While the company expects the change of its tax status to be dilutive to reported earnings, because net income derived from the investment activities of its previously untaxed pass-through entities will now be taxed at a corporate rate, the company anticipates that the change will result in an increase of the after-tax cash return to shareholders who are residents in highly taxed states. In addition, the company believes that the change will simplify its reporting structure, resulting in lower corporate costs, and will broaden the appeal of its shares to institutional investors that were unable or unwilling to receive a Schedule K-1 tax statement, which the company generated in years when it was taxed as a partnership, thereby enhancing the company’s access to the capital markets.
Additionally, the company’s board of directors has declared a special cash distribution in the amount of
In April, the company expects to initiate regular quarterly cash distributions, intended to reflect an annual payout ratio of approximately 50% of operating net income. As a partnership, the company targeted an annual payout ratio of approximately 90% to 100%.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide JMP Group’s current expectations or forecasts about future events, including beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. In particular, this press release contains forward looking statements about the effect of a change in corporate tax status to reported earnings, anticipated after-tax cash return to shareholders, and the indented distribution amount and frequency subsequent to the change in tax status. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expected or implied by the forward-looking statements. The company’s actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Form 10-K for the year ended
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