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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
DATE OF REPORT (Date of earliest event reported): April 13, 2000
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
(Address of principal executive offices)
(212) 476-9000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
First Quarter 2000 Financial Results
On April 13, 2000, Neuberger Berman Inc. ("Corporation") reported
results of operations for the three months ended March 31, 2000. A
copy of the press release issued by the Corporation is attached as
Exhibit 99.1 and incorporated herein by reference.
Also, on April 13, 2000 the Corporation announced that its Board of
Directors had declared the Corporation's dividend for the first
quarter of 2000, in the amount of $0.10 per share. The dividend will
be payable on May 16, 2000 to stockholders of record at the close of
business on May 2, 2000. A copy of the press release issued by the
Corporation is attached as Exhibit 99.2 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The Exhibits listed on the Exhibit Index 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: April 17, 2000 By: /s/ Jeffrey B. Lane
---------------------------------
Jeffrey B. Lane
President and
Chief Executive Officer
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EXHIBIT INDEX
99.1 Press release issued by the Corporation on April 13, 2000, with respect
to results of operations for the three months ended March 31, 2000.
99.2 Press release issued by the Corporation on April 13, 2000, with respect
to the declaration of the Corporation's first quarter dividend.
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Exhibit 99.1
NEUBERGER BERMAN INC. [LOGO]
605 Third Avenue
New York, NY 10158-3698
Tel 212.476.9000
PRESS RELEASE
Contact: Robert Matza
Executive Vice President and Chief Administrative Officer
(212) 476-9808
FOR IMMEDIATE RELEASE
NEUBERGER BERMAN REPORTS FIRST QUARTER NET OPERATING INCOME
OF $34.1 MILLION, OR $0.69 PER SHARE,
EXCLUDING A TAX BENEFIT OF $0.12 PER SHARE
TOTAL ASSETS UNDER MANAGEMENT REACH $55.5 BILLION
$21.8 BILLION RECORD ASSETS IN PRIVATE ASSET MANAGEMENT
- --------------------------------------------------------------------------------
New York, NY, April 13, 2000...Neuberger Berman (NYSE: NEU) today reported net
operating income of $34.1 million, or $0.69 per share, excluding a financial
statement tax benefit of $0.12 per share, for the first quarter ended March 31,
2000, the Company's first full quarter since its initial public offering was
completed on October 13, 1999. This compares with pro forma net income from
operations of $34.7 million, or $0.69 per share, in the prior year period. All
pro forma results for 1999 assume that the Company's initial public offering,
reorganization and other related transactions had occurred at the beginning of
that year.
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Net income for the current quarter of $40.2 million, or $0.81 per share,
reflects a financial statement tax benefit related to the change in the price of
the Company's stock from December 31, 1999 to March 31, 2000, in connection with
the Company's Employee Defined Contribution Stock Incentive Plan. Excluding the
financial statement tax benefit, the effective tax rate was 43.3%.
Operating results also include a pre-tax charge of approximately $750,000 for
employees' severance payments related to a decision to outsource certain
administrative activities in mutual fund operations. The Company believes this
will result in greater efficiency and future cost savings. Net revenues after
interest expense for the quarter were $155.4 million versus pro forma net
revenues after interest expense of $145.6 million in the prior year period.
Assets under management reached $55.5 billion at quarter-end, up from $54.4
billion at December 31, 1999 and $55.0 billion at March 31, 1999.
As previously announced, the Company has authorized a $50 million common stock
repurchase program. In the quarter, 376,685 shares of stock were repurchased for
approximately $9.4 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, "The operating
results for this quarter are beginning to reflect the invigorating effect of our
recent public offering, as we carry through on our strategy to grow assets and
diversify our products and investment styles. Assets under management in the
Private Asset Management segment reached a record level of $21.8
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billion. Our growing national sales force of 32 Client Consultants generated
$206 million in new assets in the quarter, up from $172 million in the fourth
quarter of 1999. Strong performance and a more diversified product line are
showing results, as evidenced by the 67% increase this quarter in our Growth
Equity Group's assets to $4.5 billion, up from $2.7 billion at December 31,
1999. We continue to develop new products, and have filed a technology fund,
which is expected to begin operations in May this year, and a new institutional
cash fund, which is expected to begin operations shortly thereafter.
"We are particularly pleased with the improvement in performance of our mutual
funds and sub-advised accounts. All but two of our equity mutual funds
outperformed their benchmarks in the quarter, some by a significant margin, and
net cash outflows from mutual funds and sub-advised accounts declined
substantially to $498 million, down from $1.5 billion in the prior quarter.
Institutional separate accounts experienced $640 million of net cash outflows in
the quarter, half of which were in fixed income separate accounts. Although the
equity markets continue to be volatile, we remain committed to our goal of
improving investment performance.
"Neuberger Berman's strong financial base and management structure enable us to
remain focused on our five key initiatives: diversifying the breadth of products
and services we offer; enhancing client service; continually improving
investment performance; increasing assets under management; and building
stockholder value."
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PRIVATE ASSET MANAGEMENT
NET REVENUES: $73.5 MILLION VS. $63.1 MILLION*, UP 16.5%
PRETAX INCOME: $36.2 MILLION VS. $32.4 MILLION*, UP 11.8%
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Assets under management in the Private Asset Management segment reached a record
$21.8 billion at March 31, 2000, an increase of 3.3% in the first quarter and up
14.9% from $19.0 billion at March 31, 1999. This segment, which provides asset
management services to individuals, families and small institutions, as well as
a range of estate and retirement planning and trust services through its trust
companies, accounted for 60.1% of consolidated pretax operating income for the
quarter, compared to 52.9% in the prior year period.
The Company continues its focus on generating asset growth in this segment
through expansion of the national sales force of Client Consultants and
attracting investment teams with existing client relationships. The Company's
ability to offer diversified styles of investment management to clients,
combined with solid investment results, have been key drivers of this segment's
strong performance.
* Pro forma
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MUTUAL FUND AND INSTITUTIONAL
NET REVENUES: $55.8 MILLION VS. $62.5 MILLION*, DOWN 10.8%
PRETAX INCOME: $16.5 MILLION VS. $23.8 MILLION*, DOWN 30.6%
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Assets under management in the Mutual Fund and Institutional segment were $33.7
billion at March 31, 2000, as compared to $33.3 billion at year end 1999, and
down 6.4% from $36.0 billion at March 31, 1999. Although some products continued
to experience net cash outflows, the total $1.2 billion outflow recorded in the
quarter represented a substantial decline from the $2.1 billion of net outflows
in the fourth quarter of 1999. The Company remains optimistic about cash flow in
this segment over time, primarily because of its more fully diversified product
line and improving investment performance.
Overall, the performance of the Company's mutual funds in the quarter was
strong. The market environment became more favorable for its larger value-style
funds, and the performance of the Company's small, mid and large cap growth
funds and international fund continued to be impressive.
* PRO FORMA
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PROFESSIONAL SECURITIES SERVICES
NET REVENUES: $26.1 MILLION VS. $20.0 MILLION*, UP 30.5%
PRETAX INCOME: $7.5 MILLION VS. $5.1 MILLION*, UP 48.9%
- --------------------------------------------------------------------------------
The increase in net revenues in the Professional Securities Services segment
versus the prior year quarter is primarily attributable to favorable results
from market-maker activities and increased revenues from Professional Investor
Clearing Services activities.
* * *
Neuberger Berman is an investment advisory company that has provided clients
with a broad range of investment products, services and strategies for more than
60 years. The company engages in private asset management, mutual funds and
institutional management, and professional securities services for individuals,
institutions, corporations, pension funds, foundations and endowments. Its
website, and this news release, can be accessed at WWW.NB.COM.
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.
* Pro forma
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NEUBERGER BERMAN INC. AND SUBSIDIARIES
CONSOLIDATED AND PRO FORMA CONDENSED STATEMENTS OF INCOME (UNAUDITED) FOR THE
QUARTERS ENDING MARCH 31, 2000, DECEMBER 31, 1999 AND MARCH 31,1999 (IN
THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------- FAV (UNFAV)
ACTUAL PRO FORMA (1) CHANGE FROM
-------- ---------------------- ------------------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31,
2000 1999 1999 1999 1999
-------- -------- -------- -------- --------
REVENUES:
<S> <C> <C> <C> <C> <C>
Investment advisory and administrative fees (2) $ 96,951 $ 92,566 $ 94,606 4.7% 2.5%
Commissions 39,828 34,913 38,351 14.1% 3.9%
Interest 51,025 45,682 40,251 11.7% 26.8%
Principal transactions in securities 5,076 4,006 2,085 26.7% 143.5%
Clearance fees 3,622 2,922 2,813 24.0% 28.8%
Other income 838 522 1,069 60.5% (21.6%)
-------- -------- --------
GROSS REVENUES 197,340 180,611 179,175 9.3% 10.1%
Interest expense 41,928 37,094 33,559 (13.0%) (24.9%)
-------- -------- --------
NET REVENUES AFTER INTEREST EXPENSE 155,412 143,517 145,616 8.3% 6.7%
-------- -------- --------
OPERATING EXPENSES:
Employee compensation and benefits 65,933 57,788 57,305 (14.1%) (15.1%)
Information technology 5,221 5,340 4,182 2.2% (24.8%)
Rent and occupancy 4,164 4,102 3,145 (1.5%) (32.4%)
Brokerage, clearing and exchange fees 2,843 2,353 3,021 (20.8%) 5.9%
Advertising and sales promotion 2,452 2,381 2,716 (3.0%) 9.7%
Distribution and fund administration (2) 4,392 4,550 5,219 3.5% 15.8%
Professional fees 2,277 2,439 2,364 6.6% 3.7%
Depreciation and amortization 2,460 2,701 2,095 8.9% (17.4%)
Other expenses 5,452 5,755 4,364 5.3% (24.9%)
-------- -------- --------
TOTAL OPERATING EXPENSES 95,194 87,409 84,411 (8.9%) (12.8%)
-------- -------- --------
NET INCOME BEFORE TAXES 60,218 56,108 61,205 7.3% (1.6%)
Provision for income taxes 19,977(3) 24,295 26,502 17.8% 24.6%
-------- -------- --------
NET INCOME $ 40,241 $ 31,813 $ 34,703 26.5% 16.0%
======== ======== ========
NET INCOME PER COMMON SHARE
Basic and diluted:
Net income per share $ 0.81 $ 0.64 $ 0.69
Weighted average common shares
outstanding 49,476 49,928 50,022
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Notes:
(1) Given the firm's conversion from partnership to corporation in the fourth
quarter of 1999, management believes that the best measure by which to
assess the firm's performance in 1999 is operating results on a pro forma
basis, as if the initial public offering, reorganization and other related
transactions had taken place at the beginning of 1999.
The Pro Forma Condensed Statement of Income gives effect to the following
items:
- 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.
- Adjustment to reflect compensation expense paid in corporate form.
- Adjustment to reflect provision for income taxes in corporate form and
reverse actual unincorporated business tax and state and local taxes.
(2) A reclassification was recorded to gross up administrative fees received by
the Company from their mutual funds and paid to third party administrators
as fund administration expense, previously reported net.
(3) Provision for income taxes for the current quarter reflects a financial
statement tax benefit of $6,097 related to the change in the price of the
Company's stock from December 31, 1999 to March 31, 2000, in connection
with the Company's Employee Defined Contribution Incentive Plan.
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NEUBERGER BERMAN INC. AND SUBSIDIARIES
STATEMENT OF INCOME BY SEGMENT (UNAUDITED)
FOR THE QUARTERS ENDING MARCH 31, 2000, DECEMBER 31, 1999 AND MARCH 31, 1999 (IN
THOUSANDS, EXCEPT FOR ASSETS UNDER MANAGEMENT)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------- FAV (UNFAV)
ACTUAL PRO FORMA CHANGE FROM
--------- ---------------------------- --------------------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31,
2000 1999 1999 1999 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PRIVATE ASSET MANAGEMENT
NET REVENUES AFTER INTEREST EXPENSE $ 73,539 $ 65,718 $ 63,100 11.9% 16.5%
NET INCOME BEFORE TAXES $ 36,173 $ 32,589 $ 32,361 11.0% 11.8%
ASSETS UNDER MANAGEMENT (IN MILLIONS) $ 21,803 $ 21,112 $ 18,983 3.3% 14.9%
MARKET FLOWS (IN MILLIONS)
Net assets additions (withdrawals) $ 53 $ (16) $ 24 N/A 120.8%
Market appreciation 638 1,997 1,054 (68.1%) (39.5%)
--------- --------- ---------
Total increase $ 691 $ 1,981 $ 1,078 (65.1%) (35.9%)
========= ========= =========
MUTUAL FUNDS & INSTITUTIONAL
NET REVENUES AFTER INTEREST EXPENSE $ 55,754 $ 54,785 $ 62,506 1.8% (10.8%)
NET INCOME BEFORE TAXES $ 16,504 $ 17,476 $ 23,778 (5.6%) (30.6%)
ASSETS UNDER MANAGEMENT (IN MILLIONS) $ 33,667 $ 33,287 $ 35,980 1.1% (6.4%)
MARKET FLOWS (IN MILLIONS)
Net assets withdrawals $ (1,211) $ (2,128) $ (2,087) 43.1% 42.0%
Market appreciation 1,591 3,090 385 (48.5%) 313.2%
--------- --------- ---------
Total increase (decrease) $ 380 $ 962 $ (1,702) (60.5%) N/A
========= ========= =========
PROFESSIONAL SECURITIES SERVICES
NET REVENUES AFTER INTEREST EXPENSE $ 26,119 $ 23,014 $ 20,010 13.5% 30.5%
NET INCOME BEFORE TAXES $ 7,541 $ 6,043 $ 5,066 24.8% 48.9%
TOTAL
NET REVENUES AFTER INTEREST EXPENSE $ 155,412 $ 143,517 $ 145,616 8.3% 6.7%
NET INCOME BEFORE TAXES $ 60,218 $ 56,108 $ 61,205 7.3% (1.6%)
ASSETS UNDER MANAGEMENT (IN MILLIONS) $ 55,470 $ 54,399 $ 54,963 2.0% 0.9%
MARKET FLOWS (IN MILLIONS)
Net assets withdrawals $ (1,158) $ (2,144) $ (2,063) 46.0% 43.9%
Market appreciation $ 2,229 $ 5,087 $ 1,439 (56.2%) 54.9%
--------- --------- ---------
Total increase (decrease) $ 1,071 $ 2,943 $ (624) (63.6%) N/A
--------- --------- ---------
</TABLE>
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Exhibit 99.2
[NEUBERGER BERMAN LETTERHEAD]
PRESS RELEASE
Contact: Robert Matza
Executive Vice President and Chief Administrative Officer
(212) 476-9808
FOR IMMEDIATE RELEASE
NEUBERGER BERMAN INC. DECLARES DIVIDEND
FOR FIRST QUARTER 2000
New York, April 13, 2000: Neuberger Berman Inc. (NYSE:NEU) today announced
that its Board of Directors has declared the company's dividend for the first
quarter of 2000, in the amount of $0.10 per share. The dividend will be
payable on May 16, 2000 to stockholders of record at the close of business on
May 2, 2000.
Neuberger Berman is an investment advisory firm that, through its
subsidiaries, has provided clients with a broad range of investment products,
services, and strategies for over 60 years. Neuberger Berman's web site can
be viewed at www.nb.com.
# # # # #
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.
1
