-----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, WmWFST4GO46vtcjTJYl7uxFvEBx16uR/edVq6Kk87ABSuF7J+NtbT3xoQcjiUMn6 LsTMtxUC6/vNOHHSD43ssA== 0000928385-99-002343.txt : 19990723 0000928385-99-002343.hdr.sgml : 19990723 ACCESSION NUMBER: 0000928385-99-002343 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990721 ITEM INFORMATION: FILED AS OF DATE: 19990722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRIEDMAN BILLINGS RAMSEY GROUP INC CENTRAL INDEX KEY: 0001048750 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 541870350 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13731 FILM NUMBER: 99668896 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 8-K 1 FORM 8-K FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): July 21, 1999 Friedman, Billings, Ramsey Group, Inc. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Virginia 001-13731 54-1837743 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1001 Nineteenth Street, North Arlington, VA 22209 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (703) 469-1000 - -------------------------------------------------------------------------------- (Registrant's telephone number including area code) Item 5. Other Events 1. On July 21, 1999, Friedman, Billings, Ramsey Group, Inc. issued a press release reporting its second quarter 1999 results. The entire text of the press release is being filed herewith and attached as exhibit 99.1. 2. On July 21, 1999, Friedman, Billings, Ramsey Group, Inc. held a conference call regarding its second quarter 1999 results. The text of that conference call as posted to Friedman, Billings, Ramsey Group, Inc.'s web-site www.fbrcorp.com --------------- is being filed herewith and attached as exhibit 99.2. 99.1 Press Release dated July 21, 1999. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. By: /s/ Emanuel J. Friedman Chief Executive Officer 2 EX-99.1 2 EXHIBIT 99.1 Exhibit 99.1 For Immediate Release Investor Contact: David Allan, FBR (703) 469-1080 Media Contact: Melanie Nelson, FBR (703) 312-9623 Friedman Billings Ramsey Group Reports $0.12 Per Share in Second Quarter National Advertising Campaign for fbr.com Begins Tomorrow Washington, D.C., July 21, 1999 -- Friedman Billings Ramsey Group, Inc. (NYSE:FBR) today reported $5.8 million in net income or $0.12 per share for the second quarter ended June 30, 1999 versus $7.4 million in net income or $0.15 per share for the same quarter a year ago. Revenue for the quarter was $40 million compared with $57 million in the second quarter of 1998. "The second quarter was an excellent quarter for the firm with contributions from each area of our business, notably with increases in M&A advisory revenues and significant gains in incentive-based assets under management" said Emanuel J. Friedman, Chairman and Chief Executive Officer of Friedman Billings Ramsey Group, Inc. "We are also pleased with the increase in investment banking activity during the quarter led by our $182 million equity offering for Key Energy Services (NYSE: KEG) in May." Net income for the six-month period was $5.9 million or $0.12 per share versus $23.0 million or $0.46 per share for the first six months of 1998. For the six- month period ended June 30, 1999, revenue amounted to $62.4 million compared to $125.3 million for the same period in 1998. Friedman continued, "Our focus now is on pursuing the tremendous market opportunity for fbr.com, our financial services portal for the online investor. With no 'bricks-and-mortar' retail channel and no retail brokers, we are in an excellent position to aggressively go after the online investor market, which is expected to triple from approximately 8 million accounts to 24 million accounts over the next two and a half years. FBR, with approximately 85 investment bankers and 55 research analysts, is well positioned to leverage its strengths on the Internet." "Tomorrow, our first national ads for fbr.com will appear in major daily newspapers around the country," Friedman continued. "The message of the ads is clear. As a leading underwriter with an electronic distribution channel, we plan to put meaningful amounts of IPO shares in the hands of the online investor. Last week's 'no action' letter by the SEC strengthens our ability to allocate shares in size by effectively eliminating the practical problems of confirming hundreds or thousands of orders by phone. The SEC's position is a benefit to online investment banks and online investors alike." - more - -2- Progress on fbr.com President of FBR Group W. Russell Ramsey said, "We are pleased with the progress we have made since launching fbr.com's IPO DesktopSM on April 15th. We completed two, co-managed offerings during the quarter CareerBuilder (CBDR) on May 12 followed by CAIS Internet (CAIS) on May 20." Ramsey continued, "It is important for the investing public to realize that FBR, as a lead and co-manager of IPOs, has a much greater ability to allocate IPO shares than an underwriter who is participating in a syndicate or selling group. This is a key point of differentiation for our company from comparable online investment banks and electronic brokerages." "We have recently established a $2,000 account minimum to invest online with fbr.com and to have access to our IPOs at a 100 share, round-lot, minimum order. This reasonable minimum is consistent with our goal to democratize the IPO process for the online investor. Other firms, by comparison, have set this minimum as high as $100,000 or higher, which eliminates many individual investors," Ramsey said. In July, fbr.com engaged Hill, Holliday, Connors, Cosmopulos Inc. in New York to create and execute an overall brand awareness campaign. The first component of the campaign, full-page, print ads, will appear in tomorrow's editions of The Wall Street Journal, The New York Times, The Boston Globe, The Washington Post, Chicago Tribune, Austin American-Statesmen, The Los Angeles Times, San Francisco Chronicle, San Francisco Examiner, San Jose Mercury News, Seattle Times and Seattle Post-Intelligencer. On June 23, fbr.com launched online trading. Investors can now trade in stocks and mutual funds and have access to research and IPOs through fbr.com. As part of a summer promotion, new customers receive their first eight trades commission-free before September 30, 1999. President of fbr.com Suzanne Richardson said, "Our goal is to provide online investors with exceptional customer service and the best possible user experience. During the quarter, we established a customer service call center in Arlington, Virginia with a capacity of 80 seats and room to grow." Richardson continued, "Our goals for the next four months are to roll-out Fund DesktopSM, which will offer accredited investors private investment partnerships, venture capital and private equity funds, as well as Research DesktopSM, which will offer both FBR's research and research from third parties. Later in the year, we plan to introduce DAE (direct access execution) DesktopSM to provide active investors with a highly efficient, alternative way to trade online with Level II trading information. Other 2nd Quarter Highlights Other highlights for the second quarter include: * Friedman Billings Ramsey Group, Inc. ended the quarter with $812 million in total assets under management as of June 30, 1999. This total includes funds raised in connection with the closing of a second venture capital fund by FBR Technology Venture Partners, Inc. (TVP) for investments in technology start-up companies. - -3- * Three of FBR TVP's portfolio companies completed Initial Public Offerings in the second quarter: Proxicom (PXCM), CareerBuilder (CBDR) and Network Access Solutions (NASC). The market value increase in TVP's investments in these newly public companies contributed to an increase in the Company's investment gains and Assets under Management during the quarter. * The Company acted as M&A advisor to Building One Services Corporation (BOSS) in its successful re-capitalization in April. (FBR originally acted as the lead manager for the Initial Public Offering of the predecessor company to Building One Services in 1997.) Following the completed re-capitalization, the Company sold warrants it held from the completion of the IPO to Boss Investment LLC in June, which resulted in investment gains in the second quarter. Vice Chairman and Chief Operating Officer of FBR Group Eric Billings said, "Through fbr.com, we are positioning FBR at the forefront of online investment banking. In IPOs where we are the lead or co-manager, we plan to put up to 50 percent of our share allocation online. Based on our record as an underwriter and the current health of the capital markets, FBR is in an excellent position to move online investors into the realm of much larger allocations." FBR had 48,881,817 common shares outstanding, shareholders' equity of $188 million and book value per share of $3.84 as of June 30, 1999. Friedman, Billings, Ramsey Group (NYSE:FBR), is an investment bank and asset manager and the parent company of fbr.com, an online investment bank and electronic brokerage. Headquartered in Northern Virginia, home to many of the world's leading online businesses, the Company has become a leading underwriter of Initial Public Offerings and provides analyst research on 430 companies. fbr.com, a division of FBR Investment Services, Inc., leverages the Company's strengths as an underwriter and asset manager by providing online investors with access to IPOs, online trading, research, and unique asset management products. For more information, please visit our website at www.fbr.com. Statements concerning future performance, earnings, developments, expenditures, negotiations or other events, concerning expectations for plans and objectives for future operations or for growth and market forecasts, and any other guidance on present and future periods, constitute forward-looking statements that are subject to a number of factors, risks and uncertainties that might cause actual events and results to differ materially from stated expectations. These factors include but are not limited to the effect of demand for public offerings, activity in the secondary securities markets, available technologies, competition for business and personnel, and general economic, political and market conditions. # # # Note to Editors: Two pages of financial information follow this page FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)
Three months ended June 30, 1999 % 1998 % REVENUES Investment Banking $15,065 37.3% $45,928 80.1% Institutional Brokerage 10,701 26.5% 11,975 20.9% Asset management fees 2,522 6.2% 2,306 4.0% Gains and losses, net 9,715 24.1% (8,558) -14.9% Interest and dividends 2,376 5.9% 5,683 9.9% Total revenues 40,379 100.0% 57,334 100.0% EXPENSES: Compensation and benefits 22,109 54.8% 28,899 50.4% Business development 5,908 14.6% 8,259 14.4% Interest 494 1.2% 1,468 2.5% Other 6,019 14.9% 6,115 10.7% Total expenses 34,530 85.5% 44,741 78.0% Net income before income taxes 5,849 14.5% 12,593 22.0% Provision for income taxes - 0.0% 5,160 9.0% Net income 5,849 14.5% 7,433 13.0% Basic and diluted earnings per share $0.12 - $0.15 - Weighted average shares (in thousands) 48,692 - 50,029 -
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)
Three months ended June 30, 1999 % 1998 % REVENUES Investment banking 21,113 33.8% 97,299 77.7% Institutional brokerage 20,797 33.3% 24,717 19.7% Asset management fees 4,859 7.8% 5,475 4.4% Gains and losses, net 10,760 17.2% (11,475) -9.2% Interest and dividends 4,919 7.9% 9,302 7.4% Total revenues 62,448 100.0% 125,318 100.0% EXPENSES: Compensation and benefits 36,347 58.2% 57,242 45.7% Business development 8,502 13.6% 15,065 12.0% Interest 1,001 1.6% 3,127 2.5% Other 10,704 17.2% 11,555 9.2% Total expenses 56,554 90.6% 86,989 69.4% Net income before income taxes 5,894 9.4% 38,329 30.6% Provision for income taxes - 0.0% 15,317 12.2% Net income 5,894 9.4% 23,012 18.4% Basic and diluted earnings per share $0.12 - $0.46 - Weighted average shares (in thousands) 48,862 - 50,029 -
-5- EX-99.2 3 EXHIBIT 99.2 Exhibit 99.2 Conference Call Transcript dated July 21, 1999. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. By: /s/ Emanuel J. Friedman Chief Executive Officer Exhibit 99.2 FBR CONFERENCE CALL SCRIPT July 21, 1999 This is Eric Generous, Chief Financial Officer of Friedman Billings Ramsey Group. Before beginning our call, I would like to read the following Safe Harbor language: Statements concerning future performance, developments or events, concerning expectations for growth, filed backlog and market forecasts, and any other guidance on present and future periods, constitute forward-looking statements which are subject to a number of factors, risks and uncertainties which might cause actual results or developments to differ materially from stated expectations or current circumstances. These factors include but are not limited to the effect of demand for public offerings, activity in the secondary securities markets, competition for business and personnel, available technologies and general economic, political and market conditions. Additional information concerning factors that could cause actual results to differ materially is contained in FBR's Annual Report on Form 10K and quarterly reports on Form 10Q. I would now like to turn the call over to Manny Friedman. Good morning and welcome to our second quarter conference call. This is Manny Friedman, Chairman and CEO of FBR Group. As I'm sure you've seen this morning, the second quarter was an excellent quarter for our firm. We reported $5.8 million in net income for the quarter or $0.12 per share. This compares with $7.4 million in net income or $0.15 per share for this quarter one year ago. The second quarter performance marks a solid return to profitability for FBR and we are all naturally very pleased. In terms of key drivers for the quarter, in Investment Banking, our Energy Group led a $182 million transaction for Key Energy Services, which is the world's largest rig-based well servicing firm. Including $10 million placed privately by Key Energy, this was roughly a $200 million recapitalization. The recap was our first significant transaction in the energy sector since we formed this group a year and a half ago. As mentioned in the press release, another contributor to second quarter performance were fees from M&A advisory services. In April, we advised on the leveraged recapitalization of Building One Services with participation by Apollo Group. Building One, which is better known by it's ticker symbol "BOSS", is now a much stronger company engaged in the consolidation of building and facilities service providers. You may be aware that we originally led the IPO for the predecessor company to BOSS, so we are pleased to have seen this successfully come full circle. Another contributor during the quarter was the performance of our venture capital investments and the closing of a second technology fund, which Eric Billings will discuss later in the call. In sum, it was a great quarter from a results point of view. It was also a great quarter from a strategic point of view since we launched fbr.com, our online investment bank, on April 15th. I'd like to turn you over now to Russ Ramsey, President of FBR Group and Suzanne Richardson, President of fbr.com who are joining the call this morning from New York City. [New Speaker: Russ] Thanks Manny. I'm pleased to announce that you will see our first series of ads for fbr.com tomorrow in newspapers all over the country. Our ads will be hard to miss, especially with a double, full-page insert in the Wall Street Journal, national edition. I think you'll find that the ads make important points about the unique position we are in as both a major lead underwriter and an online investment bank. I'd like to make a few overall observations about fbr.com and then ask Suzanne to give you an update on operations and marketing. We've come a long way in a short time with fbr.com. In just the last nine weeks, we launched IPO Desktop -- on April 15 -- and Trading Desktop -- on June 23. FBR has done two, co-managed IPOs online and has two pending. We're aggressively going after a market that is growing rapidly at a compound annual growth rate of 48 percent, according to an industry estimate by IDC. By 2002, the number of online accounts will have tripled from 8 million today to 24 million active online accounts. By 2003, Forrester estimates that there will be over $3 trillion in assets in online accounts in the United States. The market is large and growing fast and we're in a great position to go after it. As an institutional brokerage, we have no retail brokers, no bricks-and- mortar operations and no channel conflict. That means that we have no brokers to put out of work, no lost commissions to compensate brokers for, and no other focus for retail than the online investor. We have a track record as a lead manager. You've heard that before, but it is worth repeating. We were the # 7 lead manager in the United States for 1997 and 1998 combined. And in the first quarter of 1998, we raised more capital than any other firm - on or off Wall Street*. That may seem like nothing more than historical fact, but remember that, through fbr.com, we compete with firms that have never lead managed an offering. We also compete with firms that, for IPO allocations, depend almost entirely on syndication or selling groups. As I'm sure you know, firms in this position get very small allocations and have little or no control over the number of shares they receive. But as a both a lead manager and co-manager, we do. And that's why I stress that point. Last week, the industry got very good news from the SEC. The SEC staff issued a no-action letter which has been interpreted to allow an e-mail be an acceptable substitute for a phone call to confirm an IPO share order. This is significant for all underwriters because it has further cleared the way for large share allocations to online investors. For our online IPOs, we had been calling hundreds of investors on the day of pricing. Calling dramatically limited the ability of underwriters to handle large allocations online. With e-mail confirmation, we will be able to handle much greater volume in large deals -- and with a lower overheard expense. At fbr.com, we are now focused on rapidly growing our account base. The beginning of our ad campaign tomorrow represents an important first step. We are also offering IPOs online that attract attention. Next week, we expect to offer two new IPOs. With that said, I'd like to turn you over to a founding member of FBR and now President of fbr.com Suzanne Richardson. [New speaker: Suzanne] Thank you Russ. I'd like to address some of the key accomplishments we've made with online offerings in the last few weeks. On April 15th, we launched IPO Desktop with the objective of enabling investors to invest in our IPOs online. On May 12th and May 20th, we proved our system with two online offerings, CareerBuilder and CAIS Internet. These were co-managed offerings that we kept small by design in order to ensure that we had a smoothly working IPO operation. We passed both of these tests with flying colors. On June 23rd, we commenced online trading. Investors can now have access to mutual funds, execute trades online and access FBR analyst research via fbr.com. As part of a summer promotion, we're giving away the first eight trades commission-free before September 30. This translates into a $200 savings for new customers. We've also established a relatively low account minimum of $2,000. Our strategy is simple: we aim to get the customer's attention, interest him or her in IPOs and then look to deliver other investment products and grow these account balances over time. We have staffed up accordingly and established a customer service call center here in Arlington - just a few blocks from our headquarters. We have 80- seat capacity at the call center with room to grow. Good customer service means the difference between a good online investing experience and a bad one, so we're taking customer service very seriously. Simply put, we expect to excel in this area. In terms of our competitive position, as Russ mentioned, we think that our record as a manager of IPOs sets us apart from most of the competition. And that's an important competitive strength for our company. Bear in mind, however, that fbr.com is more than IPOs and that, while IPOs are "the nose under the tent", there are a whole host of other financial products to deliver to the customer including mutual funds, private equity funds, venture capital and I'll talk about that more in a second. We have several goals for the next four months that I'd like to share with you this morning. We have found that the most important resource for the online investor is time. It's critical to the online investor that a site works quickly and smoothly. Accordingly, we will upgrade and enhance the efficiency of our fbr.com site as a continual process. In the Fall, we expect to launch Research Desktop, which will provide upgraded access to our analyst research, as well as research by third parties. As part of this expanded capability, we plan to offer online discussions with our research analysts, daily briefs from morning research calls, and research updates. Also in the Fall, we expect to unveil Fund Desktop, which will provide accredited investors with access to proprietary investment partnerships, venture capital and other alternative assets that have historically not been available to the majority of accredited investors. Finally, after the roll-out of these two products, at some point later in the year, we will offer DAE Desktop, which stands for Direct Access Execution. This trading capability will give online investors Level II quotes and allow them to direct a trade to the market maker or ECN of their choice. In summary, we've conducted two IPOs online, with two more pending. We have built our site to handle and begun to staff up for much larger volumes. We have thousands of registrations that we are in the process of converting to accounts. Once we have completed this process and seen the impact of our advertising campaign, we will release an account total at some point in the future. For your information, we have a far-term goal of 300,000 accounts within 18 months. And we would consider ourselves on track for this goal if we have 30,000 accounts by the end of this year. That concludes my update. I look forward to keeping you apprised of our progress in the coming weeks and months. Now, I'll turn you back to Virginia, to Eric Billings. [New speakers: Eric Billings] Thanks Suzanne. As Manny mentioned to you when we began the call, it was a good quarter for asset management. We began the quarter with $673 million under management and ended the quarter with $812 million, an 21% increase. The majority of this increase is accounted for by the closing of a second technology venture capital fund. In this past quarter, I think you can clearly see how venture capital contributes to the bottom line. Last quarter, three of our portfolio companies went public Proxicom -- trading symbol PXCM -- , CareerBuilder - CBDR -- and Network Access Solutions -- NASC. The appreciation of our ownership in these companies resulted in a significant investment gain for the company. It also led to an increase in our total Assets under Management. We're very proud of what we've been able to accomplish in venture capital in such a short time, and I would like to publicly acknowledge the efforts of Gene Riechers and Hooks Johnston who head up our venture capital efforts. Finally, let me echo the sentiments of my colleagues on fbr.com. It's clear that financial services are moving online at a rapid pace. Any doubts of that were erased on June 1st, when Merrill Lynch announced its online strategy. fbr.com is our way of building on ten years of success. It's also our way of making sure that we're a major participant and a leader in the future. Up until this point, the capital markets have not seen large allocations of shares online. We hope to be the firm that changes that by putting up to 50% of our IPO share allocations online. And while we can't see the Future, we plan to take some major first steps in that direction in the second half of this year. That concludes our remarks, we would now like to open up the call for questions. [New speaker: Manny] If there are no further questions, that concludes our conference call for today. Thank you for joining us and have a good day. * Source: Securities Data Corp., FBR ranked No. 1 Lead Underwriter of US Issuer IPOs for first quarter 1998, excluding closed end funds and unit trusts. CommScan Equidesk, FBR ranked No. 7 Lead Underwriter of US Issuer IPOs for the period from 1/1/97 to 12/31/98. -----END PRIVACY-ENHANCED MESSAGE-----