8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

____________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITES EXCHANGE ACT of 1934

November 3, 2005___  ___________________________________________

(Date of Report – date of earliest event reported)

First Albany Companies Inc._____________________________________

(Exact name of registrant as specified in its charter)

New York________________________0-14140_________22-2655804______

(State of Other Jurisdiction of Incorporation)    (Commission File Number)

IRS Employer Identification No.)

677 Broadway, Albany, New York  12207__________________

(Address of Principal Executive Offices)

(Zip Code)

(518) 447-8500__________________________________________________

(Registrant’s telephone number, including area code)

________________________________________________________________

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

“ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

“ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

“ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

“ Pre-commencement communications pursuant to Rule 13e-4(c)under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations and Financial Condition

On November 3, 2005, First Albany Companies Inc. (the “Company”) issued a press release announcing the Company’s results for the quarter ended September 30, 2005.  A copy of the press release is furnished with this Form 8-K as exhibit 99.1.

Item 9.01 Financial Statements Pro Forma Financial Information and Exhibits.

(c)  Exhibits.

Exhibit 99.1 – Press Release of First Albany Companies Inc. dated November 3, 2005

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 hereunto duly authorized.

First Albany Companies Inc.

Dated: 11/2/05

/S/STEVEN R. JENKINS

Steven R. Jenkins

Chief Financial Officer

EX-99

EXHIBIT 99.1

FIRST ALBANY REPORTS THIRD QUARTER 2005 FINANCIAL RESULTS

ALBANY, NEW YORK, November 3, 2005 – First Albany Companies Inc. (NASDAQ: FACT) reported its financial results for the third quarter ending September 30, 2005, and will hold a conference call today at 4:15 P.M., EST (see dial-in information below).

Overview of Quarterly Results

First Albany’s 2005 third quarter net revenues from continuing operations were $37.2 million, compared to $37.1 million for the 2004 third quarter. A $3.5 million increase in Investment Banking revenue and a $6.6 million improvement in investment income related to the value of the Company’s investment portfolio during the quarter were offset by net revenue declines of $9.5 million in Sales and Trading. For the 2005 third quarter, the Company reported a net loss from continuing operations of $3.0 million compared to a net loss of $6.0 million for the same period in 2004.  Results for the 2005 third quarter include $0.5 million in costs, net of tax, incurred in consolidating the Company’s New York City offices, while results for the 2004 third quarter include, net of tax, $2.1 million for restructuring costs associated with staffing reductions, a software-related asset impairment, legal expenses and documenting compliance with Section 404 of the Sarbanes-Oxley Act.   The 2005 third quarter net loss per diluted share from continuing operations was $0.21 compared to a net loss of $0.45 per diluted share in the third quarter of 2004. Consolidated net loss was $ 2.9 million for the 2005 third quarter compared to a net loss of $6.4 million for the same period in 2004. Diluted earnings per share on a consolidated basis for the 2005 third quarter was a net loss of $0.21 per share compared to a net loss of $0.48 in the third quarter of 2004.

For the nine months ended September 30, 2005, net revenues from continuing operations were $102.3 million, compared to $120.1 million for the same period in 2004.  A strong performance in Fixed Income investment banking and an increase in investment income related to the value of the Company’s investment portfolio were offset by lower net revenues in sales and trading for both Equities and Fixed Income.  Results for the nine months were negatively impacted by $1.7 million in severance costs, net of tax, related to staffing reductions and $0.5 million in expenses, net of taxes, incurred as part of the Company’s effort to consolidate its offices in New York City. Including these charges, the Company reported a net loss from continuing operations of $12.9 million for the first nine months of 2005 compared to a net loss from continuing operations of $ 4.5 million for the same period in 2004.  The 2004 results were negatively impacted by charges totaling $3.7 million, net of tax, including:  restructuring costs associated with staffing reductions, a software-related asset impairment, legal expenses, and documenting compliance with Section 404 of the Sarbanes-Oxley Act.  Earnings per diluted share from continuing operations for the nine months ended September 30, 2005 was a net loss of $0.94 compared to a net loss of $0.37 per diluted share for the same period in 2004.  The Company reported a consolidated net loss of $13.2 million for the nine months ended September 30, 2005, compared to a consolidated net loss of $5.6 million for the same period in 2004. Consolidated diluted earnings per share for the nine months ended September 30, 2005, was a net loss of $0.96 compared to a net loss of $0.46 for the same period of 2004.

“We experienced weakness in our taxable fixed income products, had a strong performance from Public Finance, and the third quarter, net revenue for Investment Banking doubled over the second quarter of this year,” said Alan Goldberg, President and Chief Executive Officer of First Albany. “We expect improved sequential results in the fourth quarter, and will continue to reduce costs and lower our breakeven so that increases in revenue can more readily affect profitability.”

Operational Highlights  

Fixed Income

•

Fixed Income net revenue was $19.6 million for the 2005 third quarter, compared to $23.4 million for the 2004 third quarter.  For the nine months ended September 30, 2005, Fixed Income net revenue was $60.4 million compared to $61.9 million for the same period in 2004.

o

Public Finance net revenue was $8.5 million for the 2005 third quarter compared to $2.5 million for the 2004 third quarter.  For the nine months ended September 30, 2005, public finance net revenue was $20.3 million compared to $11.9 million for the same period in 2004, due primarily to an increase in underwriting revenue.

•

The third quarter of 2005 was a difficult quarter in fixed income sales and trading.  A flattening yield curve and low market volatility contributed to the year-over-year declines in revenue in the Company’s taxable products.  

o

Mortgage-backed net revenue was $3.5 million for the 2005 third quarter compared to $5.9 million for the 2004 third quarter.  The Company’s acquisition of Descap Securities in May of 2004 resulted in a 30.7 percent, or $3.3 million, year-over-year increase in mortgage-backed net revenue for the nine months ended September 30, 2005.

o

Corporate bond net revenue was $3.1 million compared to $5.9 million for the 2004 third quarter. For the nine months ended September 30, 2005, corporate bond net revenue was $9.7 million compared to $17.9 million for the same period in 2004. Spread compression continues to negatively impact secondary corporate bond activity.  

o

Municipal sales and trading revenue was $3.4 million compared to $4.3 million for the 2004 third quarter. For the nine months ended September 30, 2005, municipal sales and trading net revenue was $9.4 million compared to $12.3 million for the same period in 2004.  The drop in revenue was primarily due to a decline in principal transaction revenue.

Equities

•

Equity Capital Markets reported year-over-year declines in net revenue for the third quarter of 2005 primarily as a result of lower customer volumes in sales and trading and a decline in advisory fee revenue in Investment Banking. Net revenue was $16.0 million for the 2005 third quarter compared to $19.1 million for the 2004 third quarter.  For the nine months ended September 30, 2005, Equity Capital Markets net revenue was $43.2 million compared to $58.1 million the same period in 2004.

o

Investment banking net revenue was $5.6 million for the 2005 third quarter compared to $8.1 million for the 2004 third quarter on lower advisory fee revenue.  During the 2005 third quarter, the Company completed nine transactions, acting as a co-manager on four public offerings, a placement agent on two private offerings, and an advisor on three transactions.  For the nine months ended September 30, 2005, Investment Banking net revenue was $11.5 million compared to $17.4 million for same period in 2004 as result of a decline in underwriting activity and lower advisory fee revenue.

o

Sales and Trading net revenue was $10.4 million for the 2005 third quarter compared to $11.0 million for the 2004 third quarter, with a six percent drop in NASDAQ net revenue and a five percent drop in Listed net revenue. For the nine months ended September 30, 2005, Sales and Trading net revenue was $31.6 million compared to $40.5 million the same period in 2004.

Other

•

Other net revenue was $1.5 million for the 2005 third quarter compared to net loss of $5.4 million for the third quarter of 2004. The year-over-year increase in revenue was the result of an improvement in investment income related to the change in value of Company’s investment portfolio.

First Albany Companies
Operational Highlights
(Unaudited)
		Three Months Ended September 30					Nine Months Ended September 30
		2005		2004	2005 V 2004		2005		2004	2005 V 2004
(Dollars in Thousands)
Net Revenues:
Equities	$	15,996	$	19,139	-16%	$	43,173	$	58,121	-26%
Fixed Income		19,635		23,367	-16%		60,439		61,917	-2%
Other		1,528		(5,442)	128%		(1,273)		111	n/m
Total	$	37,159	$	37,064	0%	$	102,339	$	120,149	-15%
Pre-Tax Operating Income    (Loss):
Equities	$	(389)	$	678	-157%	$	(5,188)	$	3,937	-232%
Fixed Income		816		5,114	-84%		5,988		9,900	-40%
Other		(5,653)		(16,243)	65%		(23,503)		(26,505)	11%
Total	$	(5,226)	$	(10,451)	50%	$	(22,703)	$	(12,668)	-79%
Capital Markets (Fixed Income & Equities)
		Three Months Ended September 30					Nine Months Ended September 30
		2005		2004	2005 V 2004		2005		2004	2005 V 2004
(Dollars in Thousands)
Net Revenues:
Institutional Sales & Trading
Equities	$	10,387	$	11,017	-6%	$	31,605	$	40,539	-22%
Fixed Income		10,979		19,849	-45%		37,713		47,554	-21%
Total Institutional Sales & Trading		21,366		30,866	-31%		69,318		88,093	-21%
Investment Banking
Equities		5,594		8,067	-30%		11,508		17,393	-34%
Fixed Income		8,533		2,537	236%		20,950		12,454	68%
Total Investment Banking		14,127		10,604	33%		32,458		29,847	9%
Net Interest Income		127		928	-86%		1,760		1,855	-5%
Other Income		11		108	-89%		76		243	-69%
Total Net Revenues	$	35,631	$	42,506	-16%	$	103,612	$	120,038	-14%
Note: Does not include Discontinued Operations

Other

During the quarter ending June 30, 2005, the Company executed a lease for new office space in New York City, which will provide the opportunity to consolidate operations.  The Company currently anticipates moving into the new space in the first quarter of 2006.  The Company’s leases for its current office spaces in New York City expire in October 2008 and May 2009.  Based upon current market conditions, the Company has estimated it will incur a charge of approximately $2.6 million to $3.0 million, net of anticipated sublease rental income, when it ceases to use its current office spaces.  In addition, the Company has revised the estimated useful lives of leasehold improvements related to its existing space and will recognize an incremental non-cash charge of approximately $0.5 million between October 1, 2005 and the anticipated cease-use date.   Also, in addition to the rent expense being recognized on the existing office spaces through the cease-use date, the Company will also recognize rent expense related to the new space.  In the third quarter of 2005, the Company recognized $0.4 million of the non-cash charge and $0.3 million in additional rent expense.  

Shareholders’ Equity

Shareholders’ equity as of September 30, 2005 was $79.7 million, compared to $80.2 million on June 30, 2005.  Book value per share as of September 30, 2005 was $5.96, as compared to $6.03 on June 30, 2005.

Conference Call Information

First Albany Companies will hold a conference call today, Thursday, November 3, 2005, at 4:15 P.M. (EST).   This call will be webcast and can be accessed on the Investor Relations portion of the First Albany Companies website at www.firstalbany.com, as well as being distributed through the Thomson StreetEvents Network.  Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents.  Institutional investors can access the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site. To participate on the call, please dial 800.362.0595and request the First Albany earnings call. A recording of the call will be available for seven days by dialing 800.839.2383.

About First Albany

Founded in 1953, First Albany is a leading institutionally focused independent investment bank that serves the institutional market, the growing corporate middle market and public institutions by providing clients with strategic, research-based, innovative investment opportunities. First Albany offers a diverse range of products through its Equities division, Fixed Income division and Venture Capital division, FA Technology Ventures Inc.  First Albany is traded on NASDAQ under the symbol FACT with offices in major business and commercial markets.  

###

This press release contains "forward-looking statements,” which are subject to various risks and uncertainties, including the conditions of the securities markets, generally, and acceptance of the Company's services within those markets and other risks and factors identified from time to time in the Company's filings with the Securities and Exchange Commission. These statements are not historical facts but instead represent only the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control.  It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.

###

FOR ADDITIONAL INFORMATION

PLEASE CONTACT:

Steven R. Jenkins (Investors)

Chief Financial Officer

First Albany Companies

518.447.8500

Ben Tanner (Media)

Fleishman Hillard

212.453.2301

Al Bellenchia (Media)  

Fleishman Hillard

212.453.2256

FIRST ALBANY COMPANIES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
		THREE MONTHS ENDED				NINE MONTHS ENDED
		September 30				September 30
(In thousands of dollars except for per share amounts and shares outstanding)		2005		2004		2005		2004
Revenues:
Commissions	$	4,355	$	4,963	$	13,586	$	16,121
Principal transactions		17,026		24,485		56,337		69,616
Investment banking		14,359		11,994		32,613		32,184
Investment gains		398		(6,204)		(6,247)		(2,341)
Interest		3,832		2,972		11,485		6,895
Fees and other		647		663		3,564		1,794
Total revenues		40,617		38,873		111,338		124,269
Interest expense		3,458		1,809		8,999		4,120
Net revenues		37,159		37,064		102,339		120,149
Expenses (excluding interest):
Compensation and benefits		29,881		32,254		87,919		91,916
Clearing, settlement and brokerage costs		2,375		1,577		7,180		5,011
Communications and data processing		3,598		3,587		10,965		11,369
Occupancy and depreciation		3,460		2,417		9,143		6,982
Selling		1,719		1,966		5,234		5,671
Impairment		-		1,375		-		1,375
Restructuring		-		750		-		750
Other		1,352		3,589		4,601		9,743
Total expenses (excluding interest)		42,385		47,515		125,042		132,817
Income (loss) before income taxes		(5,226)		(10,451)		(22,703)		(12,668)
Income tax (benefit) expense		(2,274)		(4,458)		(9,791)		(8,188)
Income (loss) from continuing operations		(2,952)		(5,993)		(12,912)		(4,480)
Income (loss) from discontinued operations, net of taxes		41		(378)		(249)		(1,147)
Net income (loss)	$	(2,911)	$	(6,371)	$	(13,161)	$	(5,627)
Per share data:
Basic earnings:
Continued operations	$	(0.21)	$	(0.45)	$	(0.94)	$	(0.37)
Discontinued operations		(0.00)		(0.03)		(0.02)		(0.09)
Net Income (Loss)	$	(0.21)	$	(0.48)	$	(0.96)	$	(0.46)
Diluted earnings:
Continued operations	$	(0.21)	$	(0.45)	$	(0.94)	$	(0.37)
Discontinued operations		(0.00)		(0.03)		(0.02)		(0.09)
Net Income (Loss)	$	(0.21)	$	(0.48)	$	(0.96)	$	(0.46)
Weighted average common and common equivalent shares outstanding:
Basic		13,973,462		13,148,611		13,699,739		12,275,353
Dilutive (a)		14,798,686		13,848,167		14,601,776		13,471,907

(a) Amount includes, for the three months and nine months of 2005, 0.8 million and 0.9 million, respectively, and for the three months and nine months of 2004, 0.7 million and 1.2 million, respectively, common equivalent shares that were excluded from the computation of dilutive earnings per share because they were anti-dilutive.