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) August 4, 2000
--------------------------
First Albany Companies Inc
--------------------------------------------------
(Exact name of registrant as specified in charter)
New York 014140 22-2655804
--------------------------- ---------------------- ---------------
State or other jurisdiction Commission file number (IRS employer
of incorporation) identification No.)
30 S. Pearl Street, Albany, New York 12207
--------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (518) 447-8500
</PAGE>
<PAGE>
Item 2. Acquisition or Disposition of Assets.
------ -------------------------------------
On May 9, 2000, the Company announced that it has signed an agreement for
the sale of the assets of its Private Client Group, its retail brokerage
branch network, to First Union Securities, a subsidiary of First Union
Corp. The transaction closed on August 4, 2000. The amount received was
approximately $87 million (adjusted from previously announced $100 million
due to attrition related to financial consultants production) plus certain
assets purchased for $11 million less certain liabilities assumed for
approximately ($6) million and less the assumption of certain long term
deferred compensation plans totaling about ($17) million. In addition, the
Company and First Union Securities agreed to enhance the Financial
Consultant retention program. The Company's contribution to this plan was
approximately ($8) million. Finally, all customer assets and liabilities
associated with this business will be transferred to First Union
Securities.
Also, the Company has agreed to buy back approximately 800,000 First
Albany Companies Inc. shares (the "Shares") offered for sale by the
financial consultants employed by the Private Client Group, who have
accepted employment with First Union Securities for approximately $16
million.
Item 7. Financial Statements and Exhibits
------ ---------------------------------
(b) Pro Forma Financial Information
(1) Introduction to Pro Forma Financial Information (unaudited)
(2) Pro Forma Consolidated Statement of Earnings (unaudited) for the six
months ended June 30, 2000.
(3) Pro Forma Consolidated Statement of Earnings (unaudited) for the six
months ended June 30, 1999.
(4) Pro Forma Consolidated Statement of Earnings (unaudited) for the year
ended December 31, 1999.
(5) Pro Forma Consolidated Statement of Earnings (unaudited) for the year
ended December 31, 1998.
(6) Pro Forma Consolidated Statement of Earnings (unaudited) for the year
ended December 31, 1997.
(7) Pro Forma Consolidated Balance Sheet (unaudited) as of June 30, 2000.
(8) Notes to Pro Forma Financial Information (unaudited).
(c) Agreement to Sell First Albany Corporation's Retail Branch Network and
Correspondent Clearing Business dated May 8, 2000 between First Albany
Companies Inc., First Albany Corporation and First Union Securities,
Inc. (filed as Exhibit 10.26 for form 10Q for quarter ended March 31,
2000)
</PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST ALBANY COMPANIES INC.
Date: August 21, 2000 by: /s/STEVEN R JENKINS
---------------- --------------------------------
Name: Steven R. Jenkins
Title: Chief Financial Officer
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
INDEX TO PRO FORMA FINANCIAL INFORMATION
UNAUDITED
Introduction to Pro Forma Financial Information (unaudited)
Pro Forma Consolidated Statement of Earnings (unaudited) for six months
ended June 30, 2000.
Pro Forma Consolidated Statement of Earnings (unaudited) for six months
ended June 30, 1999.
Pro Forma Consolidated Statement of Earnings (unaudited) for the year ended
December 31, 1999.
Pro Forma Consolidated Statement of Earnings (unaudited) for the year ended
December 31, 1998.
Pro Forma Consolidated Statement of Earnings (unaudited) for the year ended
December 31, 1997.
Pro Forma Consolidated Balance Sheet (unaudited) as of June 30, 2000.
Notes to Pro Forma Financial Information (unaudited).
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION
FOR SIX MONTHS ENDED JUNE 30, 2000
UNAUDITED
The Pro Forma Consolidated Statements of Earnings for the six months ended
June 30, 2000 and June 30, 1999 and for the fiscal year ended December 31,
1999, December 31, 1998, and December 31, 1997 present our consolidated
results of operations, assuming that the sale of the Private Client Group
occurred as of the beginning of the periods presented. The Pro Forma
Consolidated Balance Sheet as of June 30, 2000 presents our consolidated
financial position assuming that the sale had been completed as of that
date.
The Pro Forma Financial Information should be read in conjunction with our
historical financial statements and related notes included in our 1999
Annual Report on Form 10-K and our Quarterly Report filed on Form 10-Q for
the quarter ended June 30, 2000. The Pro Forma Financial Information
presented is for informational purposes only and is not intended to be
indicative of the results of operations that would have occurred had the
sale been consummated as of the beginning of the periods presented, nor is
it intended to be indicative of our future results of operations or
financial position.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR SIX MONTHS ENDED JUNE 30, 2000
UNAUDITED
<TABLE>
(In thousands Discontinued Continuing Pro Forma
of dollars) Actual Operations(a) Operations Adjustments(b) Pro Forma
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
OPERATING REVENUES $109,725 $54,627 $55,098 $ 0 $55,098
INTEREST INCOME 42,690 2,411 40,279 40,279
--------------------------------------------------------------------------------------
TOTAL REVENUES 152,415 57,038 95,377 0 95,377
--------------------------------------------------------------------------------------
INTEREST EXPENSE 36,798 232 36,566 (1,316) 35,250
---------------------------------------------------------------------------------------
NET REVENUES 115,617 56,806 58,811 1,316 60,127
---------------------------------------------------------------------------------------
EXPENSES (EXCLUDING
INTEREST)
COMPENSATION AND
BENEFITS 81,825 37,863 43,962 43,962
CLEARING, SETTLEMENT &
BROKERAGE 2,583 1,051 1,532 1,532
COMMUNICATIONS & DATA
PROCESSING 7,575 3,049 4,526 4,526
OCCUPANCY AND
DEPRECIATION 6,808 4,086 2,722 2,722
SELLING 5,612 2,789 2,823 2,823
OTHER 5,671 3,720 1,951 1,951
---------------------------------------------------------------------------------------
TOTAL EXPENSES EXCL
INTEREST 110,074 52,558 57,516 0 57,516
---------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 5,543 4,248 1,295 1,316 2,611
EQUITY IN LOSSES OF
AFFILIATES (1,962) (1,962) (1,962)
---------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES 3,581 4,248 (667) 1,316 649
INCOME TAX EXPENSE
(RECOVERY) 1,605 1,786 (181) 540 359
---------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,976 $ 2,462 ($ 486) $ 776 $ 290
=======================================================================================
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $0.25 ($0.06) $0.04
DILUTED EARNINGS PER
SHARE $0.21 ($0.05) $0.03
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING:
BASIC................. 8,001,106 8,001,106 8,001,106
DILUTIVE.............. 9,362,933 9,362,933 9,362,933
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR SIX MONTHS ENDED JUNE 30, 1999
UNAUDITED
<TABLE>
(In thousands Discontinued Continuing Pro Forma
of dollars) Actual Operations(a) Operations Adjustments(b) Pro Forma
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
OPERATING REVENUES $91,343 $47,360 $43,983 $ 0 $43,983
INTEREST INCOME 26,471 2,138 24,333 24,333
---------------------------------------------------------------------------------------
TOTAL REVENUES 117,814 49,498 68,316 0 68,316
---------------------------------------------------------------------------------------
INTEREST EXPENSE 21,674 163 21,511 (1,120) 20,391
---------------------------------------------------------------------------------------
NET REVENUES 96,140 49,335 46,805 1,120 47,925
---------------------------------------------------------------------------------------
EXPENSES (EXCLUDING
INTEREST)
COMPENSATION AND
BENEFITS 69,029 31,021 38,008 38,008
CLEARING, SETTLEMENT &
BROKERAGE 2,494 1,087 1,407 1,407
COMMUNICATIONS & DATA
PROCESSING 7,071 2,908 4,163 4,163
OCCUPANCY AND
DEPRECIATION 6,550 3,998 2,552 2,552
SELLING 4,511 1,885 2,626 2,626
OTHER 5,036 2,996 2,040 2,040
---------------------------------------------------------------------------------------
TOTAL EXPENSES EXCL
INTEREST 94,691 43,895 50,796 0 50,796
---------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 1,449 5,440 (3,991) 1,120 (2,871)
EQUITY IN LOSSES OF
AFFILIATES (1,416) (1,416) (1,416)
---------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES 33 5,440 (5,407) 1,120 (4,287)
INCOME TAX EXPENSE
(RECOVERY) 13 2,105 (2,092) 459 (1,633)
---------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 20 $ 3,335 ($ 3,315) $ 661 ($ 2,654)
=======================================================================================
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $0.00 ($0.43) ($0.35)
DILUTED EARNINGS PER
SHARE $0.00 ($0.39) ($0.31)
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING:
BASIC.................. 7,641,684 7,641,684 7,641,684
DILUTIVE............... 8,497,669 8,497,669 8,497,669
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE PAST YEAR ENDED DECEMBER 31, 1999
UNAUDITED
<TABLE>
In thousands Discontinued Continuing Pro Forma
of dollara) Actual Operations(a) Operations Adjustments(b) Pro Forma
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------
OPERATING REVENUES $190,776 $92,321 $ 98,455 $ 0 $98,455
INTEREST INCOME 61,551 4,463 57,088 57,088
----------------------------------------------------------------------------------------
TOTAL REVENUES 252,327 96,784 155,543 0 155,543
----------------------------------------------------------------------------------------
INTEREST EXPENSE 51,931 385 51,546 (2,240) 49,306
----------------------------------------------------------------------------------------
NET REVENUES 200,396 96,399 103,997 2,240 106,237
----------------------------------------------------------------------------------------
EXPENSES (EXCLUDING
INTEREST)
COMPENSATION AND
BENEFITS 143,776 61,451 82,325 82,325
CLEARING, SETTLEMENT &
BROKERAGE 4,970 2,075 2,895 2,895
COMMUNICATIONS & DATA
PROCESSING 14,151 5,800 8,351 8,351
OCCUPANCY AND
DEORECIATION 13,376 8,069 5,307 5,307
SELLING 9,527 4,053 5,474 5,474
OTHER 10,194 5,824 4,370 4,370
----------------------------------------------------------------------------------------
TOTAL EXPENSES EXCL
INTEREST 195,994 87,272 108,722 0 108,722
----------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 4,402 9,127 (4,725) 2,240 (2,485)
EQUITY IN LOSSES OF
AFFILIATES (3,629) (3,629) (3,629)
----------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES 773 9,127 (8,354) 2,240 (6,114)
INCOME TAX EXPENSE
(RECOVERY) 360 3,854 (3,494) 918 (2,576)
----------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 413 $ 5,273 ($ 4,860) $ 1,322 ($ 3,538)
========================================================================================
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $0.05 ($0.63) ($0.46)
DILUTIVE EARNINGS PER
SHARE $0.05 ($0.56) ($0.41)
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING:
BASIC.................. 7,664,677 7,664,677 7,664,677
DILUTIVE............... 8,661,382 8,661,382 8,661,382
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE PAST YEAR ENDED DECEMBER 31, 1998
UNAUDITED
<TABLE>
(In thousands Discontinued Continuing Pro Forma
of dollars) Actual Operations(a) Operations Adjustments(b) Pro Forma
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
OPERATING REVENUES $179,357 $85,227 $94,130 $ 0 $94,130
INTEREST INCOME 48,697 3,848 44,849 44,849
---------------------------------------------------------------------------------------
TOTAL REVENUES 228,054 89,075 138,979 0 138,979
---------------------------------------------------------------------------------------
INTEREST EXPENSE 39,946 307 39,639 (2,276) 37,363
---------------------------------------------------------------------------------------
NET REVENUES 188,108 88,768 99,340 2,276 101,616
---------------------------------------------------------------------------------------
EXPENSES (EXCLUDING
INTEREST)
COMPENSATION AND
BENEFITS 130,169 58,372 71,797 71,797
CLEARING, SETTLEMENT &
BROKERAGE 4,347 2,127 2,220 2,220
COMMUNICATIONS & DATA
PROCESSING 13,852 6,017 7,835 7,835
OCCUPANYC AND
DEPRECIATION 13,420 7,524 5,896 5,896
SELLING 7,863 3,313 4,550 4,550
OTHER 9,837 6,291 3,546 3,546
---------------------------------------------------------------------------------------
TOTAL EXPENSES EXCL
INTEREST 179,488 83,644 95,844 0 95,844
---------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 8,620 5,124 3,496 2,276 5,772
EQUITY IN LOSSES OF
AFFILIATES (1,488) (1,488) (1,488)
---------------------------------------------------------------------------------------
INCOME (LOSS)BEFORE INCOME
TAXES 7,132 5,124 2,008 2,276 4,284
INCOME TAX EXPENSE
(RECOVERY) 2,794 2,608 186 933 1,119
---------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 4,338 $ 2,516 $ 1,822 $ 1,343 $ 3,165
=======================================================================================
EARNING PER SHARE:
BASIC EARNINGS PER SHARE $0.58 $0.24 $0.42
DILUTIVE EARNINGS PER
SHARE $0.52 $0.22 $0.38
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING:
BASIC................. 7,536,153 7,536,153 7,536,153
DILUTIVE.............. 8,275,118 8,275,118 8,275,118
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE PAST YEAR ENDED DECEMBER 31, 1997
UNAUDITED
<TABLE>
(In thousands Discontinued Continuing Pro Forma
of dollars) Actual Operation(a) Operations Adjustments(b) Pro Forma
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
OPERATING REVENUES $146,330 $77,251 $69,079 $ 0 $69,079
INTEREST INCOME 45,474 1,646 43,828 43,828
---------------------------------------------------------------------------------------
TOTAL REVENUES 191,804 78,897 112,907 0 112,907
---------------------------------------------------------------------------------------
INTEREST EXPENSE 38,615 248 38,367 (2,380) 35,987
---------------------------------------------------------------------------------------
NET REVENUES 153,189 78,649 74,540 2,380 76,920
---------------------------------------------------------------------------------------
EXPENSES (EXCLUDING
INTEREST)
COMPENSATION AND
BEBEFITS 105,080 49,710 55,370 55,370
CLEARING, SETTLEMENT &
BROKERGAE 3,358 1,966 1,392 1,392
COMMUNICATIONS & DATA
PROCESSING 12,872 5,634 7,238 7,238
OCCUPANCY AND
DEPRECIATION 13,203 7,433 5,770 5,770
SELLING 8,027 3,118 4,909 4,909
OTHER 8,915 4,723 4,192 4,192
---------------------------------------------------------------------------------------
TOTAL EXPENSES EXCL
INTEREST 151,455 72,584 78,871 0 78,871
---------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 1,734 6,065 (4,331) 2,380 (1,951)
EQUITY IN INCOME OF
AFFILIATES 1,168 1,168 1,168
---------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES 2,902 6,065 (3,163) 2,380 (783)
INCOME TAX EXPENSE
(RECOVERY) 1,251 2,611 (1,360) 976 (384)
---------------------------------------------------------------------------------------
INCOME BEFORE
EXTRAORDINARY GAIN 1,651 3,454 (1,803) 1,404 (399)
EXTRAORDINARY GAIN, NET
OF TAXES 305 305 305
---------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,956 $ 3,454 ($ 1,498) $ 1,404 ($ 94)
=======================================================================================
BASIC EARNINGS PER SHARE:
INCOME BEFORE
EXTRAORDINARY ITEMS $0.23 ($0.25) ($0.05)
EXTRAORDINARY GAIN 0.04 0.04 0.04
---------------------------------------------------------------------------------------
NET INCOME (LOSS) $0.27 ($0.21) ($0.01)
=======================================================================================
DILUTIVE EARNINGS PER SHARE:
INCOME BEFORE
EXTRAORDINARY ITEMS $0.21 ($0.22) ($0.05)
EXTRAORDINARY GAIN 0.04 0.04 0.04
---------------------------------------------------------------------------------------
NET INCOME (LOSS) $0.25 ($0.18) ($0.01)
=======================================================================================
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE PAST YEAR ENDED DECEMBER 31, 1997
UNAUDITED
(CONTINUED)
<TABLE>
<S> <C> <C> <C>
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING:
BASIC.................. 7,314,144 7,314,144 7,314,144
DILUTIVE............... 8,026,907 8,026,907 8,026,907
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
UNAUDITED
<TABLE>
(In thousands Discontinued Pro Forma
of dollars) Actual Operations(a) Restated Adjustments(c,d) Pro Forma
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
ASSETS
------
Cash $ 1,661 $ $ 1,661 $ $ 1,661
Securities purchased under
agreement to resell 45,679 45,679 45,679
Securities borrowed 880,283 880,283 880,283
Receivables from 0
Brokers, dealers,
and clearing agencies 5,005 5,005 5,005
Customers 282,789 254,524 28,265 28,265
Others 28,809 28,809 28,809
Securities owned 193,642 193,642 193,642
Investments 21,981 21,981 21,981
Office equipment and
leaseholds, net 10,668 2,266 8,402 8,402
Net assets of discontinued
operations 0 (227,483) 227,483 (227,483) 0
Other assets 32,021 12,363 19,658 19,658
------------------------------------------------------------------------------------
Total Assets $1,502,538 $ 41,670 $1,460,868 ($227,483) $1,233,385
====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABLILTIES
-----------
Short-term bank loans $ 188,559 $ $ 188,559 ($ 92,483) $ 96,076
Securities loaned 1,059,161 1,059,161 (175,000) 884,161
Payables to:
Brokers, dealers, and
clearing agencies 10,754 10,754 10,754
Customers 38,512 34,661 3,851 3,851
Others 21,698 21,698 21,698
Securities sold but not
yet purchased 68,599 68,599 68,599
Accounts payable 3,579 3,579 3,579
Accrued compensation 20,041 3,687 16,354 16,354
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
UNAUDITED
(CONTINUED)
<TABLE>
<S> <C> <C> <C>
Accrued expenses 12,016 12,016 12,016
Income taxes payable 1,234 1,234 1,234
Deferred tax liability 120 120 120
Notes Payable 4,415 4,415 4,415
Obligations under
capitalized leases 4,714 1,332 3,382 3,382
------------------------------------------------------------------------------------
Total liabilities $1,433,402 $ 39,680 $1,393,722 ($267,483) $1,126,239
====================================================================================
COMMITMENTS AND CONTIGENCIES
Subordinated debt 6,000 6,000 6,000
STOCKHOLDERS' EQUITY
--------------------
Common stock 85 85 85
Additional paid in
capital 77,123 77,123 77,123
Deferred compensation 1,990 1,990 0
Unamortized value of
restricted stock (2,771) (2,771) (2,771)
Retained earnings
(deficit) (11,058) (11,058) 40,000 28,942
Less treasure stock at
cost (2,233) (2,233) (2,233)
------------------------------------------------------------------------------------
Total Stockholders'
Equity 63,136 1,990 61,146 40,000 101,146
------------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $1,502,538 $ 41,670 $1,460,868 ($227,483) $1,233,385
====================================================================================
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC
NOTES TO PRO FORMA FINANCIAL INFORMATION
UNAUDITED
(a) The "Discontinued Operations" columns represent the results of
operations of the Private Client Group, adjusted to properly present such
results as a discontinued operation. Interest expense has not been
allocated to discontinued operations.
(b) Gives effect to the pro forma reduction of interest expense to reflect
the application of the estimated net proceeds from the sale, of
approximately $40 million, as a reduction of short-term debt as if the
pending sale had been completed as of the beginning of the periods
presented. The calculation reflects weighted average interest rates of
6.6% and 5.6% for the six months ended June 30, 2000 and June 30, 1999
respectively, and 5.6%, 5.7% and 5.95% for the fiscal years ended
December 31, 1999, December 31, 1998 and December 31, 1997 respectively.
The related tax impact of the pro forma interest expense is included
within taxes on earnings.
(c) Elimination of net assets and related liabilities as if the sale had
been completed at the balance sheet date.
(d) We estimate that we will receive approximately $40 million in net
proceeds from the sale after federal and state taxes and restructuring
charges related to the divestiture of the Private Client Group.
(e) All earnings per share and shares outstanding have been restated for all
dividends declared.
