EXHIBIT 99.1
[FIC Logo]
June 13, 2005
Dear Shareholder:
For the past twelve months, your new management team has been engaged in
the arduous process of examining and correcting the financial accounts of our
company covering multiple years. This work required review of large volumes of
accounting data and entries, as well as extensive analysis of complex financial
transactions and the records of those transactions. In this work, the Company
has been assisted by the accounting firm of KPMG LLP and other outside
accountants and actuaries. The Company's registered public accounting firm,
PricewaterhouseCoopers LLP, has worked closely with the Company in reviewing and
auditing the Company's revised financial statements.
The scope of this accounting effort has proven to be larger than anyone
supposed at the outset. As a result, we have been long delayed in the filing of
FIC's Form 10-K report for 2003. In addition, our Form 10-K report for 2004 and
our 10-Q reports for the first three quarters of 2004 and for the first quarter
of 2005 have also been delayed. I am aware that this delay has caused severe
inconvenience and frustration to many of you. Please know that we have worked
intensely and tirelessly to complete the work in a careful and thorough manner,
and in the end to provide us all with sound financial reports that accurately
depict the financial condition and results of operations of our company.
I am happy to report that in recent weeks, this work has begun to bear
fruit. In March, our two insurance company subsidiaries, Family Life Insurance
Company and Investors Life Insurance Company of North America, filed their
statutory (unaudited) financial statements for 2004 with the insurance
regulators. In March and May, respectively, Family Life and Investors Life filed
their audited 2003 statutory financial statements with the insurance regulators.
On May 16, 2005, our insurance company subsidiaries filed their statutory
financial statements (unaudited) for the first quarter of 2005, on a timely
basis.
These two subsidiaries comprise most of the operating business of FIC. The
statutory accounting practices applicable to their financial statements vary
significantly from generally accepted accounting principles ("GAAP") that are
used in preparing FIC's consolidated financial statements. In addition, the
statutory statements do not include information pertaining to the operations
(primarily expenses) or the debt of FIC (the holding company of the insurance
company subsidiaries) or the operations of the non-insurance company
subsidiaries of FIC. Nonetheless, completion of the statutory financial
statements clears the path for completion of FIC's GAAP accounting for 2003 and
then for subsequent years. We have already devoted extensive attention to the
GAAP financials, and it is on the completion of these reports that our finance
group, outside auditors, and accounting consultants will now focus.
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The complexity of the accounting issues that we have found and the large
number of accounting periods that we have needed to reexamine have taught us to
be cautious about predicting completion dates. With that in mind, I assure you
that we are focusing our efforts on the prompt completion of FIC's 2003 Form
10-K report, with the 2004 reports to follow as soon as possible thereafter.
We will also be continuing our efforts to improve the sales, business
operations, and business outlook of our company. In that connection, I am
pleased to inform you that the sale of the River Place Pointe office complex for
$103 million, which we announced on March 23, 2005, was completed on June 1,
2005.
Thank you for your patience while we complete this accounting and reporting
effort. We look forward
to completing these tasks promptly and accurately.
Sincerely yours,
/s/ J. Bruce Boisture
J. Bruce Boisture
CEO & President
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 letter, including but not limited to, statements relating
to the timing of filings, future filings, keeping reports current, efforts to
improve sales, operations, and outlook, and other matters that are not
historical factual information are forward-looking statements. Such statements
are subject to known and unknown risks, uncertainties and other factors that
could cause actual results to vary materially from those contemplated by the
forward-looking statements including, among other things: timing and results of
reviews, audits and assessments; competing demands on the time and resources of
the Company and its personnel; the need to retain a registered public accounting
firm for 2004; the timing of actions by such firm and other accountants and
consultants; ability to implement improvements to our business; and other
factors discussed in the Company's other filings with the SEC.
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