2008, thereby reducing to a market rental rate the lease expense
to be recognized in FIC's consolidated financial statements.
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FIC anticipates that the sale of the River Place project will enable it to
diversify the investment portfolio of Investors Life, enhance liquidity and
improve the rate of return on invested assets. FIC cautions, however, that
there can be no assurance that the transaction will be completed.
As provided by the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, Financial Industries Corporation cautions that the
statements in this Form 8-K, including but not limited to, statements found in
Item 1.01-"Entry into a Material Definitive Agreement" relating to the
provisions of the real estate sale agreement and the conditions pertaining to
the closing of the transaction, accounting effect of the transaction, and other
matters that are not historical factual information are forward-looking
statements that represent management's belief and assumptions based on currently
available information. The information contained in this report relating to
trends in the Company's operations and financial results and the contingencies
and uncertainties to which the Company may be subject, as well as other
statements including words such as "anticipate," "believe," "cautions", "plan,"
"estimate," "expect," "intend," and other similar expressions constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. Such statements are made based upon management's current expectations and
beliefs concerning the financial results, economic conditions and are subject to
known and unknown risks, uncertainties and other factors contemplated by the
forward-looking statements that could cause results to differ materially from
those described in the forward-looking statement. Such factors include, among
other things: (1) timing and results of the described real estate transaction,
the accounting treatment of the transaction, whether the closing conditions are
satisfied and the closing occurs; (2) general economic conditions and other
factors, including prevailing interest rate levels and stock market performance,
which may affect the ability of the Company to sell its products, the market
value of the Company's investments and the lapse rate and profitability of
policies; (3) the Company's ability to achieve anticipated levels of operational
efficiencies and cost-saving initiatives; (4) customer response to new products,
distribution channels and marketing initiatives; (5) mortality, morbidity and
other factors which may affect the profitability of the Company's insurance
products; (6) our ability to develop and maintain effective risk management
policies and procedures and to maintain adequate reserves for future policy
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benefits and claims; (7) changes in the Federal income tax laws and regulations
which may affect the relative tax advantages of some of the Company's products;
(8) increasing competition in the sale of insurance and annuities; (9)
regulatory changes or actions, including those relating to regulation of
insurance products and insurance companies; (10) ratings assigned to the
Company's insurance subsidiaries by independent rating organizations such as
A.M. Best, which the Company believes are particularly important to the sale of
accumulation products; (11) the performance of our investment portfolios; (12)
the effect of changes in standards of accounting; (13) the effects and results
of litigation; and (14) other factors discussed in the Company's other filings
with the SEC, which are available free of charge on the SEC's website at
www.sec.gov. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those indicated. Investors should not place undue reliance on
forward-looking statements. Each forward-looking statement speaks only as of the
date of the particular statement, and the Company undertakes no obligation to
publicly update or revise any forward-looking statements. There can be no
assurance that other factors not currently anticipated by management will not
also materially and adversely affect the Company.
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 hereunto duly authorized.
FINANCIAL INDUSTRIES CORPORATION
Date: March 23, 2005 By: /s/ J. Bruce Boisture
____________________________________
President and Chief Executive Officer
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