No cash dividends were paid during the period from January 1, 1991 through December 31, 1992. Cash dividends of $456,465 and $969,798 were paid during 1994 and 1993, respectively. No cash dividends were paid during 1995.
Excluding the above-mentioned items and amortization of goodwill in 1994, the Company would have reported an after tax loss of $1,393,000 (or $0.22 per share after an estimated tax benefit of $833,000) in 1995 compared to net income of $407,000 (or $0.06 per share after providing for income taxes of $304,000) in 1994.
. The full impact of the Company's restructuring plan implemented in the latter part of 1994, coupled with additional cost reductions during 1995.
Fixed annuities achieve a higher gross margin rate because the Company receives a higher gross revenue rate on fixed annuities but makes payments to its financial institution clients and sales personnel at a constant. Mutual funds achieve the lowest gross margin rate due to the significantly lower gross revenue rate paid on
Write-off of Goodwill. The Company acquired JMC in 1988. The purchase price was determined by an earn-out formula over a period which ended in 1992. The Company allocated to goodwill the excess purchase price over the fair value of the tangible assets acquired. The goodwill was being amortized over a ten-year period which was an estimate of the time during which JMC would have strong earnings potential from the financial institution clients it had at the time of the acquisition.
. The net proceeds on the sale of rights to certain future asset-based fees generated approximately $2,348,000 (after providing for taxes of $1,566,000). This sale was effective as of the end of August, in 1995, thus the Company did not receive asset fee revenues related to this business sold for September through December, 1995, which for that period, would have generated approximately $177,000 in income after taxes for the year.
Due to the reduction in the Company's base operating expenses as a result of the restructuring and other cost reductions, management expects the Company will meet its operating and capital expenditure needs over the next twelve months. The Company's cash flow from operations in 1996 is expected to approximate net income with the exception of the depreciation and amortization expense (estimated to be approximately $320,000 in 1996). However, in connection with an exclusive Marketing Agreement executed with USBA Holding, LTD., the Company paid out $1.25 million in the first quarter of 1996. This payment is not reflected on the balance sheet as of December 31, 1995.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of JMC Group, Inc. and subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles.
During 1993, the Company repurchased 496,233 shares of common stock at a total cost of $4,646,553. During 1994, a final payment of $1,963,331 was made related to this repurchase of stock.
A summary of changes in outstanding common stock options during 1995, 1994, and 1993 follows: