First Marblehead (NASDAQ:FMD) Q2 2015 Earnings Conference Call - Final Transcript

Feb 09, 2015 • 05:00 am ET


First Marblehead (NASDAQ:FMD) Q2 2015 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Good day, and welcome to The First Marblehead Second Quarter Fiscal 2015 Earnings Conference Call and Webcast. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.I would now like to turn the conference call over to Suzanne Murray, Managing Director and General Counsel. Ms. Murray, the floor is your ma'am.

Suzanne Murray

Thank you, and good afternoon. Welcome to First Marblehead's earnings call for the second quarter of fiscal 2015. On today's call, we have Dan Meyers, our Chairman and CEO; and Alan Breitman, our CFO. (Forward-Looking Cautionary Statements) During this call, we'll refer to net operating cash usage, which is a non-GAAP financial measure. A reconciliation to loss from continuing operations before income taxes, the most directly comparable GAAP measure, is included in the earnings press release posted on our website under the heading For Investors.I'll now turn the call over to Dan.

Daniel Meyers

Thank you, Suzanne, and welcome to this afternoon's call from the winter wonderland of Boston. I'd like to start by reviewing the status of several legal matters.First, as we announced in middle of December and our pleased to reiterate, the Internal Revenue Service has informed the company that it is no longer challenging the federal tax refund, the company received previously in the aggregate amount of $221.7 million.

We expect to receive formal written confirmation of the IRS' decision during the third quarter of fiscal 2015. As it is true for all refunds in excess of 42 million, and as we've previously disclosed, the IRS' decision is subject to the review of the Congressional Joint Committee on Taxation. Great thanks to the Internal team who worked on this for over years and to excellent counsel from (inaudible). Second, I'd like to provide an update on our Massachusetts State income tax matters. As we have previously disclosed, we're involved in several matters relating to the Massachusetts tax treatment of GATE Holdings, Inc., a former subsidiary of First Marblehead. The issues involved in these cases are highly complex and technical and have been going on for many years.Most recently, our appeal of the decision of the Massachusetts Appellate Tax Board or ATB for GATE Holdings taxable years ended June 30, 2004, 2005, and 2006 was before the Massachusetts Supreme Judicial Court.

On January 28th, as we've previously announced the SJC issued its opinion affirming the decision of the ATB. However, in reaching its conclusion, the SJC has interpreted the controlling statue in a manner that is inconsistent with ATB's interpretation. As well as the interpretations advocated by both GATE Holdings and the Commissioner of Revenue in their briefs.We believe that the SJC's statutory analysis is incorrect and we expect to file a petition for rehearing on this matter with the SJC.

The petition is due on February 11th, 2015. We also have an appeal pending before the ATB for GATE Holdings taxable years June 20, 2008 and 2009, which has been