UNITED STATES
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 7, 2005
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OCWEN FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Florida 1-13219 65-0039856
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
The Forum, Suite 1000
1675 Palm Beach Lakes Boulevard, West Palm Beach, Florida 33401
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (561) 682-8000
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N/A
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(Former name or former address, if changed since last report)
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))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS
(Dollars in 000s)
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On March 7, 2005, the Company's Board of Directors approved a reserve of $3,000
reflecting reassessments of prior estimates concerning two contingent
liabilities. In accordance with applicable accounting rules, this revision will
be reflected as an adjustment of the previously announced fourth quarter and
2004 earnings. Subsequent to the adjustments, net income for the fourth quarter
of 2004 was $2.6 million or $0.04 per share, and net income for the year ended
December 31, 2004 was $57.7 million or $0.88 per share. The relevant subsequent
events are described below.
On February 28, 2005, a jury in County Court for Nueces County, Texas, returned
a verdict of $140 in compensatory and statutory damages in favor of Jesus S.
Guzman and Joann B. Guzman in their lawsuit against the Bank and others arising
out of a disputed foreclosure. The jury rejected plaintiffs' request for
punitive damages. The verdict included $2,900 for plaintiffs attorneys' fees, an
amount which we believe is unsupported by the evidence and impermissibly
excessive under the controlling legal authorities. We are pursuing post-trial
motions seeking to set aside or substantially reduce the attorneys' fees award
and, if necessary, will take an appeal on that issue and perhaps other issues to
the Texas Court of Appeals for the Thirteenth Judicial District. We intend to
continue to vigorously defend the Guzman matter.
Earlier in February, 2005, a jury in Circuit Court for Palm Beach County,
Florida, returned verdicts of $1,000 and $1,056 in compensatory damages in favor
of Patti J. Kidder and Katherine R. Dean, respectively, in a lawsuit against OCN
and the Bank. The jury rejected plaintiffs' request for punitive damages. The
plaintiffs are former Bank employees who brought claims under the Florida Civil
Rights Act, the Florida Whistleblower Act and state tort law, arising out of an
alleged invasion of privacy and related incidents allegedly committed by other
former employees of the Bank in 1998 for which plaintiffs sought to hold the
Ocwen defendants vicariously liable. We believe the verdicts are against the
weight of evidence and contrary to law. Defendants have filed motions for a new
trial and/or remittitur and, if necessary, will take an appeal to the Florida
Court of Appeals for the Fourth District. We intend to continue to vigorously
defend the Kidder/Dean matter.
Revised statements of operations and financial condition are attached.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) - (b) Not applicable.
(c) Exhibits
99.1 Revised statements of operations and financial condition
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
OCWEN FINANCIAL CORPORATION
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(Registrant)
By: /s/ ROBERT J. LEIST
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Robert J. Leist,
Vice President & Chief Accounting
Officer and Acting Chief Financial
Officer
Date: March 9, 2005
Exhibit 99.1
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
Three Months Twelve Months
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For the periods ended December 31, 2004 2003 2004 2003
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Revenue
Servicing and related fees ......................... $ 40,142 $ 38,041 $ 160,062 $ 139,744
Vendor management fees ............................. 11,155 8,121 46,986 29,842
Gain (loss) on trading and match funded
securities, net .................................. (2,226) 420 (537) 3,344
Valuation gains (losses) on real estate ............ (1,120) (734) (5,110) (7,430)
Gain (loss) on sales of real estate ................ 1,705 57 1,556 466
Operating income (loss) from real estate ........... (412) 1,666 605 5,128
Gain (loss) on debt repurchases .................... -- -- -- (445)
Other income ....................................... 2,865 1,300 19,465 6,848
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Non-interest revenue ............................. 52,109 48,871 223,027 177,497
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Interest income .................................... 8,121 6,296 23,676 24,122
Interest expense ................................... 8,325 9,162 30,364 38,716
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Net interest income (expense) before provision
for loan losses ................................ (204) (2,866) (6,688) (14,594)
Provision for loan losses .......................... (969) (14) (1,881) (2,684)
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Net interest income (expense) after provision
for loan losses ................................ 765 (2,852) (4,807) (11,910)
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Total revenue ................................... 52,874 46,019 218,220 165,587
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Non-interest expense
Compensation and employee benefits ................. 23,054 19,716 87,284 72,221
Occupancy and equipment ............................ 3,934 4,391 15,933 13,159
Technology and communication costs ................. 6,574 6,544 26,049 21,121
Loan expenses ...................................... 6,739 3,416 27,313 14,252
Loss (gain) on investments in affordable housing
properties ....................................... (76) (34) (255) 285
Professional services and regulatory fees .......... 8,563 4,200 26,589 26,054
Other operating expenses ........................... 2,178 3,386 10,069 10,409
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Non-interest expense ............................. 50,966 41,619 192,982 157,501
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Distributions on Capital Securities ................. -- -- -- 3,058
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Income (loss) before minority interest and income
taxes ............................................ 1,908 4,400 25,238 5,028
Minority interest in net income (loss) of
subsidiaries ..................................... (112) (184) (162) (492)
Income tax expense (benefit) ........................ (545) 130 (32,324) 748
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Net income (loss) ................................ $ 2,565 $ 4,454 $ 57,724 $ 4,772
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Earnings (loss) per share
Basic ............................................. $ 0.04 $ 0.07 $ 0.88 $ 0.07
Diluted ........................................... $ 0.04 $ 0.07 $ 0.82 $ 0.07
Weighted average common shares outstanding
Basic .............................................. 62,733,630 67,222,211 65,811,697 67,166,888
Diluted ............................................ 63,879,194 68,446,366 73,197,255 68,063,873
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
December 31, December 31,
2004 2003
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Assets
Cash and amounts due from depository institutions .................. $ 171,645 $ 229,606
Interest earning deposits .......................................... 116,206 324
Trading securities, at fair value:
Investment grade ................................................. 86,215 6,679
Subordinates and residuals ....................................... 39,527 42,841
Real estate ........................................................ 18,732 103,943
Affordable housing properties ...................................... 5,641 7,410
Loans, net ......................................................... 3,792 28,098
Match funded assets (including advances on loans serviced for others
of $276,626 in 2004 and $105,788 in 2003) ........................ 280,760 130,087
Premises and equipment, net ........................................ 37,440 41,943
Advances on loans and loans serviced for others .................... 240,430 374,769
Mortgage servicing rights .......................................... 131,409 166,495
Receivables ........................................................ 126,719 74,315
Other assets ....................................................... 68,977 33,608
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Total assets .................................................... $ 1,327,493 $ 1,240,118
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Liabilities and Stockholders' Equity
Liabilities
Deposits ......................................................... $ 301,299 $ 446,388
Escrow deposits .................................................. 125,977 116,444
Match funded liabilities ......................................... 244,327 115,394
Lines of credit and other secured borrowings ..................... 50,612 150,384
Debt securities .................................................. 231,249 56,249
Accrued interest payable ......................................... 6,173 4,789
Accrued expenses, payables and other liabilities ................. 36,218 31,926
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Total liabilities ............................................... 995,855 921,574
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Minority interest in subsidiaries .................................. 1,530 1,286
Stockholders' Equity
Common stock, $.01 par value; 200,000,000 shares authorized:
62,739,478 and 67,467,220 shares issued and outstanding
at December 31, 2004 and December 31, 2003, respectively ....... 627 675
Additional paid-in capital ........................................ 181,336 225,559
Retained earnings ................................................. 148,133 90,409
Accumulated other comprehensive income (loss), net of taxes ....... 12 615
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Total stockholders' equity ...................................... 330,108 317,258
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Total liabilities and stockholders' equity .................... $ 1,327,493 $ 1,240,118
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