-----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, Ly+LFiPQMZ9icDO6FjT8m6pFZCyrXyf3bA8rvNt5dOtYEyK/LV6TMtaRjWylUPJM amQQ06Q/PfGR/GpM1HTsAQ== 0000719544-98-000002.txt : 19980112 0000719544-98-000002.hdr.sgml : 19980112 ACCESSION NUMBER: 0000719544-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971128 FILED AS OF DATE: 19980109 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUICK & REILLY GROUP INC /DE/ CENTRAL INDEX KEY: 0000719544 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 133082841 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08517 FILM NUMBER: 98503436 BUSINESS ADDRESS: STREET 1: 230 SOUTH COUNTY RD CITY: PALM BEACH STATE: FL ZIP: 33480 BUSINESS PHONE: 5616558000 MAIL ADDRESS: STREET 1: 26 BROADWAY 11TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10004 FORMER COMPANY: FORMER CONFORMED NAME: QUICK & REILLY GROUP INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: QUICK & REILLY GROUP INC /VA/ DATE OF NAME CHANGE: 19600201 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q For Quarter Ended November 28, 1997 Commissions File #2-83667 THE QUICK & REILLY GROUP, INC. State of Incorporation - Delaware IRS Employer ID# - 13-3082841 230 South County Road Palm Beach, FL 33480 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No THE QUICK & REILLY GROUP, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED November 28, 1997 INDEX Page Number Part I. Item 1. Financial Statements Consolidated Statements of Financial Condition -November 28, 1997 (Unaudited) and February 28, 1997 1 Consolidated Statements of Income (Unaudited) - Three Months Ended November 28, 1997 and November 29, 1996 2 Consolidated Statements of Income (Unaudited) - Nine Months Ended November 28, 1997 and November 29, 1996 3 Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended November 28, 1997 and November 29, 1996 4 Notes to Consolidated Financial Statements ( Unaudited) 6 Item 2. Management's Financial Discussion 8 SIGNATURE PAGE The Quick & Reilly Group, Inc. and Subsidiaries Consolidated Statements of Financial Condition
November 28, February 28, (In thousands except share amounts) 1997 1997 ------------------------------------- (Unaudited) ASSETS Cash & Cash Equivalents $92,960 $89,389 Receivable from Brokers, Dealers and Clearing Organizations 3,510,410 2,618,325 Receivable From Customers 1,558,215 1,181,677 Securities Owned at Market Value - U.S. Government 43,353 20,722 Municipal 135,115 103,057 Equities and Other 50,454 36,934 Exchange Memberships- At Cost (Market Value $20,060 and $16,732) 5,033 5,033 Furniture, Equipment and Leasehold Improvements- At Cost Less Accumulated Depreciation and Amortization of $18,137 and $13,042 20,776 17,047 Other Assets 95,511 59,858 ------------------------------------- TOTAL ASSETS $5,511,827 $4,132,042 ===================================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Money Borrowed From Banks $6,458 $8,600 Drafts Payable 58,173 50,342 Payable to Brokers, Dealers and Clearing Organizations 4,316,442 3,079,657 Payable to Customers 537,786 507,884 Securities Sold, But Not Yet Purchased - At Market Value 26,497 22,378 Income Taxes Payable 7,229 2,552 Accrued Expenses and Other Liabilities 116,609 86,077 ------------------------------------- Total Liabilities 5,069,194 3,757,490 ------------------------------------- Commitments and Contingencies Put Options Issued on Company Stock - 150 Shareholders' Equity Preferred Stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding - - Common Stock, $.10 par value; authorized 60,000,000 shares, issued and outstanding 38,664,015 shares at November 28, 1997 and 37,925,555 shares at February 28, 1997 3,866 3,792 Paid-In Capital 83,514 73,825 Retained Earnings 356,324 297,863 ------------------------------------- 443,704 375,480 Less: Common Stock in Treasury, at Cost - 29,636 shares at November 28, 1997 and 100,057 shares at February 28, 1997 (1,071) (1,078) ------------------------------------- TOTAL SHAREHOLDERS' EQUITY 442,633 374,402 ------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,511,827 $4,132,042 ===================================== The accompanying notes are an integral part of these statements.
The Quick & Reilly Group, Inc. and Subsidiaries Consolidated Statements of Net Income (Unaudited)
(In thousands, except per share amounts) Three Months Ended ------------------------------------ November 28, November 29, 1997 1996 ------------------------------------ REVENUES Commissions and Clearance Income $73,984 $57,463 Interest 70,663 45,525 Trading 30,184 11,780 Other 2,275 3,291 ------------------------------------ Total Revenues 177,106 118,059 Interest Expense 49,968 31,070 ------------------------------------ Net Revenues 127,138 86,989 ------------------------------------ NON-INTEREST EXPENSES Employee Compensation and Benefits 45,715 29,908 Brokerage, Exchange and Clearance Fees 7,299 3,935 Data Processing and Equipment Rental 12,260 7,469 Communication 1,357 1,069 Printing, Postage, Stationery and Office Supplies 1,885 1,487 Advertising 2,862 2,092 Rent and Other Occupancy 3,362 2,386 Professional Services 1,713 1,012 Amortization of Intangibles 1,615 1,139 Other 8,218 5,779 ------------------------------------ Total Non-Interest Expenses 86,286 56,276 ------------------------------------ Income Before Provision for Income Taxes 40,852 30,713 Provision for Income Taxes 17,637 12,276 ------------------------------------ NET INCOME $23,215 $18,437 ==================================== Earnings Per Share $0.601 $0.488 Weighted Average Number Of Shares Outstanding During the Period 38,634 37,759 Cash Dividends Declared Per Share $0.060 $0.053 The accompanying notes are an integral part of these statements.
The Quick & Reilly Group, Inc. and Subsidiaries Consolidated Statements of Net Income (Unaudited)
(In thousands, except per share amounts) Nine Months Ended ------------------------------------ November 28, November 29, 1997 1996 ------------------------------------ REVENUES Commissions and Clearance Income $207,506 $179,833 Interest 190,539 134,345 Trading 83,337 42,649 Other 5,715 10,557 ------------------------------------ Total Revenues 487,097 367,384 Interest Expense 134,476 91,533 ------------------------------------ Net Revenues 352,621 275,851 ------------------------------------ NON-INTEREST EXPENSES Employee Compensation and Benefits 126,866 93,359 Brokerage, Exchange and Clearance Fees 20,862 13,161 Data Processing and Equipment Rental 33,475 24,725 Communication 3,933 3,612 Printing, Postage, Stationery and Office Supplies 5,820 5,130 Advertising 8,054 5,771 Rent and Other Occupancy 9,570 6,730 Professional Services 4,634 3,567 Amortization of Intangibles 4,680 3,419 Other 22,373 16,226 ------------------------------------ Total Non-Interest Expenses 240,267 175,700 ------------------------------------ Income Before Provision for Income Taxes 112,354 100,151 Provision for Income Taxes 46,940 41,344 ------------------------------------ NET INCOME $65,414 $58,807 ==================================== Earnings Per Share $1.695 $1.557 Weighted Average Number Of Shares Outstanding During the Period 38,604 37,764 Cash Dividends Declared Per Share $0.180 $0.153 The accompanying notes are an integral part of these statements.
The Quick & Reilly Group, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
(In thousands) Nine Months Ended ---------------- November 28, November 29, 1997 1996 -------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $65,414 $58,807 Adjustments to Reconcile Net Income to Net Cash Provided By (Used In) Operating Activities: Depreciation and Amortization 8,489 6,209 Decrease (Increase) in Operating Assets: Receivable From Brokers, Dealers and Clearing Organizations (892,085) (422,417) Receivable From Customers (376,538) 177,973 Securities Owned (68,209) (28,006) Other Assets (22,357) 401 Increase (Decrease) in Operating Liabilities: Money Borrowed From Banks (2,142) - Drafts Payable 7,831 (28,549) Payable to Brokers, Dealers and Clearing Organizations 1,236,785 390,039 Payable to Customers 29,902 (194,802) Securities Sold, But Not Yet Purchased 4,119 13,568 Income Taxes Payable 4,677 (1,201) Accrued Expenses and Other Liabilities 30,532 (22,545) -------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 26,418 (50,523) -------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash Dividends Paid on Common Stock (6,958) (5,791) Payments for Purchase of Treasury Stock (14,682) (147) Proceeds from Sale of Treasury Stock 8,299 - Proceeds from Put Options Written 8 12 -------------------------------- NET CASH USED IN FINANCING ACTIVITIES (13,333) (5,926) -------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Payments for Purchase of Furniture, Equipment and Leasehold Improvements (7,514) (4,019) Payment for Acquisition (2,000) - Payment for Purchase of Exchange Membership - (1,125) -------------------------------- NET CASH USED IN INVESTING ACTIVITIES (9,514) (5,144) -------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,571 (61,593) -------------------------------- CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 89,389 133,287 -------------------------------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $92,960 $71,694 ================================ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid During the Period for- Interest $127,807 $91,202 Income Taxes 41,036 42,937 Noncash Financing and Investing Activities- Issuance of Common Stock for Intangible Assets $16,000 - The accompanying notes are an integral part of these statements.
The Quick & Reilly Group, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The accompanying interim financial statements reflect all adjustments which are, of a normal recurring nature, and, in the opinion of management, necessary for a fair presentation of the interim periods presented. It is recommended that these financial statements be read in conjunction with the Company's Financial Statements and Notes thereto included in the 1997 Annual Report which is incorporated by reference on Form 10-K. Certain amounts on the consolidated statements of income have been restated for the three months and nine months ended November 29, 1996, to conform with the November 28, 1997 presentation. 2. Commitments and Contingencies Margin requirements of approximately $125,439,000 with a clearing corporation at November 28, 1997 have been satisfied by obtaining letters of credit of $126,500,000 secured by customers' margin account securities. In the ordinary course of their securities business, certain of the Company's subsidiaries have been named defendants in a number of lawsuits. In the opinion of management, based upon discussion with counsel, the resolutions of such lawsuits will not in the aggregate have a material adverse effect on the consolidated financial condition of the Company or on its results of operations. 3. Income Taxes For the three months ended November 28, 1997 and November 29, 1996, the effective income tax rate differs from the expected federal statutory rate applied to income before income taxes primarily due to state and local taxes. 4. Net Capital Requirements As registered broker-dealers and member firms of the New York Stock Exchange, Inc. (the "NYSE"), five subsidiaries are subject to certain rules of both the Securities and Exchange Commission and the NYSE. These rules require registrants to maintain minimum levels of net capital, as defined, and may restrict a member from expanding its business and declaring dividends as its net capital approaches specified levels. At November 28, 1997, the subsidiaries had net capital, in the aggregate, of $226,049,000 which exceeded aggregate minimum net capital requirements by $186,321,000. 5. Dividends Declared On October 17, 1997 the Board of Directors declared a cash dividend of $0.06 per share payable on January 2, 1998 to holders of record on December 1, 1997. 6. Announced Merger with Fleet Financial Group On September 17, 1997, the Company and Fleet Financial Group announced a definitive agreement, approved by the Company's Board of Directors, under which Fleet will acquire the Company in a stock for stock transaction in which the Company's shareholders will receive a fixed exchange ratio of .578 shares of Fleet common stock for each common share of The Quick & Reilly Group. The transaction is expected to be accounted for as a pooling of interest, and is expected to close in the first quarter of 1998 subject to customary closing conditions and regulatory approval, including the approval of the Company's shareholders. Item 2. Management's Financial Discussion: Results of Operations: Third Quarter Ended November 28, 1997 Compared to Third Quarter Ended November 29, 1996. Total revenues increased 50% to $177,106,000 while net revenues (revenues net of interest expense) increased 46% to $127,138,000. Expenses, not including interest, increased 53% to $86,286,000. Pretax margin on net revenues decreased from 35% to 32%, while the pretax margin on gross revenues decreased from 26% to 23%. Net margin on net revenues decreased from 21% to 18%, while net margin on total revenues decreased from 16% to 13%. The Company's effective tax rate was 43% for the current quarter versus 40% for the same quarter last year. Commissions and Clearance Income increased 29% to $73,984,000 reflecting increased trading volume. Interest income increased 55% to $70,663,000 primarily due to increases in customer margin debits and stock borrowing activities. Trading increased 156% to $30,184,000 primarily due to the over-the-counter trading of the Nash, Weiss & Co. subsidiary, acquired in March, 1997, as well as an 86% increase in trading profits at JJC Specialist Corp. Other income decreased 31% to $2,275,000 primarily because brokerage fees previously received from Nash, Weiss & Co. are now eliminated in the Company's consolidated results since the March, 1997 acquisition. Employee Compensation and Benefits increased 53% to $45,715,000 primarily due to the increased payroll costs associated with the acquisition of Nash, Weiss & Co. and increases in incentive bonuses. Brokerage, Exchange and Clearance Fees increased 85% to $7,299,000 primarily due to the increased volume and the brokerage fees paid by the newly-acquired Nash, Weiss & Co. subsidiary. Data Processing and Equipment Rental increased 64% to $12,260,000 due to increases in the number of trades processed, increased expenditures for systems improvements and enhancements, and the Nash, Weiss & Co. acquisition with its equipment rental and quotes expenditures not being reflected in last year's numbers. Communication expenses increased 27% to $1,357,000 due to the additional communication costs in the Nash, Weiss & Co. subsidiary and due to the increased volume. Printing, Postage, Stationery and Office Supplies increased 27% to $1,885,000 reflecting the increased volume. Advertising increased 37% to $2,862,000 primarily due to increased commitments for advertising in the Company's Quick & Reilly, Inc. subsidiary. Rent and Other Occupancy increased 41% to $3,362,000 due to increased occupancy costs in Quick & Reilly Inc.'s branch network, increased depreciation charges and the additional occupancy costs associated with the Nash, Weiss & Co. acquisition. Professional Services increased 69% to $1,713,000 primarily due to increased legal and consulting fees. Amortization of Intangibles increased 42% to $1,615,000 primarily due to the amortization of intangible assets associated with the Nash, Weiss & Co. acquisition. Other expenses increased 42% to $8,218,000 primarily due to increases in research expenditures and additional miscellaneous expenses attributable to Nash, Weiss & Co. Nine Months Ended November 28, 1997 Compared to Nine Months Ended November 29, 1996. Total revenues increased 33% to $487,097,000 while net revenues (revenues net of interest expense) increased 28% to $352,621,000. Expenses, not including interest, increased 37% to $240,267,000. Pretax margin on net revenues decreased from 36% to 32%, while the pretax margin on gross revenues decreased from 27% to 23%. Net margin on net revenues decreased from 21% to 19%, while net margin on total revenues decreased from 16% to 13%. The Company's effective tax rate was 42% for the current nine month period versus 41% for the same period last year. Commissions and Clearance Income increased 15% to $207,506,000 primarily due to an increase in the number of trades processed. Interest income increased 42% to $190,539,000 primarily due to an increases in stock borrowing activities. Trading increased 95% to $83,337,000 primarily due to the over-the counter trading of the Nash, Weiss & Co. subsidiary, acquired in March, 1997 as well as due to a 28% increase in JJC Specialist Corp.'s trading profits. Other income decreased 46% to $5,715,000 because brokerage fees previously received from Nash, Weiss & Co. are now eliminated in the Company's consolidated results since the March, 1997 acquisition. Employee Compensation and Benefits increased 36% to $126,866,000 primarily due to the increased payroll costs associated with the acquisition of Nash, Weiss & Co., as well as increases in incentive bonuses. Brokerage, Exchange and Clearance Fees increased 59% to $20,862,000 primarily due to the brokerage fees paid by the newly-acquired Nash, Weiss & Co. subsidiary acquired in March, 1997. Data Processing and Equipment Rental increased 35% to $33,475,000 due to increases in the number of trades processed, increased expenditures for systems improvements and enhancements, and the Nash, Weiss & Co. acquisition with its equipment rental and quotes expenditures not being reflected in last year's numbers. Communications increased 9% to $3,933,000 due to the additional communication costs in the Nash, Weiss & Co. subsidiary and due to the increased volume. Printing, Postage, Stationery and Office Supplies increased 13% to $5,820,000 primarily due to the increase in trading volume. Advertising increased 40% to $8,054,000 primarily due to increased commitments for advertising in the Company's Quick & Reilly, Inc. subsidiary. Rent and Other Occupancy increased 42% to $9,570,000 due to increased occupancy costs in Quick & Reilly Inc.'s branch network, increased depreciation charges and the additional occupancy costs associated with the Nash, Weiss & Co. acquisition. Professional Services increased 30% to $4,634,000 primarily due to increased legal and consulting fees. Amortization of Intangibles increased 37% to $4,680,000 primarily due to the amortization of intangible assets associated with the Nash, Weiss & Co. acquisition. Other expenses increased 38% to $22,373,000 primarily due to increases in research expenditures and additional miscellaneous expenses attributable to Nash, Weiss & Co. Liquidity and Capital Resources Management of the Company believes that funds generated from operations will provide it with sufficient resources to meet all present and reasonably foreseeable future capital needs. The Company's assets are highly liquid and consist mainly of cash or assets readily convertible into cash. --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE QUICK & REILLY GROUP, INC. BY: ------------------- Leslie C. Quick, Jr. Chairman of the Board Chief Executive Officer BY: ------------------- Thomas C. Quick President BY: ------------------- Robert J. Rabinoff Controller
EX-27 2
BD 1,000 9-MOS FEB-28-1998 NOV-28-1997 92,960 1,027,252 0 4,041,373 228,922 20,776 5,511,904 0 1,652,844 0 3,389,930 26,497 0 0 0 3,866 438,767 5,511,904 83,337 190,539 207,506 0 9,545 134,476 126,866 112,354 112,354 0 0 65,414 $ 1.70 $ 1.70
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