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UNITED STATES
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
JANAUARY 25, 2000
DATE OF REPORT
NEUBERGER BERMAN INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 1-15361
DELAWARE 06-1523639
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
605 Third Avenue
New York, NY 10158
(212) 476-9000
ITEM 5. OTHER EVENTS
Fourth Quarter 1999 Financial Results
On January 25, 2000, Neuberger Berman Inc. ("Corporation")
reported results of operations for the three and twelve months
ended December 31, 1999. A copy of the press release issued by
the Corporation is attached as Exhibit 99.1 and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
( c ) Exhibits
The Exhibits listed on the Exhibit Index on page 2 of this
Form 8-K are filed herewith.
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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.
Neuberger Berman Inc.
(Registrant)
Date: January 25, 2000 By: /s/ Robert Matza
---------------------------------
Robert Matza
Executive Vice President and
Chief Administrative Officer
EXHIBIT INDEX
99.1 Press release issued by the Corporation on January 25, 2000,
with respect to results of operations for the three and twelve
months ended December 31, 1999.
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NEUBERGER BERMAN INC. [LOGO]
605 Third Avenue
New York, NY 10158-3698
Tel 212.476.9000
PRESS RELEASE
For further information
Contact: Robert Matza
Chief Administrative Officer
(212) 476-9808
FOR IMMEDIATE RELEASE
Tuesday, January 25th, 2000
NEUBERGER BERMAN REPORTS FOURTH QUARTER PRO FORMA NET
INCOME FROM OPERATIONS OF $ 31.8 MILLION, OR $ 0.64 PER SHARE,
BEFORE ONE-TIME IPO CHARGE OF $150.1 MILLION PRETAX
1999 PRO FORMA NET INCOME FROM OPERATIONS $131.8 MILLION, BEFORE CHARGE
TOTAL ASSETS UNDER MANAGEMENT REACH $54.4 BILLION
New York, N.Y., January 25, 2000... Neuberger Berman (NYSE:NEU) today reported
pro forma net income from operations of $31.8 million, or $0.64 per share, for
the fourth quarter ended December 31, 1999. This compares with pro forma net
income from operations of $30.5 million, or $0.61 per share, in the prior year
period. All pro forma results for 1999 and 1998 assume that the incorporation
and other transactions related to the Company's initial public offering,
completed on October 13, 1999, had occurred at the beginning of each fiscal
year. Historical results pertain to the period prior to the initial public
offering.
Historical results for the quarter reflected a loss of $65.9 million, after a
one-time charge, which was previously disclosed in the Company's Form S-1, of
$150.1 million pretax ($98.2 million after taxes) related to the IPO. This
charge includes an initial contribution of common shares to the Company's
Defined Contribution Plan, a cash contribution to the Neuberger Berman
Foundation and other expenses. Historical net revenues, after interest expense,
were $141.3 million for the quarter versus $141.6 million in the comparable 1998
period. Assets under management reached $54.4 billion at the end of
1
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the quarter and year, down from $55.6 billion at December 31, 1998 but up from
$51.5 billion at September 30, 1999. For the full year 1999, pro forma operating
earnings were $131.8 million, or $2.64 per share, on net revenues after interest
expense of $567.1 million. On a comparable basis, pro forma operating earnings
for 1998 were $146.1 million, or $2.92 per share, on net revenues of $574.4
million. Historical net income, after the IPO charge for 1999, was $135.6
million, down from $285.0 million in 1998.
As previously announced, the Company has authorized a $50 million common stock
repurchase program. In the quarter, 306,000 shares of stock were repurchased for
approximately $ 8.1 million. Subsequent purchases may be made from time to time
in the open market and in negotiated transactions, subject to market conditions.
Jeffrey B. Lane, President and Chief Executive Officer said, "We continue to be
extremely pleased with the performance of the Private Asset Management segment
of our business. New account activity is strong and assets under management
reached record levels at the end of the quarter. Meanwhile, although all our
equity mutual funds outperformed their respective benchmarks in the quarter, and
most did for the year, we remain disappointed in the net cash outflows and
revenue decline experienced in the Mutual Funds and Institutional business. The
outflows have primarily resulted from the negative impact an exceptionally
narrow stock market has had on portfolios with a value orientation. Our
concerted efforts to diversify our product offerings and investment styles are
beginning to bear fruit, as evidenced by the launch of a large cap growth fund
in December, an increase in assets under management in our growth products from
$ 1.7 billion at September 30, 1999 to $ 2.7 billion at December 31, 1999, and
the strong performance in our mid cap growth, small cap growth and international
funds. Other new products are on the drawing board that are intended to address
investor demands.
"The past year has been a momentous time in our proud 60-year history. We
continue to dedicate ourselves to preserving the best attributes of the past
while better positioning our company for the future. Neuberger Berman
employee/shareholders are firmly committed to achieving significant growth in
the amount of assets we manage, demonstrating exceptional performance throughout
our diversified product offerings, expanding our multi-channel distribution
capabilities, and improving profitability in our three core businesses."
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PRIVATE ASSET MANAGEMENT
(PRO FORMA)
4TH QUARTER NET REVENUES*: $ 65.7 MILLION VS. $ 60.7 MILLION, UP 8%
1999 NET REVENUES*: $ 260.1 MILLION VS. $ 237.9 MILLION, UP 9%
4TH QUARTER PRETAX INCOME: $ 32.6 MILLION VS. $ 30.4 MILLION, UP 7%
1999 PRETAX INCOME: $ 129.3 MILLION VS. $ 121.4 MILLION, UP 7%
Assets under management in the Private Asset Management segment reached a record
level of $21.1 billion at December 31, 1999, an increase of 10% in the fourth
quarter and up almost 18% from $17.9 billion at year-end 1998. This segment,
which provides asset management services to individuals, families and smaller
institutions, as well as a range of estate and retirement planning and trust
services through its trust companies, accounted for 58% of consolidated pretax
operating income for the fourth quarter of 1999, up from 57% in the fourth
quarter of 1998. On a year-to-date basis, this segment accounted for 56% of
consolidated pretax operating income, up from 47% in 1998.
The Company's focus on generating asset growth in this segment continues
according to plan, through expansion of the sales force, particularly in
targeted cities across the country, and attracting investment teams with
existing client relationships. Five professionals were added to the national
sales force during the year. The national sales force generated in excess of
$170 million in new assets in the fourth quarter alone. New offices in
Philadelphia and Houston are on track to open in March and April, respectively,
this year.
* After Interest Expense
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MUTUAL FUNDS AND INSTITUTIONAL
(PRO FORMA)
4TH QUARTER NET REVENUES*: $52.7 MILLION VS. $ 59.9 MILLION, DOWN 12%
1999 NET REVENUES*: $225.5 MILLION VS. $258.3 MILLION, DOWN 13%
4TH QUARTER PRETAX INCOME: $ 17.5 MILLION VS. $ 16.7 MILLION, UP 5%
1999 PRETAX INCOME: $84.5 MILLION VS. $113.6 MILLION, DOWN 26%
Assets under management in the Mutual Funds and Institutional segment were $33.3
billion at December 31, 1999, up $1.0 billion from the prior quarter but down
11.7% from $37.7 billion at year-end 1998. Net cash outflows in the period of
$2.1 billion continued to be unsatisfactory, although this was more than offset
by market appreciation.
Mutual fund performance in the quarter was quite strong across the spectrum,
with all funds outperforming their benchmarks - several of them by a
considerable margin. The market environment for our larger value style funds
improved somewhat in the quarter. Performance of the newer small cap growth, mid
cap growth and international funds was very strong. The Company launched a large
cap growth fund in December to further broaden its product offerings and respond
to investor demand.
In addition to striving for better fund performance across a broader investment
spectrum, the Company is also aggressively pursuing the expansion of the number
of institutions with which it can create a distribution relationship as well as
broadening the penetration of existing relationships with various types of
institutions.
*AFTER INTEREST EXPENSE
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PROFESSIONAL SECURITIES SERVICES
(PRO FORMA)
4TH QUARTER NET REVENUES*: $ 23.0 MILLION VS. $ 21.7 MILLION, UP 6%
1999 NET REVENUES*: $ 81.5 MILLION VS. $ 78.2 MILLION, UP 4%
4TH QUARTER PRETAX INCOME: $ 6.0 MILLION VS. $ 6.7 MILLION, DOWN 10%
1999 PRETAX INCOME: $ 18.7 MILLION VS. $ 22.7 MILLION, DOWN 18%
Net revenues in the Professional Securities Services segment increased in the
quarter, primarily due to increases in market maker revenues and higher net
interest income related to proceeds from the initial public offering. On an
operating basis, expenses were higher due to increased staffing. For the year,
higher market maker revenues and revenues from clearance fees were offset by a
decrease in net interest income and higher expenses related to investments in
information technology and a build-up in staffing for the growing trust and
professional investor clearing services businesses.
*AFTER INTEREST EXPENSE
# # #
Neuberger Berman is an independent investment advisory firm that has provided
clients with a broad range of investment products, services and strategies for
more than 60 years. The firm engages in private asset management, mutual fund
management and professional securities services for individuals, institutions,
corporations, pension funds, foundations and endowments. Its website, and this
release, can be accessed at www.nb.com or www.nbfunds.com.
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Statements made in this release which look forward in time involve risks and
uncertainties and are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such risks and uncertainties
include the ability of the Company to successfully implement its operating
strategy and acquisition strategy, the Company's ability to manage rapid
expansion, changes in economic cycles, competition from other companies, changes
in governmental regulations applicable to the Company and other risk factors
detailed in the Company's Securities and Exchange Commission filings, including
the Company's Prospectus dated October 6, 1999.
5
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NEUBERGER BERMAN INC.
PRO FORMA CONDENSED STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR AND QUARTER ENDING DECEMBER 31, 1999 AND 1998 01/24/00 4:12 PM
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER % CHANGE DECEMBER % CHANGE
1999 1998 FAV (UNFAV) 1999 1998 FAV (UNFAV)
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<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Investment advisory and administrative fees $ 90,495 $ 87,800 3.1% $370,383 $378,839 (2.2%)
Commissions 34,913 40,267 (13.3%) 142,082 145,969 (2.7%)
Interest 45,682 44,879 1.8% 160,022 164,782 (2.9%)
Principal transactions in securities 4,006 2,826 41.8% 10,003 6,324 58.2%
Clearance fees 2,922 2,626 11.3% 11,081 9,146 21.2%
Other income 522 1,361 (61.6%) 4,059 4,004 1.4%
---------------------- ----------------------
GROSS REVENUES 178,540 179,759 (0.7%) 697,630 709,064 (1.6%)
Interest expense (1) 37,094 37,497 1.1% 130,532 134,628 3.0%
---------------------- ----------------------
NET REVENUES AFTER INTEREST EXPENSE 141,446 142,262 (0.6%) 567,098 574,436 (1.3%)
---------------------- ----------------------
OPERATING EXPENSES:
Employee compensation and benefits (2)(4) 57,788 57,750 (0.1%) 229,560 212,883 (7.8%)
Information technology 5,340 4,305 (24.0%) 19,172 15,634 (22.6%)
Rent and occupancy 4,102 3,431 (19.6%) 15,313 12,182 (25.7%)
Brokerage, clearing and exchange fees 2,353 2,698 12.8% 10,164 10,245 0.8%
Advertising and sales promotion 2,381 6,136 61.2% 9,259 14,707 37.0%
Distributor and fund administration 2,479 2,856 13.2% 10,386 12,433 16.5%
Professional fees 2,439 3,182 23.4% 9,276 11,550 19.7%
Depreciation and amortization 2,701 3,732 27.6% 10,532 8,716 (20.8%)
Other expenses (4) 5,755 4,376 (31.5%) 20,931 18,432 (13.6%)
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TOTAL OPERATING EXPENSES 85,338 88,466 3.5% 334,593 316,782 (5.6%)
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NET INCOME BEFORE TAXES 56,108 53,796 4.3% 232,505 257,654 (9.8%)
Provision for income taxes (3) 24,295 23,294 (4.3%) 100,675 111,564 9.8%
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NET INCOME 31,813 30,502 4.3% 131,830 146,090 (9.8%)
====================== ======================
Pro forma weighted shares outstanding 49,928 50,022 49,998 50,022
PRO FORMA BASIC EARNINGS PER SHARE $ 0.64 $ 0.61 4.5% $ 2.64 $ 2.92 (9.7%)
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Notes:
(1) Adjustment to reflect decrease in interest expense due to the repayment of
short term borrowings and a portion of the subordinated note from net
proceeds of the IPO and increase in interest expense due to refinancing the
balance of the subordinated note.
(2) Adjustment to reflect compensation expense paid in corporate form.
(3) Adjustment to reflect provision for income taxes in corporate form and
reverse actual unincorporated business tax and state and local taxes.
(4) Does not include $150.1 million of pre-tax, IPO related non-recurring
charges.
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NEUBERGER BERMAN INC.
AND NEUBERGER BERMAN MANAGEMENT INC.
COMBINED STATEMENT OF INCOME (UNAUDITED) 01/24/00 4:12 PM
FOR THE YEAR AND QUARTER ENDING DECEMBER 31, 1999 AND 1998
(IN THOUSANDS)
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HISTORICAL HISTORICAL
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER % CHANGE DECEMBER % CHANGE
1999 1998 FAV (UNFAV) 1999 1998 FAV (UNFAV)
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<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Investment advisory and administrative fees $ 90,495 $ 87,800 3.1% $ 370,383 $ 378,839 (2.2%)
Commissions 34,913 40,267 (13.3%) 142,082 145,969 (2.7%)
Interest 45,682 44,879 1.8% 160,022 164,782 (2.9%)
Principal transactions in securities 4,006 2,826 41.8% 10,003 6,324 58.2%
Clearance fees 2,922 2,626 11.3% 11,081 9,146 21.2%
Other income 522 1,361 (61.6%) 4,059 4,004 1.4%
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GROSS REVENUES 178,540 179,759 (0.7%) 697,630 709,064 (1.6%)
Interest expense 37,215 38,180 2.5% 133,769 137,329 2.6%
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NET REVENUES AFTER INTEREST EXPENSE 141,325 141,579 (0.2%) 563,861 571,735 (1.4%)
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OPERATING EXPENSES:
Employee compensation and benefits 196,788 44,674 (340.5%) 325,310 173,379 (87.6%)
Information technology 5,340 4,305 (24.0%) 19,172 15,634 (22.6%)
Rent and occupancy 4,102 3,431 (19.6%) 15,313 12,182 (25.7%)
Brokerage, clearing and exchange fees 2,353 2,698 12.8% 10,164 10,245 0.8%
Advertising and sales promotion 2,381 6,136 61.2% 9,259 14,707 37.0%
Distributor and fund administration 2,479 2,856 13.2% 10,386 12,433 16.5%
Professional fees 2,439 3,182 23.4% 9,276 11,550 19.7%
Depreciation and amortization 2,701 3,732 27.6% 10,532 8,716 (20.8%)
Other expenses 15,901 4,376 (263.4%) 31,077 18,432 (68.6%)
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TOTAL OPERATING EXPENSES 234,484 75,390 (211.0%) 440,489 277,278 (58.9%)
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NET INCOME (LOSS) BEFORE TAXES (93,159) 66,189 (240.7%) 123,372 294,457 (58.1%)
Taxes (27,239) 2,442 1215.4% (12,195) 9,506 228.3%
----------------------- -----------------------
NET INCOME (LOSS) $ (65,920) $ 63,747 (203.4%) $ 135,567 $ 284,951 (52.4%)
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NEUBERGER BERMAN INC.
AND NEUBERGER BERMAN MANAGEMENT INC.
STATEMENT OF INCOME BY SEGMENT (UNAUDITED) 1/24/2000 4:12PM
FOR THE YEAR AND QUARTER ENDING DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT FOR ASSETS UNDER MANAGEMENT)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AS OF OR FOR THE THREE AS OF OR FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
DECEMBER % CHANGE DECEMBER % CHANGE
1999 1998 FAV (UNFAV) 1999 1998 FAV (UNFAV)
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PRIVATE ASSET MANAGEMENT
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NET REVENUES AFTER INTEREST EXPENSE $ 65,718 $ 60,718 8.2% $ 260,114 $ 237,933 9.3%
NET INCOME BEFORE TAXES $ 32,589 $ 30,430 7.1% $ 129,331 $ 121,357 6.6%
ASSETS UNDER MANAGEMENT (IN MILLIONS) $ 21,112 $ 17,905 17.9% $ 21,112 $ 17,905 17.9%
MARKET FLOWS (IN MILLIONS)
Net assets additions (withdrawals) $ (16) $ (134) $ 337 $ 76
Market appreciation 1,997 2,549 2,870 2,276
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Total increase $ 1,981 $ 2,415 $ 3,207 $ 2,352
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MUTUAL FUNDS & INSTITUTIONAL
- ----------------------------
NET REVENUES AFTER INTEREST EXPENSE $ 52,714 $ 59,855 (11.9%) $ 225,516 $ 258,344 (12.7%)
NET INCOME BEFORE TAXES $ 17,476 16,689 4.7% $ 84,515 113,586 (25.6%)
ASSETS UNDER MANAGEMENT (IN MILLIONS) $ 33,287 $ 37,682 (11.7%) $ 33,287 $ 37,682 (11.7%)
MARKET FLOWS (IN MILLIONS)
Net assets withdrawals $ (2,128) $ (1,309) $ (7,661) $ (2,173)
Market appreciation 3,090 4,763 3,266 1,897
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Total increase (decrease) $ 962 $ 3,454 $ (4,395) $ (276)
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PROFESSIONAL SECURITIES SERVICES
- --------------------------------
NET REVENUES AFTER INTEREST EXPENSE $ 23,014 $ 21,689 6.1% $ 81,468 $ 78,159 4.2%
NET INCOME BEFORE TAXES $ 6,043 $ 6,677 (9.5%) $ 18,659 $ 22,711 (17.8%)
TOTAL
- -----
NET REVENUES AFTER INTEREST EXPENSE $ 141,446 $ 142,262 (0.6%) $ 567,098 $ 574,436 (1.3%)
NET INCOME BEFORE TAXES $ 56,108 $ 53,796 4.3% $ 232,505 $ 257,654 (9.8%)
ASSETS UNDER MANAGEMENT (IN MILLIONS) $ 54,399 $ 55,587 (2.1%) $ 54,399 $ 55,587 (2.1%)
MARKET FLOWS (IN MILLIONS)
Net assets withdrawals $ (2,144) $ (1,443) $ (7,324) $ (2,097)
Market appreciation $ 5,087 $ 7,312 $ 6,136 $ 4,173
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Total increase (decrease) $ 2,943 $ 5,869 $ (1,188) $ 2,076
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</TABLE>
8
