FREEDOM SECURITIES CORP /DE/
8-K, 2000-01-25
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES
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<PAGE>   1


                       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): January 12, 2000

                         FREEDOM SECURITIES CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
      <S>                              <C>                             <C>
             Delaware                          011-13993                          04-3335712
      (State of Incorporation)         (Commission File Number)       (IRS Employer Identification No.)
</TABLE>


                       One Beacon Street, Boston, MA 02108
               (Address of principal executive offices) (Zip Code)


                                 (617) 725-2000
              (Registrant's telephone number, including area code)


                                       N/A
          (Former name or former address, if changed since last report)


<PAGE>   2


Item 5.           Other Events.

         On January 12, 2000, Freedom issued a press release announcing that
Kenneth S. Klipper had been named Freedom's Chief Financial Officer, Executive
Vice President and a member of the Freedom Securities Operating Committee. A
copy of the press release is included under Item 7, Exhibit 99.1.

         On January 19, 2000, Freedom issued a press release announcing its
financial results for the fourth quarter. A copy of the press release is
included under Item 7, Exhibit 99.2.

Item 7.           Exhibits.

<TABLE>
<CAPTION>

Exhibit         Description
- -------         -----------
<C>             <C>
99.1            Freedom Press Release, dated January 12, 2000.

99.2            Freedom Press Release, dated January 19, 2000.
</TABLE>


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date:  January 25, 2000


                                        FREEDOM SECURITIES CORPORATION



                                         By: /s/ JOHN H. GOLDSMITH
                                            ------------------------------------
                                                 Name:  John H. Goldsmith
                                                 Title:  Chief Executive Officer




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit         Description
- -------         -----------
<C>             <C>
99.1            Freedom Press Release, dated January 12, 2000

99.2            Freedom Press Release, dated January 19, 2000
</TABLE>


                                     Page 2



<PAGE>   1
                                                                    Exhibit 99.1

Kenneth S. Klipper Joins Freedom Securities Corporation As Chief Financial
Officer

Boston (January 12, 2000) - John Goldsmith, Chairman and Chief Executive Officer
of Freedom Securities Corporation (NYSE: FSI), today announced that Kenneth S.
Klipper has been named the company's Chief Financial Officer, Executive Vice
President and a member of the Freedom Securities Operating Committee. He will
assume his new duties on January 18, 2000.


"Ken Klipper is a valuable addition to our senior management team," said Mr.
Goldsmith. "His background as a CFO and his wealth of accounting, brokerage,
financial management and regulatory expertise will serve our operating units and
our shareholders well."


Mr. Klipper comes to Freedom Securities from Fidelity Investments, where most
recently he served simultaneously as Senior Vice President and Chief Financial
Officer of National Financial Services Corp., the nation's third largest
clearing firm, and Fidelity Brokerage Services, Inc., the nation's second
largest discount brokerage.


In his new position, Mr. Klipper will assume overall responsibility of the
financial stewardship of Freedom Securities. He will oversee the company's
internal control structure and will be responsible for all of the company's
treasury and accounting functions. "Ken will be an important player in the
continued growth of this company and will be very helpful in our evaluation of
strategic alliances with other firms," said Mr. Goldsmith.


Prior to his tenure at Fidelity, Mr. Klipper was Controller and Managing
Director at Wheat First Butcher Singer, Inc., and a Senior Audit Manager at KPMG
Peat Marwick, both in Richmond, Va. He is a graduate of the University of
Richmond and is a CPA.


"I am looking forward to joining Freedom Securities, particularly as there
appear to be great opportunities for the company to build its revenue base. The
management philosophy at Freedom, and its diverse portfolio of strengths, will
allow me to use my industry expertise in exciting ways as the company sets its
goals for the coming years," said Mr. Klipper.


Freedom Securities Corporation


Freedom Securities Corporation, based in Boston, is a leading full-service
retail brokerage and investment firm with some 2,600 employees. Its operating
subsidiaries include Tucker Anthony Incorporated, a full-service brokerage and
investment firm, and its divisions: Tucker Anthony

<PAGE>   2



Cleary Gull, an investment banking and institutional brokerage firm, Gibraltar
Securities, a brokerage and investment advisory firm, and Hopper Soliday, a
municipal finance and underwriting brokerage firm; Sutro & Co., Incorporated, a
West Coast brokerage and investment banking firm; Hill Thompson Magid & Co., a
New Jersey-based OTC trading firm; Freedom Capital Management Corporation, a
Boston-based asset management firm; and Cleary Gull Investment Management
Services, Inc., a Milwaukee-based asset management firm.


Contact:


John Goldsmith, Chairman & CEO
Freedom Securities Corp.
Tel.: 617-725-1764


Christopher Williams
Coltrin & Associates
Tel.: 212-221-1616, ext. 29
E-mail: [email protected]

<PAGE>   1
                                                                    Exhibit 99.2


FREEDOM SECURITIES CORPORATION REPORTS 11% INCREASE IN FOURTH QUARTER NET
INCOME ON RECORD REVENUES


Boston (January 19, 2000) - Freedom Securities Corporation (NYSE: FSI) today
announced that net income for the quarter ended December 31, 1999 was $7.9
million, an 11% increase over last year's fourth quarter results. Net revenues
for the company reached $166.3 million in the fourth quarter of 1999 versus
$118.7 million, a 40% increase over the same period in 1998. For the year ended
December 31, 1999, Freedom Securities reported net income of $29.1 million up
16% over 1998, and 10% before extraordinary item. Net revenues were a record
$553.3 million in 1999, a 26% increase over last year.


On a per share basis, earnings (diluted) for the quarter were $0.36 per share up
from $0.34 in the fourth quarter of last year. Per share earnings for the year
were $1.39 up from $1.34 a year ago. The earnings per share amounts for 1999
were based on 21.0 million diluted shares versus 19.7 million diluted shares in
1998.


John H. Goldsmith, Chairman and Chief Executive Officer of Freedom Securities
stated: "I am pleased with our performance, both for the last quarter of 1999
and for the year as a whole, particularly in light of the significant costs
incurred in our acquisitions." Freedom Securities acquired four firms during
1999: Hopper Soliday and Charter Investment Group in the first quarter,
Gibraltar Securities in the third quarter and most recently Hill Thompson Magid
& Co., a New Jersey-based over-the-counter trading firm in the fourth quarter.


Freedom Securities also continued its aggressive growth strategy by hiring over
120 new brokers during 1999. Mr. Goldsmith noted, "The investments that were
made in people during 1999 will have a positive benefit to the Company in 2000
and beyond."


Commission revenues for the fourth quarter were $67.9 million, or 44% higher
than the same period last year. For the year, commission revenues were up 28% to
$228.2 million. Revenues from principal transactions rose sharply, to $49.6
million, an increase of 63% over the fourth quarter of 1998. For the year,
principal transaction revenues rose 49% to $146.6 million.


Asset management revenues grew 34% in the fourth quarter to $18.2 million. For
the year, asset management revenue was up 42% to $67.1 million and assets under
management grew 22% to $11.0 billion at the end of 1999.


Investment banking revenues were up slightly in the quarter to $19.5 million, an
increase of 3% over the same time period in 1998. However, investment banking
revenues were down for the year to $72.9 million, a decline of 11% due in part
to the transitional effects of realigning much of the Company's equity capital
market businesses.

<PAGE>   2


Total non-interest expenses were $152.2 million, up 43% from the fourth quarter
of 1998. For the year, expenses rose 28% over 1998 to $504.5 million. The rise
in expenses is due primarily to the first time inclusion of the newly acquired
companies, costs associated with the recruitment of investment executives and
acquisition related costs.


Freedom Securities Corporation, based in Boston, is a leading full-service
retail brokerage and investment firm with over 2,600 employees. Its operating
subsidiaries include Tucker Anthony Incorporated, a full-service brokerage and
investment firm, and its divisions: Tucker Anthony Cleary Gull, an investment
banking and institutional brokerage firm, Gibraltar Securities, a brokerage and
investment advisory firm, and Hopper Soliday, a municipal finance and
underwriting brokerage firm; Sutro & Co., Incorporated, a West Coast brokerage
and investment banking firm; Hill Thompson Magid & Co., a New Jersey-based OTC
trading firm; Freedom Capital Management Corporation, a Boston-based asset
management firm; and Cleary Gull Investment Management Services, Inc., a
Milwaukee-based asset management firm. For investor information, please call
1-888-949-7000.


Statements in this news release, which are not strictly historical, are
forward-looking statements, which are subject to risk and uncertainty. Factors
that may cause actual results to differ materially include, but are not limited
to, business conditions, competition, the successful management of projects,
unexpected termination of projects, attracting and retaining highly-skilled
employees, and various other factors which involve risk and uncertainty detailed
in the Company's filings with the Securities and Exchange Commission.


Contact:


John Goldsmith, Chairman & CEO
Freedom Securities Corporation
Tel.: 617-725-1764


Christopher Williams
Coltrin & Associates
Tel.: 212-221-1616, ext. 29
E-mail: [email protected]



<PAGE>   3


                         FREEDOM SECURITIES CORPORATION
                       CONSOLIDATED SUMMARY OF OPERATIONS
                                   (Unaudited)
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                          QUARTERS ENDED          TWELVE MONTHS ENDED
                                                           DECEMBER 31,                DECEMBER 31
                                                     ----------------------      ----------------------
                                                       1999          1998          1999          1998
                                                     --------      --------      --------      --------
<S>                                                  <C>           <C>           <C>           <C>
Revenues:
   Commissions                                       $ 67,878      $ 47,300      $228,198      $178,959
   Principal Transactions                              49,621        30,536       146,638        98,287
   Investment Banking                                  19,489        18,905        72,852        82,255
   Asset Management                                    18,243        13,573        67,106        47,294
   Other                                                3,082         1,643         9,649         8,569
                                                     --------      --------      --------      --------
              Total operating revenues                158,313       111,957       524,443       415,364
   Interest income                                     20,135        12,150        66,228        50,848
                                                     --------      --------      --------      --------
              Total revenues                          178,448       124,107       590,671       466,212
   Interest expense                                    12,116         5,364        37,335        25,836
                                                     --------      --------      --------      --------
              Net revenues                            166,332       118,743       553,336       440,376

Non-interest expenses:
   Compensation & Benefits                            108,867        76,712       362,239       286,072
   Occupancy & Equipment                                7,534         6,249        28,567        23,557
   Communications                                       6,182         5,177        22,355        18,373
   Brokerage & Clearance                                7,038         4,053        21,662        14,430
   Promotional                                          5,946         4,264        18,112        14,115
   Other                                               16,639        10,149        51,607        37,771
                                                     --------      --------      --------      --------
              Total non-interest expenses             152,206       106,604       504,542       394,318

Acquisition interest expense                              685          --             810         1,464
                                                     --------      --------      --------      --------
Income before taxes                                    13,441        12,139        47,984        44,594
Income tax expense                                      5,578         5,062        18,868        18,183
                                                     --------      --------      --------      --------
Net Income before Extraordinary Item                 $  7,863      $  7,077      $ 29,116      $ 26,411

   Extraordinary Item (net of tax)*                                                            $  1,276
                                                     --------      --------      --------      --------
Net Income after Extraordinary Item                  $  7,863      $  7,077      $ 29,116      $ 25,135
                                                     ========      ========      ========      ========

Earnings per share
              Basic before Extraordinary Item        $   0.37      $   0.35      $   1.45      $   1.41
              Basic after Extraordinary Item         $   0.37      $   0.35      $   1.45      $   1.34
              Diluted before Extraordinary Item      $   0.36      $   0.34      $   1.39      $   1.34
              Diluted after Extraordinary Item       $   0.36      $   0.34      $   1.39      $   1.28

Weighted average common shares
              Basic                                    21,289        20,084        20,094        18,701
              Diluted                                  22,044        20,956        20,995        19,705
</TABLE>


* Extraordinary Item is related to the write-off of capitalized debt costs as a
  result of the retirement of $77.5 million in debt at the time of the Company's
  April 2, 1998 IPO.

     Certain prior period amounts have been reclassified to conform with current
period presentation.


<PAGE>   4


                         FREEDOM SECURITIES CORPORATION
                           CONSOLIDATED FINANCIAL DATA
                                   (Unaudited)
           (In thousands, except per share data and financial ratios)



<TABLE>
<CAPTION>

                                                                      TWELVE MONTHS ENDED DECEMBER 31,
                                                                      --------------------------------
                                                                          1999               1998
                                                                      ----------           -----------
<S>                                                                     <C>                <C>
BALANCE SHEET DATA AT END OF PERIOD:
     Total assets                                                      $818,003             $606,250
     Long-term borrowings                                              $ 60,301             $ 16,709
     Total stockholders' equity                                        $272,216             $223,390
     Book value per common share outstanding (1)                       $  12.51             $  11.13
     Common shares outstanding at end of period                          21,752               20,079

OTHER FINANCIAL DATA:
     Ratio of long-term borrowings to total capitalization (2)               18%                   7%
     Return on average equity                                                12%                  16%
     Compensation as percentage of net revenues                              65%                  65%
     Pre-tax margin                                                           9%                  10%
</TABLE>


(1) Book value per share reflects the stock-split which occurred in conjunction
    with the April 2, 1998 IPO.
(2) Total capitalization consists of long-term borrowings and stockholders'
    equity at the end of the period.


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