<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 001-13731
Friedman, Billings, Ramsey Group, Inc.
(Exact name of Registrant as specified in its charter)
Virginia 54-1837743
(State or other jurisdiction of (I.R.S. Employer
incorporation or 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)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Title Outstanding
Class A Common Stock 15,470,188 shares as of July 31, 2000
Class B Common Stock 33,733,529 shares as of July 31, 2000
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
Page Number (s)
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements - (unaudited)
Consolidated Balance Sheets-
June 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations-
Three Months Ended June 30, 2000 and 1999 4
Six Months Ended June 30, 2000 and 1999 5
Consolidated Statements of Cash Flows-
Six Months Ended June 30, 2000 and 1999 6
Notes to Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-19
Item 3. Changes in Information about Market Risk 19
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 19-20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 20
EXHIBIT INDEX 20
2
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
2000 1999
-------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 45,502 $ 43,743
Receivables:
Investment banking 6,353 4,273
Asset management fees 388 3,112
Affiliates 4,026 1,339
Other 1,683 1,698
Due from clearing broker 18,439 13,472
Marketable trading securities, at market value:
Corporate equities 5,864 4,193
Corporate bonds 2,088 1,944
Long-term investments 184,368 135,723
Deferred tax asset - 2,402
Prepaid expenses and other assets 2,342 3,149
Furniture, equipment, software and leasehold improvements,
net of accumulated depreciation and amortization of
$8,143 and $5,798, respectively 11,783 11,308
-------- --------
Total assets $282,836 $226,356
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Trading account securities sold but not yet purchased, at market value:
Corporate equities $ 3,573 $ 3,015
Corporate bonds 553 14
Accounts payable and accrued expenses 7,266 8,869
Accrued compensation and benefits 66,735 24,130
Long-term secured loans 1,072 1,359
-------- --------
Total liabilities 79,199 37,387
-------- --------
Commitments and contingencies (Note 9) - -
Shareholders' equity:
Preferred Stock, $0.01 par value, 15,000,000 shares authorized,
none issued and outstanding - -
Class A Common Stock, $0.01 par value, 150,000,000 shares
authorized, 16,547,323 and 14,304,026 issued, respectively 166 143
Class B Common Stock, $0.01 par value, 100,000,000 shares authorized,
33,733,529 and 35,799,729 issued and outstanding, respectively 337 358
Additional paid-in capital 209,741 208,678
Treasury stock, at cost, 1,077,135 and 1,143,027 shares, respectively (7,858) (8,341)
Accumulated other comprehensive loss (4,568) (5,991)
Retained earnings (deficit) 5,819 (5,878)
-------- --------
Total shareholders' equity 203,637 188,969
-------- --------
Total liabilities and shareholders' equity $282,836 $226,356
======== ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended June 30,
----------------
2000 1999
------- -------
<S> <C> <C>
Revenues:
Investment banking:
Underwriting $ 1,205 $ 9,245
Corporate finance 8,741 5,820
Investment gains - 2,148
Institutional brokerage:
Principal transactions 12,788 6,804
Agency commissions 4,627 3,749
Asset management:
Base management fees 2,206 2,052
Incentive allocations 7,849 470
Net investment income 3,768 6,985
Interest, dividends and other 2,352 3,106
------- -------
Total revenues 43,536 40,379
------- -------
Expenses:
Compensation and benefits 25,209 22,109
Business development and professional services 4,391 5,908
Clearing and brokerage fees 1,539 1,195
Occupancy and equipment 2,373 1,422
Communications 1,267 913
Interest expense 319 494
Other operating expenses 2,373 2,489
------- -------
Total expenses 37,471 34,530
------- -------
Net income before taxes 6,065 5,849
Income tax provision 785 -
------- -------
Net income $ 5,280 $ 5,849
======= =======
Basic and diluted earnings per share $0.11 $0.12
======= =======
Weighted average shares outstanding:
Basic 49,106 48,692
======= =======
Diluted 50,065 49,703
======= =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------------
2000 1999
-------- -------
<S> <C> <C>
Revenues:
Investment banking:
Underwriting $ 11,711 $12,416
Corporate finance 14,931 8,697
Investment gains - 2,148
Institutional brokerage:
Principal transactions 18,789 12,865
Agency commissions 10,303 6,568
Asset management:
Base management fees 4,380 4,316
Incentive allocations 44,452 543
Net investment income 868 9,246
Interest, dividends and other 4,345 5,649
-------- -------
Total revenues 109,779 62,448
-------- -------
Expenses:
Compensation and benefits 71,432 36,347
Business development and professional services 9,008 8,502
Clearing and brokerage fees 3,106 2,209
Occupancy and equipment 4,696 2,984
Communications 2,448 1,837
Interest expense 541 1,001
Other operating expenses 3,927 3,674
-------- -------
Total expenses 95,158 56,554
-------- -------
Net income before taxes 14,621 5,894
Income tax provision 2,924 -
-------- -------
Net income $ 11,697 $ 5,894
======== =======
Basic earnings per share $ 0.24 $ 0.12
======== =======
Diluted earnings per share $ 0.23 $ 0.12
======== =======
Weighted average shares outstanding:
Basic 49,064 48,862
======== =======
Diluted 50,996 49,564
======== =======
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 11,697 $ 5,894
Non-cash items included in earnings--
Incentive allocations and net investment income
from long-term investments (45,320) (10,351)
Depreciation and amortization 2,435 1,093
Deferred income taxes 2,924 -
Other - (321)
Changes in operating assets:
Receivables--
Investment banking (2,080) (1,205)
Asset management fees 2,768 (1,096)
Income taxes - 7,495
Affiliates (63) 9
Other 822 396
Due from clearing broker (4,967) (18,584)
Marketable trading securities (1,147) 4,470
Prepaid expenses and other assets 243 245
Changes in operating liabilities:
Trading account securities sold but not
yet purchased 1,097 (262)
Accounts payable and accrued expenses (1,603) 4,188
Accrued compensation and benefits 42,605 2,301
-------- --------
Net cash provided by (used in) operating activities 9,411 (5,728)
-------- --------
Cash flows from investment activities:
Purchases of fixed assets (2,868) (954)
Purchases of long-term investments, net (6,045) (145)
-------- --------
Net cash used in investing activities (8,913) (1,099)
-------- --------
Cash flows from financing activities:
Repayments of long-term secured loans (287) (272)
Proceeds from issuance of common stock 1,065 -
Issuance of treasury stock 483 -
Purchases of treasury stock - (1,634)
-------- --------
Net cash provided by (used in) financing activities 1,261 (1,906)
-------- --------
Net increase (decrease) in cash and cash equivalents 1,759 (8,733)
Cash and cash equivalents, beginning of period 43,743 46,827
-------- --------
Cash and cash equivalents, end of period $ 45,502 $ 38,094
======== ========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)-(Unaudited)
1. Basis of Presentation:
The consolidated financial statements of Friedman, Billings, Ramsey Group,
Inc. and subsidiaries (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Therefore, they do not include all
information required by generally accepted accounting principles for complete
financial statements. The interim financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for the periods
presented. All significant intercompany accounts and transactions have been
eliminated in consolidation. The results of operations for interim periods are
not necessarily indicative of the results for the entire year. These financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1999 included on
Form 10-K filed by the Company under the Securities Exchange Act of 1934.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain amounts in the consolidated financial statements for prior periods
have been reclassified to conform to the current period presentation.
2. Comprehensive Income:
The components of comprehensive income are (in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------ ------- ------- -------
<S> <C> <C> <C> <C>
Net income $5,280 $ 5,849 $11,697 $ 5,894
Other comprehensive income:
Net change in unrealized investment gains (losses)
related to available-for-sale securities and
investment in FBR Asset Investment Corporation (414) 4,347 1,423 (3,309)
------ ------- ------- -------
Comprehensive income $4,866 $10,196 $13,120 $ 2,585
====== ======= ======= =======
</TABLE>
3. Long-Term Investments, Incentive Allocations and Net Investment Income:
Long-term investments consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- -----------
<S> <C> <C>
Venture capital and other proprietary
investment partnerships $133,710 $ 69,988
FBR Asset Investment Corporation 27,527 24,194
Private debt and preferred equity investments 17,840 25,380
Available-for-sale securities 5,291 16,161
-------- --------
$184,368 $135,723
======== ========
</TABLE>
7
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)-(Unaudited)
3. Long-Term Investments, Incentive Allocations and Net Investment Income,
continued:
FBR Technology Venture Partners, L.P. ("TVP")
---------------------------------------------
As of June 30, 2000, TVP's investments include equity investments in
securities of development-stage and early-stage, privately and publicly held
technology companies. The disposition of the privately held investments is
generally restricted due to the lack of a ready market and may remain restricted
for a period of time even if a company becomes public. TVP's investments may
represent significant proportions of the issuer's equity and they may carry
special contractual privileges, as well as certain restrictions, not applicable
to other security holders. As a result, precise valuation for the private and
restricted investments is a matter of judgment and the determination of fair
value must be considered only an approximation. Public company investments are
valued based on the June 30, 2000 closing price less discounts averaging 43% to
reflect restrictions on liquidity including the size of the fund's holdings
relative to the public market float and marketability. During the quarter ended
June 30, 2000, the Company recorded incentive allocations of $7,790 and net
investment income of $546 related to its investment in TVP.
FBR Asset Investment Corporation ("FBR-Asset")
----------------------------------------------
During the quarter ended June 30, 2000, the Company recorded $1,916 of net
investment income in the statement of operations for its proportionate share of
FBR-Asset's increase in net book value. The Company also recorded, in other
comprehensive income, $866 of unrealized investment income for its proportionate
share of FBR-Asset's net unrealized gains related to available-for-sale
securities. As of June 30, 2000, the net unrealized loss related to FBR-Asset
and included in the Company's accumulated other comprehensive loss has been
reduced to $(1,540).
Available-For-Sale Securities
-----------------------------
As of June 30, 2000, the unrealized losses related to available-for-sale
securities have increased to $(3,028) and are included in accumulated other
comprehensive loss.
4. Summarized Income Statement Information:
The Company's investment in TVP of $87,570 represents 47% of the Company's
total long-term investments and 31% of the Company's total assets as of June 30,
2000. The following table summarizes TVP's income statement information (in
thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------- ------- -------- -------
<S> <C> <C> <C> <C>
Investment income $ 86 $ 10 $ 123 $ 20
Total expenses 326 384 649 735
------- ------- -------- -------
Net investment loss (240) (374) (526) (715)
Unrealized appreciation of investments 29 44,283 183,596 43,381
Net realized gains on investments 28,663 - 39,822 -
------- ------- -------- -------
Net income $28,452 $43,909 $222,892 $42,666
======= ======= ======== =======
</TABLE>
The Company's investment in FBR-Asset of $27,527 represents 15% of the
Company's total long-term investments and 10% of the Company's total assets as
of June 30, 2000. The following table summarizes FBR-Asset's income statement
information (in thousands):
8
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)-(Unaudited)
4. Summarized Income Statement Information, continued:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------ ------ ------- -------
<S> <C> <C> <C> <C>
Gross revenues $5,914 $5,420 $12,237 $10,585
Total expenses 3,065 2,341 6,655 4,798
------ ------ ------- -------
Net income before net investment income
(loss) 2,849 3,079 5,582 5,787
Net investment income (loss) (118) 743 (4,979) 743
------ ------ ------- -------
Net income $2,731 $3,822 $ 603 $ 6,530
====== ====== ======= =======
</TABLE>
5. Executive Officer Director Compensation:
During 2000, the Company's executive officer directors are eligible for
bonuses under the Key Employee Incentive Plan (the "Plan"). As of June 30,
2000, the Company accrued $3,655 of executive officer director compensation, in
accordance with the Plan, representing 20% of the Company's pre-tax income
(before executive officer director compensation accruals) for the quarter.
Compensation, if any, related to the Plan will be paid subsequent to December
31, 2000.
6. Income Taxes:
As of June 30, 2000, the Company has net operating losses ("NOL") for tax
purposes of approximately $39,000 that expire through 2020. The Company
maintains a partial valuation allowance against the NOL and other deferred tax
assets in general, because based on the weight of available evidence, it is
more likely than not that a portion of the deferred tax assets may not be
realized. The valuation allowance includes consideration for the deferred tax
asset related to unrealized losses on available-for-sale securities recorded in
accumulated other comprehensive loss. For the six months ended June 30, 2000,
the Company reversed $3,321 of the valuation allowance recorded through
earnings.
7. Net Capital Requirements:
The Company's U.S. broker-dealer subsidiaries are subject to the Securities
and Exchange Commission's Uniform Net Capital Rule which requires the
maintenance of minimum net capital and requires the ratio of aggregate
indebtedness to net capital, both as defined by the rule, not to exceed 15 to 1.
The Company's U.K. broker-dealer subsidiary is subject to the net capital rules
of the Securities and Futures Authority. As of June 30, 2000, the broker-dealer
subsidiaries had aggregate net capital of $29,925, which exceeded the
requirements by $27,696.
8. Earnings Per Share and Options:
Basic earnings per share is computed by dividing net income available to
common shareholders by the weighted-average number of common shares outstanding
for the period. The diluted earnings per share calculation also includes the
impact of dilutive options.
As of June 30, 2000 and 1999, respectively, 8,321,191 and 5,999,880 options
to purchase shares of common stock were outstanding. As of June 30, 2000,
962,917 of the total outstanding options were exercisable. As of June 30, 1999,
no outstanding options were exercisable.
9
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)-(Unaudited)
9. Commitments and Contingencies:
As of June 30, 2000, the Company is not a defendant or plaintiff in any
lawsuits or arbitrations that are expected to have a material adverse effect on
the Company's financial condition. The Company is a defendant in a small number
of civil lawsuits and arbitrations (together "litigation") relating to its
various businesses. There can be no assurances that these matters will not have
a material adverse effect on the Company's financial condition or results of
operations in a future period. However, based on management's review with
counsel, including a review of the reserves set aside for litigation, resolution
of these matters is not expected to have a material adverse effect on the
Company's financial condition or results of operations.
Many aspects of the Company's business involve substantial risks of
liability and litigation. Underwriters, broker-dealers and investment advisers
are exposed to liability under Federal and state securities laws, other Federal
and state laws and court decisions, including decisions with respect to
underwriters' liability and limitations on indemnification, as well as with
respect to the handling of customer accounts. For example, underwriters may be
held liable for material misstatements or omissions of fact in a prospectus used
in connection with the securities being offered and broker-dealers may be held
liable for statements made by their securities analysts or other personnel. In
certain circumstances, broker-dealers and asset managers may also be held liable
by customers and clients for losses sustained on investments. In recent years,
there has been an increasing incidence of litigation involving the securities
industry, including class actions that seek substantial damages. The Company is
also subject to the risk of litigation, including litigation that may be without
merit. As the Company intends actively to defend such litigation, significant
legal expenses could be incurred. An adverse resolution of any future litigation
against the Company could materially affect the Company's operating results and
financial condition.
10. Employee Stock Purchase Plan:
On June 30, 2000, the Company issued 90,938 shares of Class A Common Stock
to employees in accordance with the 1997 Employee Stock Purchase Plan. Of these
shares, 65,892 were previously repurchased Class A Common Stock and 25,046 were
newly issued Class A Common Stock. The shares were issued at a per share price
of $6.69, representing 85% of the market value of the Company's common stock on
January 1, 2000 (the first day of the offering period). Differences between the
average cost of the treasury stock and the sales price of the shares issued are
charged to additional paid-in capital.
11. Segment Information:
The Company considers its capital markets, asset management operations and
online financial services to be three separate reportable segments. Parent
company assets, liabilities, income and expenses, such as cash equivalents,
income taxes, interest income and executive officer director compensation are
not allocated to the segments and, therefore, are included in the "Other" column
in 1999. During 2000, the Company has developed systems and methodologies to
allocate overhead costs to its business units and, accordingly, has presented
segment information consistent with internal management reporting. There are no
significant revenue transactions between the segments. The following table
illustrates the financial information for its segments for the periods presented
(in thousands):
10
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)-(Unaudited)
11. Segment Information, continued:
<TABLE>
<CAPTION>
Online
Capital Asset Financial Consolidated
Markets Management Services Other Totals
----------- ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Three Months Ended June 30, 2000
-----------------------------------
Total revenues $26,979 $16,374 $ 183 $ - $ 43,536
Pre-tax income (loss) 1,732 6,004 (1,671) - 6,065
Three Months Ended June 30, 1999
-----------------------------------
Total revenues 29,562 10,194 - 623 40,379
Pre-tax income (loss) 1,366 7,583 (1,083) (2,017) 5,849
<CAPTION>
Online
Capital Asset Financial Consolidated
Markets Management Services Other Totals
- --------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 2000
-----------------------------------
Total revenues 57,968 51,318 493 - 109,779
Pre-tax income (loss) 5,142 12,625 (3,146) - 14,621
Six Months Ended June 30, 1999
-----------------------------------
Total revenues 46,018 15,695 - 735 62,448
Pre-tax income (loss) (896) 10,478 (1,083) (2,605) 5,894
</TABLE>
12. Subsequent Event:
The volatility of TVP's venture capital portfolio is illustrated by the
fluctuation in value of TVP's publicly traded securities through July 31, 2000.
For example, the total public market value of these securities was approximately
$463.4 million on May 10, 2000, $678.0 million on June 30, 2000 and was $526.7
million on July 31, 2000. As explained in footnote 3, the valuation, for
financial reporting purposes, of these securities reflects a discount from the
public market value.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following analysis of the consolidated financial condition and results
of operations of Friedman, Billings, Ramsey Group, Inc. (the "Company") should
be read in conjunction with the unaudited Consolidated Financial Statements as
of June 30, 2000 and 1999, and the Notes thereto and the Company's 1999 Annual
Report on Form 10-K.
BUSINESS ENVIRONMENT
Our principal business activities (capital raising, securities sales and
trading, merger and acquisition and advisory services, venture capital,
proprietary investments and asset management services) are linked to the capital
markets. In addition, our business activities are primarily focused on small
and mid-cap stocks in the Internet and information technology, bank, financial
services and real estate sectors. By their nature, our business activities are
highly competitive and are not only subject to general market conditions,
volatile trading markets and fluctuations in the volume of market activity but,
also, to the conditions affecting the companies and markets in our areas of
focus. In the second quarter, there was a decrease in new issues underwritten
and an increase in the volatility of the secondary markets in the technology
sector.
Our revenues, particularly from venture capital and private equity
activities, capital raising, and asset management activities, are subject to
substantial positive and negative fluctuations due to a variety of factors that
cannot be predicted with great certainty, including the overall condition of the
economy and the securities markets as a whole and of the sectors on which we
focus. A significant portion of the performance based or incentive revenues that
we recognize from our venture capital, private equity and other asset management
activities is based on the increase in value of securities held by the funds we
manage. These increases in value included unrealized gains that may be reduced
or reversed from one period to another. These securities are often illiquid and,
therefore, the value of these securities is subject to increased market risk.
Fluctuations also occur due to the level of market activity, which, among other
things, affects the flow of investment dollars and the size, number and timing
of transactions. As a result, net income and revenues in any particular period
may not be representative of full-year results and may vary significantly from
year to year and from quarter to quarter.
The financial services industry continues to be affected by the intensifying
competitive environment, as demonstrated by consolidation through mergers and
acquisitions, as well as significant growth in competition in the market for on-
line trading and investment banking services. The relaxation of banks' barriers
to entry into the securities industry and expansion by insurance companies into
traditional brokerage products, coupled with the repeal of laws separating
commercial and investment banking activities in the future, have increased the
number and size of companies competing for a similar customer base.
In order to compete in this increasingly competitive environment, we
continually evaluate each of our businesses across varying market conditions for
competitiveness, profitability and alignment with our long-term strategic
objectives, including the diversification of revenue sources. As a result, we
may choose, from time to time, to reallocate resources based on the
opportunities for profitability and revenue growth for each of our businesses
relative to our commitment of resources. We believe that it is important to
diversify and strengthen our revenue base by increasing the segments of our
business that offer a recurring and more predictable source of revenue.
RESULTS OF OPERATIONS
Three months ended June 30, 2000 compared to three months ended June 30, 1999
The Company's revenues increased 8% from $40.4 million in 1999 to $43.5
million in 2000 primarily due to an increase in institutional brokerage revenue
from principal transactions and asset management revenue, particularly incentive
allocations related to FBR Technology Venture Partners, L.P. ("TVP") offset by a
decrease in investment banking revenues due to the completion of fewer
underwriting transactions.
12
<PAGE>
RESULTS OF OPERATIONS, continued
Three months ended June 30, 2000 compared to three months ended June 30, 1999,
continued
Underwriting revenue decreased 87% from $9.2 million in 1999 to $1.2 million
in 2000. The decrease is attributed to fewer managed transactions completed in
2000 due to reduced activity in the markets for securities of companies in which
the Company focuses and a decrease in the average dollars raised from those
transactions completed. During 2000, the Company managed two public offerings
raising $65.3 million and generating $1.2 million in revenues. During 1999, we
managed seven transactions raising $513 million and generating $9.2 million in
revenues. The average size of underwritten transactions for which we were a
lead or co-manager decreased from $73.3 million in 1999 to $32.7 million in
2000.
Corporate finance revenue increased 50% from $5.8 million in 1999 to $8.7
million in 2000 primarily due to an increase in the transaction size of private
placement and M&A transactions. During the second quarter of 1999, we completed
two private placement transactions generating $0.7 million in revenues compared
to one completed private placement transaction generating $3.6 million in
revenues during the second quarter of 2000. M&A and advisory service revenues
remained constant at $5.1 million in 1999 and 2000, however, we completed three
M&A transactions in 1999 compared to two in 2000. Additionally, in 1999, as part
of a M&A engagement, the Company sold warrants that had been previously received
as part of a capital raising transaction resulting in a gain of $2.1 million.
Institutional brokerage revenue from principal transactions increased 88%
from $6.8 million in 1999 to $12.8 million in 2000 primarily due to an increase
in the Company's penetration of large institutional accounts and to the
Company's ability, as a market maker for its own account, to take advantage of
an increase in market volatility in the technology sector.
Institutional brokerage agency commissions increased 23% from $3.7 million
in 1999 to $4.6 million in 2000 primarily due to increased customer trading,
particularly in the technology sector, due to, among other things, volatility in
the markets. In addition, we believe we have achieved greater penetration with
our current institutional accounts through broader research coverage and sales
services.
Asset management incentive allocations increased significantly from $0.5
million in 1999 to $7.8 million in 2000. Incentive allocations in 2000 are
almost entirely related to TVP and primarily represent unrealized gains
allocated as carried interest to our capital account in TVP. Under the terms of
TVP's partnership agreement, after allocations have been made to the limited
partners in amounts totaling their commitments, we are entitled to receive
special allocations in an amount equal to 20% of the realized and unrealized
gains allocated to the limited partners. To the extent that TVP holds
securities of public companies that are restricted as to resale due to
contractual "lock-ups", regulatory requirements including Rule 144 holding
periods, or for other reasons, these securities are generally valued by
reference to the public market price, subject to discounts to reflect the
restrictions on liquidity. As the restriction period decreases over time, the
amount of the discount is generally reduced. All such securities reflect the
June 30, 2000 closing price less discounts averaging 43% to reflect restrictions
on liquidity and marketability. We review these valuations and discounts
quarterly and make adjustments as appropriate.
Asset management net investment income decreased 46% from $7.0 million in
1999 to $3.8 million in 2000. During 1999, $4.9 million of net investment income
was generated from investments in our managed partnerships and $2.0 million of
net investment income was generated from our investment in FBR Asset Investment
Corporation ("FBR-Asset"). Net investment income in 2000 included $1.9 million
of net investment income from investments in our managed partnerships and $1.9
million of net investment income generated from our investment in FBR-Asset.
Unrealized losses related to our investments that are included in "accumulated
other comprehensive loss" in our balance sheet totaled $(4.6) million as of June
30, 2000. If and when we liquidate these or determine that the decline in value
of these investments is "other than temporary", a portion or all of the losses
will be recognized as investment losses in the statement of operations during
the period in which the liquidation or determination is made. Our investment
portfolio is also exposed to future downturns in the markets and private debt
and equity investments are exposed to deterioration of credit quality, defaults
and downward valuations. We periodically review the valuations of our private
debt and equity investments. If and when we determine that the net realizable
value of these investments is less than our carrying value, we will reflect the
reduction as an investment loss.
13
<PAGE>
RESULTS OF OPERATIONS, continued
Three months ended June 30, 2000 compared to three months ended June 30, 1999,
continued
Net interest, dividends, and other revenue (net of interest expense)
decreased 22% from $2.6 million in 1999 to $2.0 million in 2000 primarily due to
$0.7 million of miscellaneous income recorded in 1999. Interest income (net of
interest expense) increased from $1.8 million in 1999 to $2.0 million in 2000
due to reduced interest expense on our trading accounts. During 1999, we
recorded $0.1 million of dividend income compared to none in 2000 due to a
decrease in trading inventory from which dividend income may be earned.
Total expenses increased 9% from $34.5 million in 1999 to $37.5 million in
2000 due primarily to an increase in compensation and benefits expense, an
increase in clearing and brokerage fees, and an increase in occupancy and
equipment offset by a decrease in investment banking expense.
Compensation and benefits expense increased 14% from $22.1 million in 1999
to $25.2 million in 2000. This increase was primarily due to increased
compensation associated with our venture capital funds. During the quarter ended
June 30, 2000, we recorded $7.8 million of incentive allocations related to our
investment in TVP. The fund management team for the venture capital funds has an
agreement with the Company to receive a percentage of the incentive allocations.
For TVP, the fund management team earns 60% of the incentive allocations and
this amount is recorded as compensation expense at the time the incentive
allocations are recorded.
Business development and professional services decreased 26% from $5.9
million in 1999 to $4.4 million in 2000 primarily due to a decrease in travel
and consulting expenses associated primarily with the decrease in underwriting
activity.
Clearing and brokerage fees increased 29% from $1.2 million in 1999 to $1.5
million in 2000 due to the increase in the volume of sales and trading activity.
As a percentage of institutional brokerage revenue, clearing and brokerage fees
decreased from 11% in 1999 to 9% in 2000 due primarily to the increase in
principal transactions.
Occupancy and equipment expense increased 67% from $1.4 million in 1999 to
$2.4 million in 2000 primarily due to the increase in depreciation and
amortization expense related to software, computer and telecommunications
equipment for fbr.com's operations. Depreciation and amortization expense
increased $0.7 million in 2000 compared to 1999.
Communications expense increased 39% from $0.9 million in 1999 to $1.3
million in 2000 due to an increase in telecommunications expenses and an
increase in costs associated with an upgrade of our broker-dealer trading
system.
Other operating expenses decreased 5% from $2.5 million in 1999 to $2.4
million in 2000 due to a reduction of overhead costs and lower litigation
accruals.
RESULTS OF OPERATIONS
Six months ended June 30, 2000 compared to six months ended June 30, 1999
The Company's revenues increased 76% from $62.4 million in 1999 to $109.8
million in 2000 primarily due to an increase in asset management revenue,
particularly incentive allocations related to FBR Technology Venture Partners,
L.P. ("TVP"), and an increase in revenue from institutional brokerage in
principal transactions and agency commissions offset by a decrease in net
investment income.
14
<PAGE>
RESULTS OF OPERATIONS, continued
Six months ended June 30, 2000 compared to six months ended June 30, 1999,
continued
Underwriting revenue decreased 6% from $12.4 million in 1999 to $11.7
million in 2000. During 2000, we managed twelve public offerings raising $2.9
billion and generating $11.7 million in revenues. During 1999, we managed eleven
public offerings raising $791.9 million and generating $12.4 million in
revenues. The average size of underwritten transactions for which we were a lead
or co-manager increased from $72.0 million in 1999 to $241.1 million in 2000.
Corporate finance revenue increased 72% from $8.7 million in 1999 to $14.9
million in 2000 primarily due to an increase in the transaction size of private
placement and M&A transactions. During 1999, we completed four private placement
transactions generating $3.0 million in revenues compared to two completed
private placements during 2000 that generated $4.8 million in revenues. We
completed five M&A transactions in both 1999 and 2000, however, revenues from
M&A and advisory services increased from $5.7 million in 1999 to $10.1 million
in 2000. Additionally, in 1999, as part of a M&A engagement, the Company sold
warrants that had been previously received as part of a capital raising
transaction resulting in a gain of $2.1 million.
Institutional brokerage revenue from principal transactions increased 46%
from $12.9 million in 1999 to $18.8 million in 2000 primarily due to an increase
in the Company's penetration of large institutional accounts and to the
Company's ability, as a market maker for its own account, to take advantage of
an increase in market volatility in the technology sector.
Institutional brokerage agency commissions increased 57% from $6.6 million
in 1999 to $10.3 million in 2000 primarily due to increased customer trading,
particularly in the technology sector, due to, among other things, volatility in
the markets. In addition, we believe we have achieved greater penetration with
our current institutional accounts through broader research coverage and sales
services.
Asset management incentive allocations increased significantly from $0.5
million in 1999 to $44.5 million in 2000. Incentive allocations in 2000 are
almost entirely related to TVP and primarily represent unrealized gains
allocated as carried interest to our capital account in TVP. Under the terms of
TVP's partnership agreement, after allocations have been made to the limited
partners in amounts totaling their commitments, we are entitled to receive
special allocations in an amount equal to 20% of the realized and unrealized
gains allocated to the limited partners. To the extent that TVP holds securities
of public companies that are restricted as to resale due to contractual "lock-
ups", regulatory requirements including Rule 144 holding periods, or for other
reasons, these securities are generally valued by reference to the public market
price, subject to discounts to reflect the restrictions on liquidity. As the
restriction period decreases over time, the amount of the discount is generally
reduced. As of June 30, 2000, all such securities reflect the June 30, 2000
closing price less discounts averaging 43% to reflect restrictions on liquidity
and marketability. We review these valuations and discounts quarterly and make
adjustments as appropriate.
Asset management net investment income decreased 91% from $9.2 million in
1999 to $0.9 million in 2000. During 1999, $6.6 million of net investment income
was generated from investments in our managed partnerships and $2.6 million of
net investment income was generated from our investment in FBR-Asset. Net
investment income in 2000 included $7.4 million of net investment income from
investments in our managed partnerships, $1.4 million of net investment income
generated from our investment in FBR-Asset offset by $(7.9) million in write-
downs of our private debt investments. Unrealized losses related to our
investments that are included in "accumulated other comprehensive loss" in our
balance sheet totaled $(4.6) million as of June 30, 2000. If and when we
liquidate these or determine that the decline in value of these investments is
"other than temporary", a portion or all of the losses will be recognized as
investment losses in the statement of operations during the period in which the
liquidation or determination is made. Our investment portfolio is also exposed
to future downturns in the markets and private debt and equity investments are
exposed to deterioration of credit quality, defaults and downward valuations. We
periodically review the valuations of our private debt and equity investments.
If and when we determine that the net realizable value of these investments is
less than our carrying value, we will reflect the reduction as an investment
loss.
15
<PAGE>
RESULTS OF OPERATIONS, continued
Six months ended June 30, 2000 compared to six months ended June 30, 1999,
continued
Net interest, dividends, and other revenue (net of interest expense)
decreased 18% from $4.6 million in 1999 to $3.8 million in 2000 primarily due to
$0.7 million of miscellaneous income recorded in 1999. Interest income (net of
interest expense) increased from $3.4 million in 1999 to $3.7 million in 2000
due to reduced interest expense on our trading accounts. During 1999, we
recorded $0.3 million of dividend income compared to none in 2000 due to a
decrease in trading inventory from which dividend income may be earned.
Total expenses increased 68% from $56.6 million in 1999 to $95.2 million in
2000 due primarily to an increase in compensation and benefits expense, an
increase in clearing and brokerage fees, and an increase in occupancy and
equipment expense.
Compensation and benefits expense increased 97% from $36.3 million in 1999
to $71.4 million in 2000. This increase was primarily due to increased
compensation associated with our venture capital funds, and to a lesser degree
higher executive officer director bonus accruals and higher compensation related
to the increase in investment banking and sales activity. During 2000, we
recorded $44.5 million of incentive allocations related to our investment in
TVP. The fund management team for the venture capital funds has an agreement
with the Company to receive a percentage of the incentive allocations. For TVP,
the fund management team earns 60% of the incentive allocations and this amount
is recorded as compensation expense at the time the incentive allocations are
recorded. Also during 1999, we recorded bonus accruals of $3.4 million for our
executive officer directors compared to $3.7 million in 2000.
Business development and professional services increased 6% from $8.5
million in 1999 to $9.0 million in 2000 primarily due to an increase in
corporate travel, consulting and legal expenses supporting institutional
brokerage and asset management activities offset by a decrease in travel and
consulting expenses associated with investment banking activity.
Clearing and brokerage fees increased 41% from $2.2 million in 1999 to $3.1
million in 2000 due to the increase in the volume of sales and trading activity.
As a percentage of institutional brokerage revenue, clearing and brokerage fees
remained unchanged at 11% in 1999 and 2000.
Occupancy and equipment expense increased 57% from $3.0 million in 1999 to
$4.7 million in 2000 primarily due to the increase in depreciation and
amortization expense related to software, computer and telecommunications
equipment for fbr.com's operations. Depreciation and amortization expense
increased $1.3 million in 2000 compared to 1999.
Communications expense increased 33% from $1.8 million in 1999 to $2.4
million in 2000 due to an increase in telecommunications expenses and an
increase in costs associated with an upgrade of our broker-dealer trading
system.
Other operating expenses increased 7% from $3.7 million in 1999 to $3.9
million in 2000 due to an increase in expenses associated with the maintenance
and operation of software and office equipment offset by a reduction of overhead
costs and lower litigation accruals.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have satisfied our liquidity and regulatory capital needs
through three primary sources: (1) internally generated funds; (2) equity
capital contributions; and (3) credit provided by banks, clearing brokers, and
affiliates of our principal clearing broker. We have required the use, and may
continue
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES, continued
the use, of temporary subordinated loans in connection with regulatory capital
requirements to support our underwriting activities. We have no material long-
term debt.
Our principal assets consist of cash and cash equivalents, receivables,
securities held for trading purposes and long-term investments. As of June 30,
2000, liquid assets consisted primarily of cash and cash equivalents of $45.5
million and a $18.4 million receivable for cash on deposit with the Company's
clearing broker. Cash equivalents consist primarily of money market funds
invested in debt obligations of the U.S. government. We also held $8.0 million
in marketable securities in our trading accounts. We had borrowing capacity
(borrowing against security positions) from FBRC's clearing broker of
approximately $12.6 million as of June 30, 2000 and a total of $40.0 million in
a committed subordinated revolving loan from an affiliate of the Company's
clearing broker that is allowable for net capital purposes. The agreement
expires in December 2000.
Long-term investments consist primarily of investments in managed
partnerships, including venture capital funds in which we serve as managing
partner, available-for-sale securities, our investment in FBR-Asset and long-
term debt and equity investments in privately held companies. Although the
investments in venture capital funds and other limited partnerships are for the
most part illiquid, the underlying investments of such entities are mostly in
publicly traded, equity and debt investments, some of which may be restricted
due to contractual "lock-up" requirements. The Company is continually evaluating
and implementing various strategies designed to minimize its risk of loss from
potential market declines of securities underlying its long-term investments.
As of June 30, 2000, a majority, by value, of the underlying assets of the
investment partnerships and the REIT were equity securities of domestic,
publicly traded companies or, in the case of the REIT, mortgage-backed
securities. These underlying investments are marked to market, subject to
liquidity discounts in the case of securities that are subject to contractual
"lock-up" requirements or regulatory restrictions (including Rule 144) or
otherwise not readily marketable, and we record our proportionate share of
unrealized gains and losses. To the extent the underlying investments in the
investment partnerships, venture funds, REIT and direct investments are not
marketable securities, they are valued at estimated fair values. In 2000, we
recorded, in earnings, net realized and unrealized losses from our investments
of $0.9 million and incentive allocations from realized and unrealized gains in
investment partnerships, including venture capital, of $44.5 million. We also
maintain, as a separate component of shareholders' equity, $4.6 million of
accumulated other comprehensive loss, representing $0.1 million of unrealized
gains on our direct investments and $4.7 million of unrealized losses related to
our investment in the REIT. As of June 30, 2000, the recorded value of our
long-term investment securities was $184.4 million. The net potential loss in
fair value, using a 10% hypothetical decline in reported value, was $18.4
million.
FBRC and FBR Investment Services, Inc. ("FBRIS") as broker-dealers, are
registered with the Securities and Exchange Commission ("SEC") and are members
of the National Association of Securities Dealers, Inc. As such, they are
subject to the minimum net capital requirements promulgated by the SEC. FBRC's
and FBRIS' regulatory net capital has historically exceeded these minimum
requirements. As of June 30, 2000, FBRC was required to maintain minimum
regulatory net capital of $1.3 million and had total regulatory net capital of
$26.6 million which was $25.3 million in excess of its requirement. As of June
30, 2000, FBRIS was required to maintain minimum regulatory net capital of $0.1
million and had total regulatory net capital of $2.1 million which was $2.0
million in excess of its requirement. Regulatory net capital requirements
increase when FBRC and FBRIS are involved in underwriting activities based upon
a percentage of the amount being underwritten by FBRC and FBRIS. Friedman,
Billings, Ramsey International Limited ("FBRIL") as a U.K. broker-dealer, is
subject to the net capital rules of the Securities and Futures Authority. As of
June 30, 2000, FBRIL was required to maintain minimum regulatory net capital of
$0.8 million and had total regulatory net capital of $1.1 million which was $0.3
million in excess of its requirement.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES, continued
As of June 30, 2000, we had net operating losses ("NOL") for tax purposes of
approximately $39.0 million that expire through 2020. We maintain a partial
valuation allowance related to the NOL and deferred tax assets, in general
because, based on the weight of available evidence, it is more likely than not
that a portion of the net deferred tax assets may not be realized.
We believe that the Company's current level of equity capital and committed
line of credit, including funds generated from operations, are adequate to meet
our liquidity and regulatory capital requirements and other activities. We may,
however, seek debt or equity financing, in public or private transactions, or
otherwise re-deploy assets, to provide capital for corporate purposes and/or to
fund strategic business opportunities, including possible acquisitions, joint
ventures, alliances or other business arrangements which could require
substantial capital outlays. Our policy is to evaluate strategic business
opportunities, including acquisitions and divestitures, as they arise.
We constantly review our capital needs and sources, the cost of capital and
return on equity, and we seek strategies to provide favorable returns on
capital. In evaluating our anticipated capital needs and current cash resources
during 1998, our Board of Directors authorized a share repurchase program of up
to 2.5 million shares of our Company's Class A Common Stock. Since announcing
the share repurchase program, the Company purchased 1,468,027 shares as of June
30, 2000. 390,892 of the repurchased shares were issued to employees pursuant
to our Employee Stock Purchase Plan.
WARRANTS
In connection with various public and private capital raising transactions,
we have received and hold the following warrants for stock of the issuing
corporation. The exercise price for each warrant is set at the offering price
of the underlying stock in the relevant capital raising transaction. Due to the
restrictions on the warrants and the underlying securities, we carry the
warrants at nominal values, and recognize profits, if any, only when realized.
<TABLE>
<CAPTION>
Number of Exercise June 30, 2000 Expiration
Warrants Price Closing Price Date
--------- -------- ------------- ----------
<S> <C> <C> <C> <C>
Access Data 222,182 $ 1.650 * 03/29/05
Capital Automotive REIT 894,464 15.000 14.1250 12/12/03
East West Bank 232,500 10.000 14.3750 06/12/03
Local Financial Corporation 382,000 10.000 8.3438 09/08/02
PlanetClick, Inc. 50,764 3.200 * 06/30/04
Styling Technology Corporation 71,050 12.000 ** 11/21/01
FBR Asset Investment Corporation 970,805 20.000 14.5000 12/11/07
Xypoint Corporation 285,107 2.100 * 07/10/03
Vcampus Corporation (formerly UOLP) 18,500 4.625 8.7500 09/16/03
Resource Asset Investment Trust 99,292 15.000 11.0000 01/08/03
American Home Mortgage Holdings, Inc. 125,000 7.800 4.5625 09/30/04
Ultraprise Corporation 234,427 2.533 * 12/22/04
The Bancorp.com 28,093 10.000 * 11/01/04
World Web, Ltd. 233,334 1.500 * 12/13/04
Total Funding.com 521,400 3.000 * 02/11/05
James Martin 60,000 13.000 * 05/26/00
PocketScript, Inc. 114,000 1.500 * 01/27/07
</TABLE>
* The underlying unregistered security does not have a ready market. We
received the warrants in a private placement transaction.
** This security was not trading on June 30, 2000.
18
<PAGE>
MATTERS RELATED TO YEAR 2000
Over the past several years, we have addressed the potential hardware,
software and other computer and technology issues and related concerns
associated with the transition to the Year 2000 and have confirmed that our
service providers took similar measures. As a result of those efforts, we have
not experienced any disruptions in our operations in connection with, or
following, the transition to the Year 2000.
Item 3. Changes in Information about Market Risk
None.
Forward-Looking Statements
This Form 10-Q includes 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. Some of the forward-looking
statements can be identified by the use of forward-looking words such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates" or "anticipates" or the negative of those words
or other comparable terminology. Such statements include, but are not limited
to, those relating to the effects of growth, our principal investment
activities, levels of assets under management and our current equity capital
levels. Forward-looking statements involve risks and uncertainties. You should
be aware that a number of important factors could cause our actual results to
differ materially from those in the forward-looking statements. 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, mutual fund and 401(k) and pension plan inflows or
outflows, volatility of the securities markets, available technologies,
government regulation, economic conditions and competition for business and
personnel in the business areas in which we focus, fluctuating quarterly
operating results, the availability of capital to us and risks related to online
commerce. We will not necessarily update the information presented or
incorporated by reference in this Form 10-Q if any of these forward-looking
statements turn out to be inaccurate. For a more detailed discussion of the
risks affecting our business see our Form 10-K for 2000 and especially the
section "Business--Factors Affecting Our Business, Operating Results and
Financial Condition".
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on May 17, 2000 at which
shareholders took the following actions:
1. The election of the five directors of the Company,
2. The approval of an amendment to the 1997 Stock and Annual Incentive Plan to
increase the number of Class A Common Stock available for issuance under the
Plan by 5 million shares and
3. The ratification of the appointment of Arthur Andersen LLP as the Company's
independent auditors for 2000.
The results of the voting in connection with the preceding items were as
follows:
19
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders, continued
1. Election of Directors: A total of 110,591,296 votes were received for this
item.
<TABLE>
<CAPTION>
For Against Abstain
----------- --------- -------
<S> <C> <C> <C>
Emanuel J. Friedman 109,509,876 1,081,420 -
Eric F. Billings 109,509,876 1,081,420 -
W. Russell Ramsey 109,509,876 1,081,420 -
Wallace L. Timmeny 109,509,876 1,081,420 -
Mark R. Warner 109,509,876 1,081,420 -
</TABLE>
2. Approval of an Amendment to 1997 Stock and Annual Incentive Plan: A total of
93,655,259 votes were received for this item.
For Against Abstain
--- ------- -------
90,851,122 2,777,325 26,812
3. Ratification of the Appointment of Arthur Andersen LLP: A total of
100,591,296 votes were received for this item.
For Against Abstain
--- ------- -------
100,553,196 27,484 10,616
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial data schedule
(b) Reports on Form 8-K
* August 3, 2000: Second quarter 2000 results
SIGNATURES
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, thereunto duly authorized.
Friedman, Billings, Ramsey Group, Inc.
08/14/00 By: /s/ Kurt R. Harrington
-------------- ---------------------------------------------------
Date Kurt R. Harrington, Senior Vice President and Chief
Financial Officer (Principal Financial and
Accounting Officer)
EXHIBIT INDEX
EXHIBIT 27.01 Financial Data Schedule
20
