GLEN ALLEN, Va. - (Business Wire) Dynex Capital, Inc. (NYSE:DX) today announced that the Court of Appeals for the Fifth Judicial District of Texas at Dallas affirmed on Friday the trial court's take-nothing judgment in favor of the Company and Dynex Commercial, Inc. (DCI), a former affiliate of the Company, rejecting the appeals made by plaintiffs, Basic Capital Management et al. The appeal sought to overturn the trial court
’s take-nothing judgment entered in favor of the Company and DCI in June 2004, or in the alternative to grant a new trial. The original litigation against the Company and DCI relates to the prior commercial lending activities of DCI from the 1997-1999 timeframe.
The Company also reported certain tax information with respect to its Series D Preferred Stock dividends paid in 2007. The Company reported that for tax reporting purposes, dividends paid in 2007 on the Company's Series D Preferred Stock totaled $0.95 per share all of which are non-qualifying and are therefore taxable at ordinary income rates. A portion of the dividends is considered a return of capital or long term capital gain. The following table presents tax information by payment date with respect to the quarterly distributions paid on the Series D Preferred Stock with respect to the 2007 tax year:
| Payment Date | | Distributions Per Share | | Ordinary Income (1) | | Return of Capital |
| | | | | | |
| January 31, 2007 | | $0.2375 | | $0.1760 | | $0.0615 |
| | | | | | |
| April 30, 2007 | | $0.2375 | | $0.1909 | | $0.0466 |
| | | | | | |
| July 31, 2007 | | $0.2375 | | $0.1858 | | $0.0517 |
| | | | | | |
| October 31, 2007 | | $0.2375 | | $0.1845 | | $0.0530 |
| | | | | | |
| Totals | | $0.9500 | | $0.7372 | | $0.2127 |
(1) Ordinary income includes “excess inclusion” income of $0.0175, $0.0707, $0.0524, and $0.0479 for the payment dates of January 31, 2007, April 30, 2007, July 31, 2007, and October 31, 2007, respectively.
Shareholders should note that the fourth quarter 2007 Series D dividend paid on January 31, 2008 will be included in 2008 taxable income. The Company did not pay any common stock dividends in 2007.
The Company’s Series D Preferred Stock dividend payments during 2007 included estimated excess inclusion income of an estimated $0.1885. The Company has excess inclusion income as a result of its ownership of certain residual interests. The Internal Revenue Service requires the Company to report excess inclusion income to assist tax-exempt and non-U.S. corporations or residents in the preparation of their tax returns. For U.S. shareholders, excess inclusion income represents income that cannot be eliminated or reduced through the use of deductions from other sources or exemptions. The Company has not received all of the required information on its residual interests as of the date of this release and such amounts may change in which case the Company will update the excess inclusion tax information on its website. The Company estimates that this information will be received and in final form by no later than March 31, 2008.
Shareholders are urged to check their 2007 tax statements received from the transfer agent or from their brokerage firms in order to ensure that the dividend tax information on those statements conforms to the information reported in this press release. The tax and excess inclusion income information above should not be construed as tax advice and is not a substitute for careful tax planning and analysis. You should consult your own tax advisor regarding the specific federal, state, local, foreign and other tax consequences to you regarding your ownership of shares of the Company's Series D Preferred Stock.
Dynex Capital, Inc. is a financial services company that elects to be treated as a real estate investment trust (REIT) for federal income tax purposes. Additional information about Dynex Capital, Inc. is available at www.dynexcapital.com.
Note: This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “forecast,” “anticipate,” “estimate,” “project,” “plan,” and similar expressions identify forward-looking statements that are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. The Company’s actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements as a result of unforeseen external factors. These factors may include, but are not limited to, changes in general economic and market conditions, defaults by borrowers, availability of suitable reinvestment opportunities, variability in investment portfolio cash flows, fluctuations in interest rates, fluctuations in property capitalization rates and values of commercial real estate, defaults by third-party servicers, prepayments of investment portfolio assets, other general competitive factors, the impact of regulatory changes, and the impact of Section 404 of the Sarbanes-Oxley Act of 2002. For additional information, see the Company’s Annual Report on Form 10-K for the period ended December 31, 2006, and other reports filed with and furnished to the Securities and Exchange Commission.
Dynex Capital, Inc.
Alison Griffin, 804-217-5897
