-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RyF3/oLLWgzEx29GOS8zAqHBLLxXNn/iI0JOM+2M4RuHjvualeChVGS1xn3Idg3/ JHBH9yktmhpkzWN64z7ttQ== /in/edgar/work/20000814/0000928385-00-002244/0000928385-00-002244.txt : 20000921 0000928385-00-002244.hdr.sgml : 20000921 ACCESSION NUMBER: 0000928385-00-002244 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRIEDMAN BILLINGS RAMSEY GROUP INC CENTRAL INDEX KEY: 0001048750 STANDARD INDUSTRIAL CLASSIFICATION: [6211 ] IRS NUMBER: 541837743 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13731 FILM NUMBER: 699513 BUSINESS ADDRESS: STREET 1: 1001 19TH STREET N CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7033129500 MAIL ADDRESS: STREET 1: 1001 NINETEENTH ST N CITY: ARLINGTON STATE: VA ZIP: 22209 10-Q 1 0001.txt FORM 10-Q 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 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 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
(Unaudited) June 30, December 31, 2000 1999 -------- ------------ 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 ======== ========
See notes to consolidated financial statements. 3 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited)
Three Months Ended June 30, ---------------- 2000 1999 ------- ------- 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 ======= =======
See notes to consolidated financial statements. 4 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited)
Six Months Ended June 30, -------------------- 2000 1999 -------- ------- 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 ======== =======
See notes to consolidated financial statements. 5 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Six Months Ended June 30, -------------------- 2000 1999 -------- -------- 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 ======== ========
See notes to consolidated financial statements. 6 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):
Three Months Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ------ ------- ------- ------- 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 ====== ======= ======= =======
3. Long-Term Investments, Incentive Allocations and Net Investment Income: Long-term investments consist of the following (in thousands):
June 30, December 31, 2000 1999 -------- ----------- 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 ======== ========
7 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):
Three Months Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ------- ------- -------- ------- 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 ======= ======= ======== =======
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 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands)-(Unaudited) 4. Summarized Income Statement Information, continued:
Three Months Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ------ ------ ------- ------- 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 ====== ====== ======= =======
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 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 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands)-(Unaudited) 11. Segment Information, continued:
Online Capital Asset Financial Consolidated Markets Management Services Other Totals ----------- ---------- ---------- -------- ------------ 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 Online Capital Asset Financial Consolidated Markets Management Services Other Totals - --------- ---------- ---------- ------- ------------ 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
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 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 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 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 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 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 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 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.
Number of Exercise June 30, 2000 Expiration Warrants Price Closing Price Date --------- -------- ------------- ---------- 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
* 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 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 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.
For Against Abstain ----------- --------- ------- 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 -
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 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheet as of June 30, 2000 and the Consolidated Statement of Operations for the six months ended June 30, 2000, which are contained in the body of the accompanying Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-2000 JAN-03-2000 JUN-30-2000 45,502 7,952 30,889 0 0 0 11,783 2,435 282,836 0 0 0 0 210,244 (6,607) 282,836 0 109,779 0 0 0 0 541 14,621 2,924 0 0 0 0 11,697 0.24 0.23
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