FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
Date of Report (date of earliest event reported): April 20, 2000
Friedman, Billings, Ramsey Group, Inc.
(Exact name of Registrant as specified in its charter)
Virginia 54-1837743 001-13731
(State or other (I.R.S. Employer incorporation or (Commission File Number)
jurisdiction of organization)
Identification No.)
1001 Nineteenth Street
North Arlington, VA 22209
(Address of principal executive offices) (Zip code)
(703) 312-9500
(Registrant's telephone number including area code)
Item 5. Other Events
1. On April 20, 2000, Friedman, Billings, Ramsey Group, Inc. issued a
press release announcing its earnings for the 1st quarter 2000. The entire text
of that press release is being filed herewith and attached as exhibit 99.1.
2. On April 20, 2000, Friedman, Billings, Ramsey Group, Inc. held a
conference call announcing its earnings for the 1st quarter 2000. The text of
that conference call is being filed herewith and attached as exhibit
99.2.
3. Friedman, Billings, Ramsey Group, Inc., attaches herewith, as
exhibit 99.3, Financial & Statistical Supplement - Operating Results,
financial schedule of its operating results for 1999 and the 1st quarter 2000.
99.1 Press Release dated April 20, 2000.
99.2 Conference Call script dated April 20, 2000.
99.3 Financial & Statistical Supplement - Operating Results.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf by the undersigned
hereunto duly authorized.
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
By: /s/ Emanuel J. Friedman
Chairman and Co-Chief Executive Officer
<PAGE>
For Immediate Release
Contact: Michael W. Robinson (703)-312-1830 or [email protected]
Friedman, Billings, Ramsey Group Reports $0.12 Per Share First
Quarter Earnings
ARLINGTON, Va., April 20, 2000 - Friedman, Billings, Ramsey Group, Inc. (NYSE:
FBR) today reported net income of $6.4 million, or $0.12 (diluted) per share
for the first quarter ended March 31, 2000, versus net income of $45,000,
or $0.00 per share for the same quarter last year.
Revenue for the first quarter was $66.2 million, compared with $22.1 million
for the first quarter of 1999 - a 200 percent increase. The Company said that
its quarterly revenue reflected a mix of contributions from its institutional
brokerage, investment banking, venture capital, and other asset management
businesses.
"During the first quarter we saw continued strength across the company,"
Chairman and Co-Chief Executive Officer Emanuel J. Friedman said. "As
a result of our strategy over the last three years, we have built broad
financing capabilities for new economy companies and maintained FBR's core
franchise in our traditional sectors. We continue to benefit from the growth of
the new economy and from the sector rotation in the capital markets."
Friedman continued: "Each of our businesses produced solid revenues in the first
quarter. We saw an increase in our recurring, and relatively predictable,
revenue sources, notably our institutional brokerage operations."
Venture capital and principal investing activities, including unrealized gains
and carry, net of losses, accounted for approximately $4.0 million of pre-tax
earnings in the first quarter.
W. Russell Ramsey, President and Co-Chief Executive Officer, said, "During
the first quarter, our managed Technology Venture Partners (FBR TVP) portfolio
continued to see a steady stream of IPOs, mergers, private rounds at stepped-up
valuations, and the announcement of the cash sale of Call Technologies to 3Com."
FBR generates gross revenues (before fund management expenses) from its managed
venture capital and private equity funds in three ways: base management fees
of 2 to 2.5 percent, a return on its principal invested as one of the funds'
investors (about three percent in FBR TVP I, for example), and a 20 percent
gross carry of the funds' overall gains.
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<PAGE>
The Company noted that, to the extent that its managed funds hold securities of
public companies that are restricted as to resale, these securities are
generally valued at a discount to the public market price on the last day of the
quarter, to reflect restrictions on liquidity, including the size of the funds'
holdings relative to the public market float. In addition, accrued compensation
is based on the performance of the managed funds and other criteria, and
therefore is subject to future adjustment.
Vice Chairman and Co-Chief Executive Officer Eric F. Billings said, "The first
quarter saw FBR continue its evolution into a broad-based capital markets and
asset management company with a focused effort in technology, financial
services, and real estate - and developing businesses in energy, insurance, as
well as consumer and business growth."
FBR had 49.1 million common shares outstanding, shareholders' equity of $198.1
million, and book value per share of $4.03 as of March 31, 2000. A live webcast
of FBR's conference call on today's results will be available at 9:00 a.m.
(Eastern Time) at http://www.vcall.com/NASApp/VCall/EventPage?ID=3D14930.
Replays of the webcast will be available afterward.
Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) is a holding company for
three businesses: venture capital; investment banking & institutional brokerage;
and its own Internet holdings, fbr.com, an online investment bank, and Offering
Marketplace, a leading technology for the electronic distribution of new issue
securities. Headquartered in Northern Virginia, home to an array of leading
global Internet companies, FBR provides capital and financial expertise
throughout a company's lifecycle. FBR has offices in Arlington and Reston, Va.,
Irvine, Ca., Boston, Charlotte, Chicago, Portland, Seattle, London, and Vienna.
For more information, see www.fbr.com.
# # #
Statements concerning future performance, developments, negotiations or events,
expectations or plans and objectives for future operations or for growth and
market forecasts, and any other guidance on present and future periods,
constitute forward-looking statements that are subject to a number of factors
risks and uncertainties that might cause actual results to differ materially
from stated expectations or current circumstances. These factors include but
are not limited to competition among venture capital firms and the high degree
of risk associated with venture capital investments, the effect of demand for
public offerings, activity in the secondary securities markets, available
technologies, competition for business and personnel, and general economic,
political and market conditions. Note to Editors: 1 page follows this page.
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<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended
March 31,
2000 % 1999 %
REVENUES: ------ ----- ----- -----
Investment banking $ 16,696 25.2% $ 6,048 27.4%
Institutional brokerage 11,677 17.6% 8,880 40.2%
Asset management 35,877 54.2% 4,598 20.9%
Interest, dividends and other 1,993 3.0% 2,543 11.5%
------- ------- ------- -------
Total revenues 66,243 100.0% 22,069 100.0%
------- ------- ------- -------
EXPENSES:
Compensation and benefits 46,223 69.8% 14,238 64.5%
Business development and 4,617 7.0% 2,594 11.8%
professional services
Interest 222 0.3% 507 2.3%
Other 6,625 10.0% 4,685 21.2%
------- ------- ------- -------
Total expenses 57,687 87.1% 22,024 99.8%
------- ------- ------- -------
Net income before income 8,556 12.9% 45 0.2%
taxes
Provision for income taxes 2,139 3.2% - 0.0%
Net income $ 6,417 9.7% $ 45 0.2%
======== ======= ======= =======
Basic earnings per $ 0.13 $ 0.00
share ======== =======
Diluted earnings per $ 0.12 $ 0.00
share ======== =======
Weighted average shares 49,021 49,034
- - basic ======== =======
Weighted average shares 51,353 49,214
- - diluted ======== =======
<PAGE>
Exhibit 2 - 99.2
1Q EARNINGS RELEASE
Conference Call Script
April 20, 2000
[Speaker]
Good morning. This is Kurt Harrington, Chief Financial Officer of Friedman
Billings Ramsey Group. Before beginning our call, I would like to remind
everyone that statements concerning future performance, developments or events,
concerning expectations for growth, filed backlog and market forecasts, and any
other guidance on present and future periods, constitute forward-looking
statements. These forward-looking statements are subject to a number of factors,
risks and uncertainties which might cause actual results or developments to
differ materially from stated expectations or current circumstances. These
factors include but are not limited to the effect of demand for public
offerings, activity in the secondary securities markets, the high degree of risk
associated with venture capital investment, competition among venture capital
firms, competition for business and personnel, available technologies and
general economic, political and market conditions. Additional information
concerning factors that could cause actual results to differ materially is
contained in FBR's Annual Report on Form 10K and quarterly reports on Form 10Q.
I would now like to turn over the call to our Chairman, Emanuel J. Friedman.
[New speaker: Manny Friedman]
Thank you and good morning. As I'm sure you've seen by now, Friedman Billings
Ramsey reported net income of $6.4 million or $0.12 per share on a diluted basis
for the first quarter of 2000. Revenue for the quarter was $66.2 million,
which is a 200 percent increase over our first quarter 1999 revenue of $22.1
million.
In the first quarter, institutional brokerage, investment banking, and venture
capital and other asset management operations all achieved year-over-year
growth.
Our strong performance in the first quarter demonstrated the success of our
long-term strategy to diversify our business and our revenue streams, as we
outlined in our 1999 annual report.
Over the past three years, FBR has maintained its strength in, but reduced its
dependence on, financial services and real estate investment banking. We have
become a much more diverse investment firm by developing Internet-centric
technology business units. Our value-added, consultative approach to financing
is built on the pillars of our industry expertise in the capital markets. This
approach enables us to advise companies from the early stages ... through
private and public capital raising... to M&A and other advisory assignments.
We do this throughout the corporate lifecycle and provide value-added capital
markets expertise to our brokerage clients as well.
In the first quarter, the successful execution of our business model was
reflected by the fact that FBR advised, financed or raised capital for 29
companies, including 13 venture capital investments, 10 managed public
offerings, and 6 corporate finance assignments.
FBR has a demonstrated ability to capture opportunity wherever it exists in the
capital formation process. And it is clear that our decisions over the last
three years to invest in the technology sector, to expand our asset management
activities into venture capital and private equity, and to create a focused M&A
team have paid off.
For additional details on the quarter, I will now turn it over to our Chief
Financial Officer, Kurt Harrington.
[New speaker: Kurt Harrington]
Thank you, Manny. Technology venture capital was the biggest contributor to
first-quarter revenues and earnings. Revenue from venture capital and private
equity as well as other asset management and principal investing activity,
including unrealized gains, and carry, net of losses, accounted for $35.9
million in the first quarter. This compares to $4.6 million in the first
quarter of 1999. At the end of the first quarter, our first technology fund,
was up more than ten times.
We have begun to return cash to investors in FBR TVP I - and by the end of this
month, we expect to have returned more than 40 percent of the fund's called
capital.
In addition, we will continue to help our existing technology portfolio
companies reach the next level and fulfill their considerable promise.
As we have seen in recent weeks, the technology sector is subject to substantial
stock volatility. Still, there is little doubt that the Internet will continue
to revolutionize communications and commerce around the world, and that FBR is
well positioned to participate in the Internet's growth.
Now, I would like to turn to the performance of our investment banking and
institutional brokerage businesses. Investment banking revenue totaled $16.7
million, compared to $6 million for the first quarter of 1999. FBR acted as
lead manager for the IPO of Atlas Pipeline Partners, an energy company. We also
co-managed a total of nine transactions, including four IPOs. fbr.com, our
online arm, participated in 14 online offerings, including the IPOs of
webMethods and Lante.
On the corporate finance front, FBR represented clients in five M&A
transactions. Among these transactions, FBR advised Lead Dog Design and
Enterprise Works on their separate acquisitions by Iconixx, as well as Imperial
Credit Industry Inc. on its acquisition of Imperial Credit Commercial Mortgage
Investment Corporation.
Finally, Sales & Trading, supported by Research, once again reported record
revenues - almost $11.7 million for the quarter. Much of this sequential growth
has been recurring and predictable, reflecting FBR's continued expansion - and
our evolution into a more balanced, diversified and successful investment firm.
With that, I would like to open the call for questions. Joining me are Manny,
Russ Ramsey, Eric Billings, and Bob Smith.
[At end of Q&A]
If there are no further questions, that concludes our conference call for today.
Thank you for joining us and have a good day.
# # #
<PAGE>
Exhibit 3 - 99.3
<TABLE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement -Operating Results (unaudited)
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
Q-1 00 YTD 1999 Q-4 99
-------------- -------------- ------------
Revenues
Investment banking:
Underwriting $ 10,506 $ 22,642 $ 6,200
Corporate finance 6,190 22,541 11,820
Investment gains - 3,853 1,690
Institutional brokerage:
Principal transactions 6,001 22,058 4,472
Agency commissions 5,676 14,988 5,048
Asset management:
Base management fees 2,174 9,409 2,379
Incentive income 36,603 35,903 35,298
Net investment gains (losses) (2,900) (3,196) (1,870)
Interest, dividends and other 1,993 10,768 2,559
-------------- -------------- ------------
Total revenues 66,243 138,966 67,596
-------------- -------------- ------------
Expenses
Compensation and benefits 46,223 98,424 45,759
Business development & 4,617 23,582 5,418
professional services
Clearing and brokerage fees 1,567 4,693 1,386
Occupancy & equipment 2,323 6,674 1,952
Communications 1,181 4,323 1,240
Interest expense 222 1,323 163
Other operating expenses 1,554 6,918 1,482
-------------- -------------- ------------
Total expenses 57,687 145,937 57,400
-------------- -------------- ------------
Net income (loss) before taxes 8,556 (6,971) 10,196
-------------- -------------- ------------
Provision (benefit) for income taxes 2,139 - -
Net income (loss) $ 6,417 $ (6,971) $ 10,196
============== ============== ============
Net income (loss) before taxes
as a percentage of revenue 12.9% -5.0% 15.1%
ROE (annualized) 13.3% -3.7% 22.7%
Total shareholders' equity $ 198,063 $ 188,969 $188,969
Basic earnings (loss) per share $ 0.13 $ (0.14) $ 0.21
Diluted earnings (loss) per share $ 0.12 $ (0.14) $ 0.21
Ending shares outstanding (in thousands) 49,096 48,961 48,961
Book value per share $ 4.03 $ 3.86 $ 3.86
Assets under management (in millions)
Managed accounts $ 114.6 $ 180.2 $ 180.2
Hedge & offshore funds 98.8 151.6 151.6
Mutual funds 54.7 66.1 66.1
Private equity & venture capital 661.7 480.9 480.9
============== ============== ===========
Total $ 929.8 $ 878.8 $ 878.8
============== ============== ===========
Employee count 396 390 390
============== ============== ===========
</TABLE>
<PAGE>
<TABLE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement -Operating Results (unaudited)
(Dollars in thousands, except per share data)
(Continued)
<S> <C> <C> <C>
Q-3 99 Q-2 99 Q-1 99
-------------- -------------- ------------
Revenues
Investment banking:
Underwriting $ 4,026 $ 9,245 $ 3,171
Corporate finance 2,024 5,820 2,877
Investment gains 15 2,148 -
Institutional brokerage:
Principal transactions 4,721 6,804 6,061
Agency commissions 3,372 3,749 2,819
Asset management:
Base management fees 2,714 2,052 2,264
Incentive income 62 470 73
Net investment gains (losses) (10,572) 6,985 2,261
Interest, dividends and other 2,560 3,106 2,543
----------- ------------ -------------
Total revenues 8,922 40,379 22,069
----------- ------------ -------------
Expenses
Compensation and benefits 16,318 22,109 14,238
Business development & 9,662 5,908 2,594
professional services
Clearing and brokerage fees 1,098 1,195 1,014
Occupancy & equipment 1,738 1,422 1,562
Communications 1,246 913 924
Interest expense 159 494 507
Other operating expenses 1,762 2,489 1,185
----------- ------------ -------------
Total expenses 31,983 34,530 22,024
----------- ------------ -------------
Net income (loss) before taxes (23,061) 5,849 45
----------- ------------ -------------
Provision (benefit) for income taxes - - -
Net income (loss) $(23,061) $ 5,849 $ 45
=========== ============ =============
Net income (loss) before taxes
as a percentage of revenue 258.5% 14.5% 0.2%
ROE (annualized) -51.4% 12.8% 0.1%
Total shareholders' equity $ 170,922 $ 187,852 $ 176,876
Basic earnings (loss) per share $ (0.47) $ 0.12 $ 0.00
Diluted earnings (loss) per share $ (0.47) $ 0.12 $ 0.00
Ending shares outstanding (in thousands) 48,882 48,882 48,733
Book value per share $ 3.50 $ 3.84 $ 3.63
Assets under management (in millions)
Managed accounts $ 200.5 $ 212.5 $ 229.4
Hedge & offshore funds 177.1 212.4 194.7
Mutual funds 78.1 91.6 95.9
Private equity & venture capital 329.6 295.7 152.9
=========== ============ =============
Total $ 785.3 $ 812.2 $ 672.9
=========== ============ =============
Employee count 390 350 349
=========== ============ =============
</TABLE>
