-----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, R2755EdA1q36Z8jCIkxuoiGeuJy+qZ3ii6ImYGfw9sNQ8aa97pXl77C1upWCsf8D thYmeg/5JU6vaXBJpN7DYg== 0000719544-96-000006.txt : 19960530 0000719544-96-000006.hdr.sgml : 19960530 ACCESSION NUMBER: 0000719544-96-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960228 FILED AS OF DATE: 19960529 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08517 FILM NUMBER: 96573578 BUSINESS ADDRESS: STREET 1: 230 SOUTH COUNTY RD CITY: PALM BEACH STATE: FL ZIP: 33480 BUSINESS PHONE: 4076558000 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-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission file number 1-8517 February 29, 1996 THE QUICK & REILLY GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-3082841 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 230 South County Road, Palm Beach, Florida 33480 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (407) 655-8000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Stock, par value $.10 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None (Title of class) 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) The aggregate market value of voting stock held by non-affiliates of the registrant is $488,837,988 at May 10, 1996. 25,177,715 (Number of shares of common stock outstanding at May 10, 1996) Documents Incorporated by Reference Form 10-K Annual Report to Shareholders for Parts II, IV year ended February 29, 1996 Proxy Statement for Annual Meeting Part III of Shareholders - June 25, 1996 PART I Item 1. Business (a) General Development of Business The Quick & Reilly Group, Inc. (the "Company") was originally incorporated in New York on June 25, 1981. The Company was reincorporated in Delaware in 1987. It is a holding company owning all of the capital stock of its primary subsidiaries: Quick & Reilly, Inc., U.S. Clearing Corp., and JJC Specialist Corp. Quick & Reilly, Inc. ("Q&R") was incorporated in New York on March 1, 1974. Q&R became a member organization of the New York Stock Exchange, Inc. ("NYSE") on May 2, 1974, and became the first member organization to offer substantially discounted commission rates to individual investors following the elimination of fixed commission rates by the Securities and Exchange Commission ("SEC") on May 1, 1975. U.S. Clearing Corp. ("USCC") was incorporated in New York on December 22, 1978, as a subsidiary of the Company and began clearing customer securities transactions in March 1979. JJC Specialist Corp. ("JJC Specialist") was incorporated in New York as a subsidiary of the Company on September 10, 1982, and conducts specialist operations on the floor of the NYSE. Q&R, USCC, and JJC Specialist (the "primary subsidiaries") are member organizations of the NYSE and are registered as broker-dealers with the SEC. Q&R and USCC are members of the National Association of Securities Dealers (the "NASD"). USCC is also a member of the American Stock Exchange (the "AMEX"), Boston Stock Exchange, Philadelphia Stock Exchange, Pacific Stock Exchange, Chicago Stock Exchange and Chicago Board of Options Exchange. The primary subsidiaries are members of the Securities Investor Protection Corporation which provides protection for customer accounts up to $500,000 per customer, with a limitation of $100,000 on claims for cash balances. USCC has arranged for an additional $49.5 million worth of protection per customer on securities through the Aetna Casualty & Surety Co. (b) Financial Information about Industry Segments The Company operates in a single industry segment and has no foreign operations. No material part of the Company's consolidated revenues is received from a single customer or group of customers. (c) Narrative Description of Business The following table sets forth consolidated revenues of the Company, the number of branch offices of Q&R, and the number of USCC correspondents at year-end, on a comparative basis for each of the last three fiscal years: Fiscal Year Ended the Last Day of February 1996 1995 1994
AMOUNT % AMOUNT % AMOUNT % Commissions (Net of clearance fees) (1) $165,259,000 36.0 $117,834,000 37.4 $119,021,000 44.9 Clearance Income 41,303,000 9.0 27,815,000 8.8 38,040,000 14.3 Interest 187,605,000 40.9 128,988,000 40.9 68,337,000 25.8 Trading (1) 52,648,000 11.5 32,584,000 10.3 31,068,000 11.7 Other (1) 11,831,000 2.6 7,950,000 2.6 8,730,000 3.3 TOTAL REVENUES $458,646,000 100% $315,171,000 100% $265,196,000 100% Number of Q&R Offices 112 103 97 Number of USCC Correspondents 270 233 179 (1) Amounts for the fiscal years ended February 28, 1995 and 1994 have been restated to conform with the presentation for the fiscal year ended February 29, 1996.
Discount Brokerage Services On May 1, 1975, the SEC eliminated fixed commission rates on securities transactions. Although this resulted in an immediate and substantial reduction in commission rates charged to institutional customers, rates charged to individual retail customers by the full-service national brokerage firms were not reduced. At that time, Q&R's management perceived that an opportunity existed for firms willing to offer brokerage services at commission rates substantially below the pre-"May Day" fixed rates, and Q&R began offering such services. Q&R offers discount brokerage services to investors who make their own investment decisions. Q&R reaches the self-directed investor through a combination of customer referrals and national and local advertising. When an individual is referred or responds to advertising, he receives a new account package that includes a description of the services offered, a commission schedule and an application. An account is established when the application is returned and an initial transaction takes place. An extensive branch office system has been established by Q&R for investors who prefer to be close to their broker. The branch office provides Q&R with a presence in the community and provides the client with the opportunity to visit an office or contact a branch office by phone. From a single office in New York in 1974, Q&R has grown to a total of 112 offices nationwide. Nine new offices were opened during the fiscal year ended February 29, 1996. These offices are located in downtown New York City, New York; Roswell, Georgia; Vestal, New York; Princeton, New Jersey; Palm Beach Gardens, Florida; Rockville, Maryland; North Houston, Texas; Islandia, New York; and Bellevue, Washington. Q&R has available various money market and mutual funds that are provided by outside vendors, representing 114 mutual fund families (of these, 20 are no-load fund families). Represented are 1,593 individual funds, including 432 no-load funds. Q&R provides investment information services to its clients to assist them in making investment decisions. A list of these servies includes: Standard & Poor's Marketscope; Standard & Poor's Research Reports; the Dow Jones News Service; Microsoft Money; Morningstar's Principia Service; Wall Street by Fax; Quick & Reilly Top Performers Report prepared by Standard & Poor's; and Quick & Reilly's Dividend Study. During fiscal 1996, Q&R completed the development and rollout of its Quickway Plus system, a new Windows-based on-line trading and portfolio management system. This software package, a fully integrated research, trading account, information and portfolio management tool, is designed to give Q&R's clients a state of the art product previously available only to institutional investors. Q&R completed the acquisition of the customer accounts of three discount brokerage firms in fiscal 1996. On June 23, 1995, Q&R acquired the brokerage firm, Northeast Investment Securities, based in Binghamton, NY. On August 18, 1995, Q&R acquired the brokerage firm, D&D Discount Brokerage Services, based in Mechanicsburg, PA; the accounts were transferred to the Q&R branch office in Harrisburg, PA. On September 18 1995, Q&R acquired the brokerage firm, Cardy & Co., based in Rockville, MD. The Company believes that Q&R's advertising has played a role in expanding the firm's customer base. Advertising expenses for the fiscal years ended in 1996, 1995, and 1994 were approximately $7,474,000, $5,218,000, and $6,226,000 respectively. Clearing Services USCC, which became operational in 1979, maintains accounts and clears securities transactions for correspondents. Correspondents consist of Q&R, JJC, other specialist firms, banks, insurance companies, broker-dealers and financial planners. When a correspondent opens an account, the account is physically maintained by USCC as agent. USCC clears all securities transactions for Q&R's customer accounts and presently carries accounts and clears transactions for 270 correspondents. There is continued competition to obtain clearing agreements with correspondent broker dealers. USCC competes in this respect with a number of large, highly visible, well-financed clearing firms. Contacts between USCC and potential correspondent brokers are made through attending and exhibiting at various trade and financial conferences, advertising, direct mail campaigns, referrals and solicited calls. Price, services, diversity of data processing programs and applications, and reputation are the main basis of competition. Management believes that USCC's services and systems are both competitive and state of the art. During the fiscal year ended February 29, 1996, USCC acquired the International Clearance Department of Republic New York Securities, a subsidiary of Republic New York Corp. and added seven correspondents in this area, establishing USCC's ability to directly self-clear international equities. Electronic data processing is an integral part of the Company's entire brokerage operations, and particularly of USCC's operations. The Company owns or leases the data processing hardware necessary to input trades and back-office data. It relies on a data processing service bureau for programming and main frame computer capabilities. Management thus far has been satisfied with the service bureau's performance, but there can be no assurance of satisfactory performance in the future. The Company believes that USCC's internal controls and safeguards against risk of securities theft are adequate. USCC relies upon certificate counts, microfilming procedures, and video cameras recording movements in high security areas as deterrents to securities theft. In addition, as required by the NYSE and certain other regulatory authorities, USCC carries a fidelity bond covering loss or theft. The total coverage of $49,500,000 per customer (with a $250,000 deductible provision per incident) is believed to be adequate. Customer Financing Customers of correspondent brokers may effect transactions either on a cash or margin basis. In an account authorized for margin trading, USCC may lend its customers an amount up to that permitted by the Federal Reserve Board (Regulation T) . The amount of the loan is also subject to NYSE margin requirements and the firm's internal policies, which in some instances are more stringent than Regulation T and NYSE requirements. Short sales of securities represent sales of borrowed securities and obligate the client to purchase the securities at a later date. Clients may sell securities short in a margin account subject to minimum equity, applicable margin requirements, and the availability of such securities to be borrowed and delivered. Interest is charged on the amount borrowed by customers to finance their margin transactions. Interest charged on customer accounts represented a major component of the Company's gross revenues for the fiscal years ended the last day of February, 1996, 1995, and 1994. USCC uses cash balances in customer accounts, known as free credit balances, to finance customer margin account balances. Secured borrowings and equity capital are also used to finance customer margin account borrowings. The amount of the Company's net interest revenues from financing margin transactions and from free credit balances is affected not only by the volume of business but also by fluctuations in prevailing interest rates. Specialist Business JJC Specialist Corp. is one of the largest specialist firms on the NYSE trading floor. The firm employs 39 specialists who are members of the NYSE and make markets in 270 issues. Each specialist firm is obligated by NYSE rules to maintain a fair and orderly market in those stocks in which it is registered. One of the firm's primary roles is to purchase or sell stock when there is a disparity between public supply and public demand. This provides an opportunity for profits but also involves a high degree of risk during market volatility. At present, there are 36 specialist firms that compete in the allocation process for new stocks. JJC Specialist was awarded six securities during the fiscal year ended February 29, 1996. On October 6, 1995, JJC Specialist acquired the NYSE activities of MMS&N, LLC, a specialist on the floor of the NYSE that made markets in 105 issues. MMS&N is the largest of the five specialist firms that the Company has acquired since 1982. The following table sets forth the highest, lowest and average month-end long and short positions of the Company's specialist business for the year ending February 29, 1996: Average Month-End Highest Position Lowest Position Position Long Short Long Short Long Short $41,428,127 $30,038,820 $9,320,571 $6,634,559 $22,604,858 $14,267,695 Competition All aspects of the Company's business are highly competitive. Competition within the securities industry is principally based upon the price and quality of the products and services offered, financial resources, and the Company's reputation within the investing community. There is also competition to attract and retain personnel within the securities industry. Competition for clients has increased from other sources, such as commercial banks, savings institutions, mutual fund management companies and investment advisory companies. It is likely that competition from these institutions will intensify as they expand their brokerage, clearance and specialist operations. Regulation The Company's primary subsidiaries are subject to various federal and state laws which specifically regulate their activities. The primary purpose of these requirements is to enhance the protection of customer assets. Under certain circumstances, these rules may limit the ability of the Company to make withdrawals of capital from the primary subsidiaries. These laws and regulatory requirements generally subject the primary subsidiaries to standards of solvency with respect to capital requirements, financial reporting requirements, approval of qualifications of personnel engaged in various aspects of their business, record keeping and business practices, the handling of customer funds resulting from securities transactions and the extension of credit to customers on margin transactions. Infractions of these rules and regulations may result in suspension of individual employees and/or their supervisors, termination of employees, limitations on certain aspects of the subsidiary's business, as well as censures and fines, or even proceedings of a civil or criminal nature which could result in a temporary or permanent suspension of a part or all of the primary subsidiaries' activities. Additional information regarding regulation is set forth in Note 12 of the Notes to Consolidated Financial Statements under the caption "Capital Requirements". Such information is incorporated by reference. Employees As of February 29, 1996, the Company and its subsidiaries had 1,109 employees, including full-time and part-time employees. Of these, 456 acted as Account Executives for Q&R. The Company's executive management group consists of six executive officers. The Company believes its relations with its employees are good. (d)Financial Information about Foreign and Domestic Operations and Export Sales Not applicable. Item 2. Properties The headquarters of the Company are located at 230 South County Road, Palm Beach, Florida, 33480. The offices of its primary subsidiaries are located at 26 Broadway, New York, New York 10004 under a lease expiring in 2005. Q&R's 112 branch offices are located in 33 states and the District of Columbia. These offices are located in premises covered by leases that expire on various dates through 2005. Item 3. Legal Proceedings In the ordinary course of their securities business, certain of the Company's primary subsidiaries have been named as defendants in a number of legal actions. In the opinion of management, based on discussions with counsel, the resolution of such actions will not have a material adverse effect on the consolidated financial condition of the Company or on its results of operations. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of the Company's security holders during the fiscal year ended February 29,1996. PART II Market for the Registrant's Common Item 5. Equity and Related Shareholder Matters The information required herein is reported on page 32 of the Company's Annual Report to Shareholders for the year ended February 29, 1996, and is incorporated herein by reference. Item 6. Selected Financial Highlights The information required herein is reported on page 1 of the Company's Annual Report to Shareholders for the year ended February 29, 1996, and is incorporated herein by reference. Management's Discussion and Analysis of Item 7. Financial Condition and Results of Operations The information required herein is reported on pages 19 and 20 of the Company's Annual Report to Shareholders for the year ended February 29, 1996, and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data The information required herein is reported on pages 22 through 30 of the Company's Annual Report to Shareholders for the year ended February 29, 1996, and is incorporated herein by reference. Changes in and Disagreements with Accountants on Item 9. Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant The information required herein will be reported in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held June 25, 1996, which will be filed on or before June 25, 1996, and is incorporated herein by reference. The Company's executive officers hold office until their respective successors are duly elected and qualified, or until their earlier resignation or removal. The executive officers devote substantially all of their business efforts to the affairs of the Company. The following table sets forth the name, age and position with the Company of the executive officers. Name Age Position Leslie C. Quick, Jr. 70 Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer and Director Thomas C. Quick 41 Director, President, Chief Operating Officer Leslie C. Quick III 43 Director, Vice President and Treasurer Peter Quick 40 Director and Vice President Christopher C. Quick 39 Director and Vice President Pascal J. Mercurio 57 Director and Vice President Leslie C. Quick, Jr. is the founder of the Company and served as President from its organization in 1981 until June 1986 and as Chief Executive Officer and Director from its organization in 1981 until present. In April 1983, he was elected Chairman of the Board of Directors of the Company. He served as President and Chief Executive Officer of Q&R from its organization in 1974 until June 1986 and as a Director from 1974 until March 1993. He has served as President and Chief Executive Officer of USCC from January 1979 to May 1981, and as a Director from January 1979 to May 1993. Mr. Quick has also served as Treasurer and a Director of JJC Specialist from September 1982 until March 1990, and as President and Chief Executive Officer from March 1983 until June 1986. Thomas C. Quick, a son of Leslie C. Quick, Jr., became a Director of the Company in July 1981 and was elected President and Chief Operating Officer in March 1996. Mr. Quick has served as Vice President and Assistant Treasurer and Director from July 1981 until his election as President and Chief Operating Officer in March 1996. In addition, Mr. Quick has served as Vice President and Director of USCC since May 1982. Mr. Quick joined Q&R in 1977, became Vice President and a Director in May 1981. He was elected President of that Corporation in June 1986 and served in that position until his election as Vice President in March 1996. He serves as a Director of JJC Specialist. Leslie C. Quick III, a son of Leslie C. Quick, Jr., has served as Vice President since March 1994, Treasurer since February 1985 and as a Director since July 1981. Mr. Quick served as President of the Company from June 1986 to March 1994, at which time he was elected President of USCC and became Vice President of the Company. He also serves as Vice President, Treasurer, Secretary and a Director of Q&R. Peter Quick, a son of Leslie C. Quick, Jr., has served as Director since November 1982 and as Vice President from June 1985. Mr. Quick served as President of the Company from March 1994 to March 1996 at which time he was elected President of Q&R and became Vice President of the Company. He was named Vice President of USCC in May 1987. He served in that capacity until May 1990 when he became President of USCC, which position he held until March 1994 when he was elected President of the Company and Vice President of USCC. He serves as Vice President, Treasurer, Secretary and Director of JJC and as President and Director of Q&R. Christopher C. Quick, a son of Leslie C. Quick, Jr., has served as Vice President of the Company since 1988 and as a Director since November 1982. Mr. Quick has served as President of JJC Specialist since June 1986 and as a Director since its organization in September 1982. From September 1982 until June 1986, Mr. Quick served as Vice President - Trading of JJC Specialist. He is a member of the NYSE and serves as a registered specialist in the specialist book managed by JJC Specialist. Pascal J. Mercurio has been a Director of the Company since July 1981 and a Director of Q&R since March 1980. He joined USCC as a Director and Executive Vice President upon its organization in January 1979. Since that time he has served in various capacities and in May 1990, he became USCC's Chairman of the Board and Chief Executive Officer. Item 11. Executive Compensation The information required herein will be reported in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held June 25, 1996, which will be filed on or before June 25, 1996, and is incorporated herein by reference. Security Ownership of Certain Beneficial Item 12. Owners and Management The information required herein will be reported in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held June 25, 1996, which will be filed on or before June 25, 1996, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions The information required herein will be reported in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held June 25, 1996, which will be filed on or before June 25, 1996, and is incorporated herein by reference. PART IV Exhibits, Financial Statement Schedules Item 14. and Reports on Form 8-K (a)(1) The following report and consolidated financial statements are incorporated by reference from the Registrant's 1996 Annual Report to Shareholders and filed as part of this Report: Report of Independent Public Accountants Consolidated Financial Statements: Consolidated Statements of Financial Condition - the last day of February, 1996 and 1995 Consolidated Statements of Income for the Fiscal Years Ended the last day of February, 1996, 1995 and 1994 Consolidated Statements of Changes in Shareholders' Equity for the Fiscal Years Ended the last day of February, 1996, 1995 and 1994 Consolidated Statements of Cash Flows for the Fiscal Years Ended the last day of February, 1996, 1995 and 1994 Notes to Consolidated Financial Statements (a)(2) The following is a list of financial statement schedules filed as part of this report beginning on page 28: Schedule I - Condensed Financial Information of Registrant Report of Independent Public Accountants on Schedule (a)(3) See accompanying Index to Exhibits (b) No reports on Form 8-K were filed by the Registrant during the last fiscal quarter of the fiscal year covered by this Report. (c) The following is a list of all Exhibits filed as part of this Report: Exhibit Description Page 3.1 Amended By-Laws previously filed as Exhibit 4.2 to the Company's Registration Statement on Form S-8, Registration No. 33-28345, and is hereby incorporated by reference. 3.2 The Company's restated certificate of incorporation was filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8, Registration No. 33-28345, and is hereby incorporated by reference. 4.1 Instruments defining the rights of security holders were filed as Exhibits 4.1 and 4.2 to the Company's Registration Statement on Form S-1, Registration No. 2-83667, and Exhibit 4.3 to the Company's Registration Statement on Form S-8, Registration No. 33-28345, and are hereby incorporated by reference. 10.1 Material contracts were filed as Exhibits 10.4 and 10.5 to the Company's Registration Statement on Form S-1, Registration No. 2-83667, and are hereby incorporated by reference. 10.2 Quick & Reilly Stock Option Plan was filed as Appendix A to the Company's Notice of Annual Meeting of Shareholders for the fiscal year ended February 28, 1991. 13.1 Annual Report to Shareholders for the year ended February 33 29, 1996 With the exception of the information incorporated by reference into Items 5, 6, 7, and 8 of this Form 10-K, the Annual Report to Shareholders for the year ended February 29, 1996 is not deemed filed as part of this report for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 21.1 A list of the Company's subsidiaries. 71 23.1 Consent of Independent Public Accountants 72 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual report to be signed on its behalf by the undersigned, thereunto duly authorized. THE QUICK & REILLY GROUP, INC. BY THOMAS C. QUICK /s/ Dated: May 15, 1996 Thomas C. Quick, President Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. LESLIE C. QUICK, JR. /s/ Dated: May 15, 1996 Leslie C. Quick, Jr. Chairman of the Board of Directors Chief Executive Officer, Chief Financial Officer, and Director THOMAS C. QUICK /s/ Dated: May 15, 1996 Thomas C. Quick, President, Chief Operating Officer and Director PETER QUICK /s/ Dated: May 15, 1996 Peter Quick Vice President, Assistant Treasurer, and Director CHRISTOPHER C. QUICK /s/ Dated: May 15, 1996 Christopher C. Quick Vice President and Director LESLIE C. QUICK III /s/ Dated: May 15, 1996 Leslie C. Quick III Vice President, Treasurer and Director ALEXANDER BENISATTO /s/ Dated: May 15, 1996 Alexander Benisatto Director RICHARD G. BRODRICK /s/ Dated: May 15, 1996 Richard G. Brodrick Director THOMAS E. CHRISTMAN /s/ Dated: May 15, 1996 Thomas E. Christman Director ARLENE B. FRYER /s/ Dated: May 15, 1996 Arlene B. Fryer Secretary and Director HENRY P. KILROY /s/ Dated: May 15, 1996 Henry P. Kilroy Director CLIFFORD W. MAYS /s/ Dated: May 15, 1996 Clifford W. Mays Director PASCAL J. MERCURIO /s/ Dated: May 15, 1996 Pascal J. Mercurio Vice President and Director ROBERT J. RABINOFF /s/ Dated: May 15, 1996 Robert J. Rabinoff Controller and Principal Accounting Officer THE QUICK & REILLY GROUP, INC. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES Reference Annual Report to Share- Form holders 10-K (page) Financial Statements Consolidated Statements of Financial Condition at the last day of February 1996 and 1995 21 For each of the three fiscal years in the period ended the last day of February 1996: Consolidated Statements of Income 22 Consolidated Statements of Changes in Shareholders' Equity 23 Consolidated Statements of Cash Flows 24 Notes to Consolidated Financial Statements 25 Report of Independent Public Accountants 30 Supplementary Information: Quarterly Financial Data (unaudited) 31 Common Stock Data 32 Schedules Report of Independent Public Accountants on Schedules 30 I - Condensed Financial Information of Registrant 25-29 THE QUICK AND REILLY GROUP, INC. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (Item 14(a)) Information presented in the schedule pertains only to continuing operations unless otherwise stated. All other schedules are omitted because the required information is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. The consolidated financial statements and supplementary information listed in the above index, which are included in the Annual Report to Shareholders of The Quick & Reilly Group, Inc. for the fiscal year ended February 29, 1996, and hereby incorporated by reference.
Schedule 1 (page 1) Condensed Financial Information of Registrant THE QUICK & REILLY GROUP, INC. (Parent Company Only) CONDENSED STATEMENTS OF FINANCIAL CONDITION February 29, February 28, 1996 1995 ASSETS Cash and Cash Equivalents $3,982,600 $6,294,983 Securities Owned - At Market Value: Municipal - 21,143,104 Other 22,884 22,884 Receivable From Subsidiaries 4,961,579 1,503,044 Investments in Subsidiaries, at Equity 322,088,228 210,511,736 Other Assets 5,303,218 4,331,504 TOTAL ASSETS $336,358,509 $243,807,255 LIABILITIES AND SHAREHOLDERS' EQUITY Payable to Subsidiaries $2,846,755 $2,400,324 Accrued Expenses and Other Liabilities 30,877,341 4,539,199 TOTAL LIABILITIES 33,724,096 6,939,523 Put Options Issued on Company Stock 470,000 - 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 25,283,860 shares 2,528,386 2,528,386 Paid-in Capital 74,462,250 72,774,714 Retained Earnings 226,425,262 165,837,020 303,415,898 241,140,120 Less: Common Stock in Treasury at Cost - 106,145 in 1996 365,400 shares in 1995 (1,251,485) (4,272,388) TOTAL SHAREHLDERS' EQUITY 302,164,413 236,867,732 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $336,358,509 $243,807,255 See Notes to Condensed Financial Condition
Schedule 1 (Page 2)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT THE QUICK & REILLY GROUP, INC. (Parent Company Only) CONDENSED STATEMENTS OF INCOME Fiscal Year Ended the Last Day of February 1996 1995 1994 REVENUES Management fees from Subsidiaries $9,308,000 $2,548,997 $1,942,003 Interest from Subsidiaries 1,228,667 1,560,000 1,560,000 Other 1,590,614 1,021,505 1,203,652 12,127,281 5,130,502 4,705,655 EXPENSES Employee Compensation and Benefits 2,583,619 1,860,293 1,678,306 Interest 241 1,153 0 Rent and Other Occupancy 73,453 71,952 62,973 Professional Services 195,080 284,212 240,742 Other 591,489 562,573 696,910 3,443,882 2,780,183 2,678,931 INCOME BEFORE PROVISION FOR INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES 8,683,399 2,350,319 2,026,724 Provision for Income Taxes 2,896,329 471,854 434,663 INCOME BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES 5,787,070 1,878,465 1,592,061 Equity in Earnings of Subsidiaries 63,656,502 39,582,306 40,898,951 NET INCOME $69,443,572 $41,460,771 $42,491,012 See Notes to Condensed Financial Information
Schedule 1 (Page 3)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT THE QUICK & REILLY GROUP, INC. (Parent Company Only) CONDENSED STATEMENTS OF CASH FLOWS Fiscal Year Ended the Last Day of February 1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $69,443,572 $41,460,771 $42,491,012 Adjustments to Reconcile Net Income to Net Cash Provided By (Used in) Operating Activities: Equity in Earnings of Subsidiaries (63,656,502) (39,582,306) (40,898,951) (Increase) Decrease in Operating Assets: Securities Owned 21,143,104 2,440,576 (3,827,698) Receivable From Subsidiaries (3,458,535) (206,194) 1,090,976 Other Assets (971,714) (80,901) (1,382,912) Increase (Decrease) in Operating Liabilities: Payable to Subsidiaries 446,431 (874,225) (771,984) Accrued Expenses and Other Liabilities 26,338,142 458,800 636,201 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 49,284,498 3,616,521 (2,663,356) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends Paid on Common Stock and Cash Paid in Lieu of Shares (8,866,159) (7,208,638) (6,195,508) Payments for Purchase of Treasury Stock (51,875) (2,341,938) (1,784,600) Proceeds from Sale of Treasury Stock 5,185,176 - 1,121,185 Proceeds from Put Options Written and Expired 55,967 - - Purchase of Shares Held in Escrow - - (82) NET CASH USED IN FINANCING ACTIVITIES (3,676,891) (9,550,576) (6,859,005) CASH FLOWS FROM INVESTING ACTIVITIES: Increase in Investment in Subsidiaries (90,429,698) - (1,997,000) Cash Dividends Received from Subsidiaries 42,509,708 10,750,000 2,000.000 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (47,919,990) 10,750,000 3,000 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,312,383) 4,815,945 (9,519,361) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 6,294,983 1,479,038 10,998,399 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $3,982,600 $6,294,983 $1,479,038 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid During the Year for: Interest $241 $1,153 $ - Income Taxes 598,292 351,077 609,750 Noncash Financing and Investing Activities: Issuance of Common Stock for Noncash Net Assets and Intangible Assets $1,000,000 $ - $ - Five Percent Stock Dividends Paid - - - Issuance of Common Stock Pursuant to Stokes, Hoyt & Co. - - 4,381 See Notes to Condensed Financial Information
Schedule 1 (Page 4) CONDENSED FINANCIAL INFORMATION OF REGISTRANT THE QUICK & REILLY GROUP, INC. (Parent Company Only) NOTES TO CONDENSED FINANCIAL INFORMATION NOTE 1 - DIVIDENDS RECEIVED FROM SUBSIDIARIES The Quick & Reilly Group, Inc. received from its consolidated subsidiaries cash dividends of$42,510,000 for the fiscal year ended February 29, 1996 and $10,750,000 and $2,000,000 for each of the fiscal years ended February 28, 1995 and 1994, respectively. NOTE 2 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The condensed financial information of The Quick & Reilly, Group, Inc. (Parent Company Only) should be read in conjunction with the consolidated financial statements of The Quick & Reilly Group, Inc. and Subsidiaries and the notes thereto incorporated by reference in this report. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To The Quick & Reilly Group, Inc.: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in The Quick & Reilly Group, Inc. and Subsidiaries' annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated April 17, 1996. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index on page 23 is the responsibility of the Company's management and is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Arthur Andersen LLP New York, New York April 17, 1996 EX-13.1 2
THE QUICK & REILLY, INC. AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS Fiscal Year Ended the Last Day of February (In Thousands, Except Per Share Amounts) 1996 1995 1994 1993 1992 Revenues $458,646 $315,171 $265,196 $195,934 $154,019 Net Revenues 324,600 231,416 226,405 171,696 140,238 Income Before Provision for Income Taxes 122,215 80,402 79,897 52,196 42,036 Net Income 69,443 41,461 42,491 28,695 22,684 Earnings Per Share (1) 2.78 1.66 1.68 1.17 0.99 Cash Dividends Per Share (1) 0.35 0.29 0.25 0.19 0.16 Total Assets 3,522,903 2,581,880 2,476,855 1,376,965 1,029,611 Total Liabilities 3,220,269 2,345,012 2,271,897 1,207,639 891,190 Total Shareholders' Equity 302,164 236,868 204,958 169,326 138,422 Book Value Per Share (1) 12.00 9.51 8.16 6.75 5.65 (1) All per share data have been restated to reflect the two three- for-two stock splits declared during the fiscal year ended February 29, 1996, and the two five percent stock dividends declared during the fiscal year ended February 28, 1994.
Description of Business The Quick & Reilly Group, Inc. (the "Company") is a holding company owning all the capital stock of its primary operating subsidiaries: Quick & Reilly, Inc., U.S. Clearing Corp. and JJC Specialist Corp. Quick & Reilly, Inc. ("Q&R") was incorporated in New York on March 1, 1974. Q&R became a member organization of the New York Stock Exchange, Inc. ("NYSE") on May 2, 1974, and became the first member organization to offer substantially discounted commission rates to individual investors following the elimination of fixed commission rates by the Securities and Exchange Commission ("SEC") on May 1, 1975. U.S. Clearing Corp. ("U.S. Clearing") was incorporated in New York on December 22, 1978, and began clearing customer trades in March 1979. In 1992, U.S. Clearing established its institutional sales operation. JJC Specialist Corp. ("JJC Specialist") was incorporated in New York on September 10, 1982, and conducts specialist operations on the floor of the NYSE. In October 1995, JJC Specialist acquired the specialist operations of MMS&N, LLC ("MMS&N"). Q&R Capital Corp. was incorporated in New York on November 6, 1995 to consolidate the investment functions of the Company and its subsidiaries. Q&R, U.S. Clearing and JJC Specialist are member organizations of the NYSE and are registered as broker-dealers with the SEC. Q&R and U.S. Clearing are members of the National Association of Securities Dealers. U.S. Clearing is also a member of the American Stock Exchange, Boston Stock Exchange, Pacific Stock Exchange, Philadelphia Stock Exchange, Chicago Stock Exchange and Chicago Board Options Exchange. Q&R, U.S. Clearing and JJC Specialist are members of the Securities Investors Protection Corporation, which provides protection for customer accounts up to $500,000 per customer, with a limitation of $100,000 on claims for cash balances. U.S. Clearing has also arranged for an additional $49.5 million protection per customer on securities through the Aetna Casualty & Surety Co. Results of Operations Comparison of 1996 and 1995 Results Fiscal 1996 Revenues of the Company increased 46% compared with fiscal 1995, while Net Revenues increased 40%. Commissions and Clearance Income increased 42% compared with 1995, due to increased volume in the securities markets and the October 1995 acquisition of the specialist operations of MMS&N by JJC Specialist. Interest Income increased 45%, primarily due to increased customer margin debits and stock borrowing activities. Interest Expense increased 60%, primarily due to stock lending activities. Trading Income increased 62%, primarily due to the acquisition of the specialist operations of MMS&N by JJC Specialist, and increased trading revenue by U.S. Clearing. Other Revenues increased 49%, primarily due to increased fee income. Total Non-Interest Expenses increased 34% for fiscal 1996 compared with fiscal 1995. Employee Compensation and Benefits increased 28%, primarily due to increases in incentive bonuses and the increase in personnel at JJC Specialist due to the acquisition of MMS&N in October 1995. Data Processing and Equipment Rental increased 41%, primarily due to the increased trading volume, as did Brokerage, Exchange and Clearance Fees increasing by 36%. Printing, Postage, Stationery and Office Supplies increased 32%, due to the increase in trading volume as well as the increase in postal rates. Advertising increased 43%, primarily due to the increased commitments of the Q&R advertising campaigns. Rent and Other Occupancy increased 25%, primarily due to the opening of new branch offices in Q&R and the expansion of JJC Specialist's office and operational space. Communication costs increased 45% primarily due to the establishment of the Easy Trade and Twenty four hour brokerage operations at Q&R and the increased volume. Amortization of Intangible Assets increased 53%, due to the three broker-dealer acquisitions during the fiscal year. Other expenses increased 66%, primarily due to the increased volume and management's commitment to expand the various subsidiaries' businesses. Comparison of 1995 and 1994 Results Fiscal 1995 Revenues of the Company increased 19% compared with fiscal 1994, while Net Revenues increased 2%. Commission and Clearance Income decreased 7% compared with 1994, due to decreased volume in the securities markets. Interest Income increased 89%, primarily due to rising interest rates, increased customer margin debits and stock borrowing activities. Interest Expense increased 116%, primarily due to rising interest rates and increased stock lending activities. Trading Income increased 5%, due to a favorable securities market environment in market-making activities. Other Revenues decreased 9%, primarily due to a decrease in fee income in U.S. Clearing. Total Non-Interest Expenses increased 3% for fiscal 1995 compared with fiscal 1994. Employee Compensation and Benefits increased 4% for fiscal 1995 compared with fiscal 1994, primarily due to increases in incentive bonuses in the clearing and specialist subsidiaries. Data Processing and Equipment Rental increased 8%, primarily due to increased equipment charges related to the Q&R branch network system and additional equipment charges for the subsidiaries' new disaster recovery site. Printing, Postage, Stationery and Office Supplies decreased 7%, due to the decreased trading volume. Rent and Other Occupancy increased 8%, primarily due to the opening of new branch offices and the moving of existing branches in Q&R. Professional Services increased 30%, primarily due to increased consulting, legal and accounting fees. Amortization of Intangible Assets decreased 18%, due to the fully amortized goodwill relating to the Conklin, Cahill & Co. acquisition at the end of February 1994. Other Expenses increased 5%, primarily due to the expansion of the Q&R branch network and the increase in institutional operations at U.S. Clearing. 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. The Company utilizes bank borrowings, securities lending activities, customers' free credit balances and other payables, as well as the Company's equity capital to finance receivables from customers. The secured financings are collateralized primarily by customer securities pledged. Customer receivables are secured by customer securities held as collateral. The Company can demand payment of outstanding balances at any time. Receivables and payables with other broker-dealers represent either current open transactions that usually settle within a few days or securities lending and borrowing activities that are collateralized and normally can be closed out within a few days. The Company's primary subsidiaries are subject to regulatory net capital requirements which are designed to measure the general financial integrity and liquidity of broker-dealers. Under the SEC's net capital requirements, Q&R, U.S. Clearing and JJC Specialist may not (a) pay or permit the payment or withdrawal of any subordinated debt, if payment would cause net capital to fall below certain specified levels; (b) permit equity capital to be removed if, after giving effect to such payment, withdrawal or removal, either the aggregate indebtedness of Q&R would exceed 10 times its net capital or the net capital of Q&R would fail to equal 1.2 times its minimum required net capital or for U.S. Clearing would be less than 5% of its aggregate debit balances arising from customer transactions or net capital of U.S. Clearing would fail to equal 1.2 times its minimum required net capital; or (c) permit equity withdrawals, unsecured loans or advances, to certain related parties without prior approval of the SEC or its designated examining authority if the withdrawal would cause net capital to fall below certain specified levels. Additionally, JJC Specialist must comply with the net liquid asset requirements of the NYSE. These restrictions have not had, and are not expected to have, any impact on the ability of the Company to meet its obligations. As of the last day of February 1996 and 1995, the Company's principal subsidiaries had aggregate net capital of $196,501,000 and $176,176,000, respectively, which exceeded their aggregate minimum net capital requirements by $139,726,000 and $145,850,000, respectively. Effects of Inflation The Company's assets are not significantly affected by inflation because they are primarily monetary and liquid. In addition, large investments in fixed assets are not required because the nature of the Company's business is to provide services. Management believes that the replacement costs of furniture, equipment and leasehold improvements in the Company's principal and branch offices would not materially affect operations. However, the rate of inflation affects the Company's expenses such as employee compensation, rent, communications and other expenses, which may not be readily recoverable in the prices of services offered by the Company. To the extent inflation results in rising interest rates and has other adverse effects upon the securities markets, it may adversely affect the Company's financial position and results of operations.
The Quick & Reilly Group Inc. and Subsiaries Consolidated Statements of Financial Condition (In thousands, Except Share Amounts) February 29, February 28, 1996 1995 ASSETS Cash and Cash Equivalents $ 133,287 $ 40,863 Receivable From Brokers, Dealers and Clearing Organizations 1,926,583 1,606,210 Receivable From Customers- Net of Allowance for Doubtful Accounts of $6,087 in 1996 and $4,571 in 1995 1,223,184 800,884 Securities Owned- At Market Value U.S. Governments 1,995 8,382 Municipals 93,841 83,120 Equities and Other 59,637 14,914 Exchange Memberships- At Cost (Market Value $14,692 in 1996 and $10,362 in 1995) 3,908 3,908 Furniture, Equipment and Leasehold Improvements- At Cost Less Accumulated Depreciation and Amortization of $9,462 in 1996 and $7,155 in 1995 15,307 6,340 Other Assets 65,161 17,259 TOTAL ASSETS $3,522,903 $2,581,880 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Money Borrowed from Banks $1,000 $7,797 Drafts Payable 81,331 34,522 Payable to Brokers, Dealers and Clearing Organizations 2,340,739 1,821,151 Payable to Customers 680,790 409,560 Securities Sold, But Not Yet Purchased- At Market Value 14,847 12,918 Income Taxes Payable 6,608 3,643 Accrued Expenses and Other Liabilities 94,954 55,241 TOTAL LIABILITIES $3,220,269 $2,345,012 Commitments and Contingencies Put Options Issued on Company Stock 470 - 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 25,283,860 shares 2,528 2,528 Paid-in Capital 74,462 72,775 Retained Earnings 226,425 165,837 303,415 241,140 Less: Common Stock in Treasury, at Cost - 106,145 shares in 1996 and 365,400 shares in 1995 (1,251) (4,272) TOTAL SHAREHOLDERS' EQUITY 302,164 236,868 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,522,903 $2,581,880 The accompanying notes are an integarl part of these statements
The Quick & Reilly Group, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (In thousands, Except Per Share Amounts) Fiscal Year Ended the Last Day of February 1996 1995 1994 REVENUES Commissions and Clearance Income $206,562 $145,649 $157,061 Interest 187,605 128,988 68,337 Trading 52,648 32,584 31,068 Other 11,831 7,950 8,730 Total Revenues 458,646 315,171 265,196 Interest Expense 134,046 83,755 38,791 Net Revenues 324,600 231,416 226,405 NON-INTEREST EXPENSES Employee Compensation and Benefits 105,739 82,785 79,546 Data Processing and Equipment Rental 24,947 17,736 16,467 Brokerage, Exchange and Clearance Fees 17,455 12,821 12,793 Printing, Postage, Stationery and Office Supplies 8,203 6,208 6,686 Advertising 7,474 5,218 6,226 Rent and Other Occupancy 7,307 5,838 5,381 Communication 4,424 3,043 2,826 Amortization of Intangibles 3,189 2,081 2,545 Professional Services 3,040 2,881 2,220 Other 20,607 12,403 11,818 Total Non-Interest Expenses 202,385 151,014 146,508 Income Before Provisions for Income Taxes 122,215 80,402 79,897 Provision for Income Taxes 52,772 38,941 37,406 NET INCOME $69,443 $41,461 $42,491 Earnings Per Share $ 2.78 $ 1.66 $ 1.68 The accompanying notes are an integral part of these statements
The Quick & Reilly Group, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (In thousands, Except Share Amounts) Common Stock Paid-in Retained Treasury Total Shares Amount Capital Earnings Stock SHAREHOLDERS' EQUITY- FEBRUARY 28, 1993 $169,326 10,176,937 $1,018 $41,576 $127,899 ($1,167) Effect of Two, Three-For Two Stock Splits Paid During the Fiscal Year Ended February 29,1996 0 12,720,714 1,272 (1,272) - - SHAREHOLDERS' EQUITY- FEBRUARY 28, 1993 RETROACTIVELY RESTATED $169,326 22,897,651 2,290 40,304 127,899 (1,167) Five Percent Common Stock Dividends Declared in April and December 1993 0 2,342,409 234 32,375 (32,609) - Reclassification of Common Stock Issued Pursuant to Stokes, Hoyt & Co. Acquisition 0 43,800 4 (4) - - Cash Dividends on Common Stock (6,196) - - - (6,196) - Purchase of Treasury Stock (1,785) - - - - (1,785) Sale of Treasury Stock Under Stock Option Plan and Related Tax Benefits 1,122 - - 100 - 1,022 Net Income 42,491 - - - 42,491 - SHAREHOLDERS' EQUITY- FEBRUARY 28, 1994 204,958 25,283,860 2,528 72,775 131,585 (1,930) Cash Dividends on Common Stock (7,209) - - - (7,209) - Purchase of Treasury Stock (2,342) - - - - (2,342) Net Income 41,461 - - - 41,461 - SHAREHOLDERS' EQUITY- FEBRUARY 28, 1995 $236,868 25,283,860 $2,528 $72,775 $165,837 ($4,272) Cash Dividends on Common Stock (8,855) - - - (8,855) - Cash Paid in Lieu of Shares Issued On Account of Two, Three-For-Two Stock Splits (11) - - (11) - - Purchase of Treasury Stock (52) - - - - (52) Sale of Treasury Stock 5,185 - - 2,112 - 3,073 Proceeds From Put Options Written, and Expired 56 - - 56 - - Put Options Issued on Company Stock (470) - - (470) - - Net Income 69,443 - - - 69,443 - SHAREHOLDER'S EQUITY - February 29, 1996 $302,164 $25,283,860 $2,528 $74,462 $226,425 ($1,251) The accompanying notes are an integral part of these statements.
The Quick & Reilly Group, Inc., CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Fiscal Year Ended the Last Day of February 1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 69,443 $ 41,461 $ 42,491 Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Depreciation and Amortization 5,668 3,503 3,971 Decreases (Increases) in Operating Assets: Receivable From Brokers, Dealers and Clearing Organizations (320,373) 4,485 (907,325) Receivable From Customers (422,300) (69,531) (189,532) Securities Owned (49,057) (41,630) (8,952) Other Assets (4,614) (980) 2,867 Increase (Decrease) in Operating Liabilities: Money Borrowed From Banks (6,797) (30,206) 9,953 Drafts Payable 46,809 (12,030) 254 Payable to Brokers, Dealers and Clearing Organizations 519,588 62,413 952,570 Payable to Customers 271,230 32,991 97,626 Securities Sold, But Not Yet Purchased 1,929 4,859 (3,841) Income Taxes Payable 2,965 1,941 (5,287) Accrued Expenses and Other Liabilities 39,533 13,147 12,983 NET CASH PROVIDED BY OPERATING ACTIVITIES 154,024 10,423 7,778 CASH FLOWS FROM FINANCING ACTIVITIES: Cash Dividends Paid on Common Stock and Cash Paid in Lieu of Shares (8,866) (7,209) (6,196) Purchase of Treasury Stock (52) (2,342) (1,785) Proceeds From Sale of Treasury Stock 5,185 - 1,122 Proceeds from Put Options Written and Expired 56 - - NET CASH USED IN FINANCING ACTIVITIES (3,677) (9,551) (6,859) CASH FLOWS FROM INVESTING ACTIVITIES: Payment for Purchase of Exchange Membership - - (575) Payments for Purchase of Furniture, Equipment and Leasehold Improvements (11,398) (1,833) (1,251) Payments for Acquisitions (46,525) - (3,500) NET CASH USED IN INVESTING ACTIVITIES (57,923) (1,833) (5,326) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 92,424 (961) (4,407) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 40,863 41,824 46,231 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $133,287 $40,863 $41,824 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid During the Year for- Interest $132,631 $74,602 $38,273 Income Taxes 48,120 29,569 34,181 Noncash Financing and Investing Activities- Issuance of Common Stock for Noncash Net Assets and Intangible Assets $1,000 - - Five Percent Stock Dividends Paid - - 32,609 Issuance of Common Stock Pursuant to Stokes, Hoyt & Co. Acquisition - - 4 The accompanying notes are an integral part of these statements.
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements include the accounts of The Quick & Reilly Group, Inc. (the "Company") and its wholly owned subsidiaries which include Quick & Reilly, Inc. ("Q&R"), a broker-dealer providing discount brokerage services; U.S. Clearing Corp. ("U.S. Clearing"), a broker-dealer providing securities clearance for Q&R and JJC Specialist Corp. ("JJC Specialist"), as well as for other correspondent broker-dealers; and JJC Specialist, a broker-dealer that is a specialist on the floor of the New York Stock Exchange, Inc. (the "primary subsidiaries"). All material intercompany transactions have been eliminated. Customer transactions are recorded on a settlement date basis. Proprietary transactions, commission and clearance revenues and related expenses are recorded on a trade date basis. Securities owned and securities sold, but not yet purchased, are valued at market and the resulting unrealized gains and losses are reflected in the Consolidated Statements of Income. Intangible assets are being amortized on a straight-line basis over three to fifteen years. Office furniture and equipment are depreciated on a straight-line basis over three to eight years. Leasehold improvements are amortized over the remaining lives of the related leases. The Company considers short-term, highly liquid investments to be cash equivalents. Certain amounts have been restated for the fiscal years ended February 28, 1995 and 1994, to conform with the February 29, 1996 presentation. These include establishing a new financial statement caption for trading income and reclassifying JJC Specialist's floor brokerage income to commission income. The preparation of the financial statements requires management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements. Management does not believe that actual results will differ materially from these estimates. During the fiscal year ended February 29, 1996, the Company effected two three-for-two stock splits. All per share amounts for earnings and cash dividends for the fiscal years ended February 28, 1995 and 1994 have been adjusted to give effect to these transactions. In addition, the number of Common Stock shares outstanding, and related dollar amounts of Common Stock and Paid-in Capital as shown on the Consolidated Statements of Financial Condition for the fiscal year ended February 28, 1995 and the Consolidated Statements of Changes in Shareholders' Equity for the fiscal years ended February 28, 1994 and 1993 have been retroactively restated to give effect to these transactions. The number of Common Stock shares outstanding, and related dollar amounts of Common Stock, Paid-in Capital and Retained Earnings, as shown on the Consolidated Statements of Changes in Shareholders' Equity for the fiscal year ended February 28, 1993 have not been retroactively restated to reflect the two five percent stock dividends paid during the fiscal year ended February 28, 1994. NOTE 2 - ACQUISITIONS During the fiscal year ended February 29, 1996, Quick & Reilly, Inc. acquired the assets of three retail broker dealers and JJC Specialist Corp. acquired the operations of a specialist firm, for cash or shares of the Company's common stock. The major portion of the purchase prices have been allocated to various intangible assets, including customer lists, goodwill and covenants not to compete, which are reflected in Other Assets in the amount of $45,218,000, net of accumulated amortization of $1,305,000, at February 29, 1996. In connection with these acquisitions, a non-interest bearing note of $22,500,000, due to be paid on October 5, 1996, is included in Accrued Expenses and Other Liabilities at February 29, 1996. During the fiscal year ended February 28, 1994, Q&R acquired the assets of a broker-dealer for cash. The major portion of the purchase price has been allocated to customer lists, goodwill, and covenants not to compete ("Intangible Assets") which are reflected in Other Assets at $2,775,000 and $3,002,000 net of accumulated amortization of $625,000 and $398,000 at February 29, 1996, and February 28, 1995, respectively. During the fiscal year ended February 28, 1993, JJC Specialist acquired through merger the specialist firm of Stokes, Hoyt & Co., and renamed it JJC Specialist Partners. The Company issued shares of its common stock to the sellers valued as of the closing date of the transaction in December 1992. The major portion of the purchase price has been allocated to goodwill and covenants not to compete. Goodwill and covenants not to compete are reflected in Other Assets in the amounts of $2,193,000 and $0, net of accumulated amortization of $3,788,000 and $1,500,000, respectively, at February 29, 1996, and $3,389,000 and $417,000, net of accumulated amortization of $2,592,000 and $1,083,000, respectively, at February 28, 1995. The acquisitions were accounted for under the purchase method of accounting and the consolidated financial statements include the results of operations of the businesses acquired from the date of acquisition. NOTE 3 - RECEIVABLE FROM AND PAYABLE TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS
Amounts receivable from and payable to brokers, dealers and clearing organizations include (in thousands): February 29, February 28, 1996 1995 Receivable: Securities Borrowed $1,837,018 $1,554,300 Securities Failed to Deliver 23,575 12,539 Clearing Organizations and Other 65,990 39,371 $1,926,583 $1,606,210 Payable: Securities Loaned $2,065,112 $1,807,747 Securities Failed to Receive 10,970 6,972 Clearing Organizations and Other 264,657 6,432 $2,340,739 $1,821,151 As these amounts are short-term in nature, their carrying amount is a reasonable estimate of fair market value.
NOTE 4 - RECEIVABLE FROM AND PAYABLE TO CUSTOMERS The amounts shown represent the dollar balances receivable from and payable to customers in connection with securities, cash and margin transactions. Customer receivables are collateralized by securities, the value of which is not reflected in the consolidated financial statements. As these amounts are short-term in nature, their carrying amounts are reasonable estimates of fair market value. NOTE 5 - MONEY BORROWED FROM BANKS Money borrowed from banks in the amount of $1,000,000 and $7,797,000, at February 29, 1996, and February 28, 1995, respectively, is fully collateralized by securities owned by customers and noncustomers. These borrowings are payable on demand and generally bear interest at the brokers' call rate. The weighted average borrowings during fiscal 1996 and 1995 were $8,078,000 and $10,572,000, respectively. The weighted average interest rates during fiscal 1996 and 1995 were 5.86% and 5.18%, respectively. As these borrowings are short-term in nature and bear market rates of interest, their carrying amounts are reasonable estimates of fair market value. NOTE 6 - COMMITMENTS AND CONTINGENCIES The Company and its primary subsidiaries occupy office premises under noncancellable leases expiring at various dates through April 2005. Future minimum aggregate rentals, excluding escalations, under the leases are $3,986,000; $3,643,000; $2,915,000; $2,635,000 and $2,506,000 for each of the fiscal years ending the last day of February 1997 through 2001, and $3,949,000 thereafter. The leases contain provisions for rent escalations based on increases in costs incurred by the lessor. Rental expense under the leases was $4,755,000, $3,780,000 and $3,412,000 for the fiscal years ended the last day of February 1996, 1995 and 1994, respectively. Margin requirements of $62,900,000 with a clearing corporation at February 29, 1996, have been satisfied by obtaining letters of credit with face amounts totaling $68,300,000. These letters of credit are secured by customers' margin securities. In the ordinary course of their securities business, certain of the Company's primary subsidiaries have been named as defendants in a number of legal actions. In the opinion of management, based on discussions with counsel, the resolution of such actions will not have a material adverse effect on the consolidated financial condition of the Company or on its results of operations. NOTE 7 - SECURED DEMAND NOTES The notes, which have a face value of $410,000 and are included in Other Assets, have been contributed pursuant to secured demand note collateral agreements and are subordinated to the claims of general creditors of U.S. Clearing. The notes bear interest at rates of 7% to 8% per annum, and mature on March 31, 1997. The loans are fully collateralized by marketable securities of approximately $611,000 that are available to the Company to utilize in its securities financing activities. The loans have automatic renewal options unless written notice is given by either party prior to seven months preceding the stated maturity dates. The loans are available to U.S. Clearing in computing its net capital pursuant to Rule 15c3-1 of the SEC. The notes can be repaid only if, after giving effect to such repayment, U.S. Clearing meets the SEC's net capital regulations governing the withdrawal of subordinated debt. NOTE 8 - EARNINGS PER SHARE Earnings per share have been calculated by dividing net income by the weighted average number of shares outstanding for the fiscal year. Stock options issued pursuant to The Quick & Reilly Stock Option Plan are common stock equivalents. For the fiscal years ended on the last day of February 1996, 1995 and 1994, earnings per share have not been adjusted for the effect of any outstanding stock options as the impact is immaterial; however, they have been retroactively adjusted to reflect the two three-for-two stock splits declared during the fiscal year ended February 29, 1996 and the two five percent stock dividends declared during the fiscal year ended February 28, 1994. The weighted average shares outstanding were 24,985,177; 24,988,790 and 25,217,354, for the fiscal years ended the last day of February 1996, 1995 and 1994, respectively. NOTE 9 - INTEREST Interest Income is comprised of the following (in thousands):
Fiscal Year Ended February 1996 1995 1994 Interest on Securities Borrowed $108,680 $70,212 $30,097 Interest on Customer Margin Balances 70,590 54,273 35,548 Other Interest Income 8,335 4,503 2,692 $187,605 $128,988 $68,337 Interest Expense is comprised of the following (in thousands): Fiscal Year Ended February 1996 1995 1994 Interest on Securities Loaned $118,288 $73,853 $33,717 Interest on Customer Credit Balances 14,877 9,158 4,562 Money Borrowed from Banks 849 714 398 Other Interest Expense 32 30 114 $134,046 $83,755 $38,791 NOTE 10 - PENSION AND PROFIT SHARING PLANS The Company and its primary subsidiaries have adopted defined contribution pension and profit sharing plans covering all full-time employees who have completed one year of service. The pension plans provide for the employer to contribute an amount based on a percentage of compensation as defined in the plan agreements. The profit sharing plans provide for the employer to contribute an amount out of its current profits, as defined in the plan agreements, or accumulated earned surplus as determined by its Board of Directors. Voluntary contributions from the participants may not exceed ten percent of compensation paid to them during the plan year. For the fiscal years ended the last day of February 1996, 1995 and 1994, the Company and its primary subsidiaries contributed, in the aggregate $3,768,000, $3,365,000 and $2,982,000, respectively, to the plans. The Company and its primary subsidiaries also have noncontributory 401(k) plans covering all full-time employees. The Company and its primary subsidiaries participate in The Quick & Reilly Group, Inc. Employee Benefit Plan (the "Benefit Plan"). The Benefit Plan, established on September 1, 1992, provides health benefits to eligible employees and their families. The Benefit Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. For the fiscal years ended the last day of February, 1996, 1995 and 1994, the Company and its primary subsidiaries contributed, in the aggregate, $10,000; $2,276,000 and $1,825,000, respectively, to the Benefit Plan. NOTE 11 - INCOME TAXES The Company and its subsidiaries file a consolidated federal tax return. Each subsidiary is charged or credited with an amount equal to its separate tax liability or benefit as if it were filing on an individual company basis. In 1994, the Company adopted the provisions of the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), which requires that an asset and liability approach be applied in accounting for income taxes and that deferred tax assets and liabilities be adjusted currently using tax rates expected to be in effect when taxes are estimated to be paid or recovered. The implementation of SFAS 109 did not have a material impact on the financial condition of the Company or on its results of operations. The effective tax rates differ from the federal statutory rate applied to income before income taxes for the following reasons:
Fiscal Year Ended February 1996 1995 1994 Federal Statutory Income Tax Rate 35% 35% 35% State and Local Taxes, Net of Federal Tax Benefits 11% 14% 14% Other (3%) (1%) (2%) Effective Income Tax Rate 43% 48% 47% Income taxes consist of the following (in thousands): Fiscal Year Ended February 1996 1995 1994 Federal $33,159 $23,681 $24,096 State and Local 19,613 15,260 13,310 $52,772 $38,941 $37,406 The deferred income tax provision (benefit) consists of the following (in thousands): Fiscal Year Ended February 1996 1995 1994 Valuation of securities owned $671 $(264) $(150) Reserves not currently deductible (817) (46) (956) $(146) $(310) $(1,106) The following deferred tax assets are reflected in Other Assets (in thousands): February 29, February 28, 1996 1995 Deferred Tax Assets: Valuation of securities owned $ - $ 383 Reserves not currently deductible 2,139 1,322 Total Deferred Tax Assets $2,139 $1,705 The following deferred tax liabilities are reflected in Accrued Expenses and Other Liabilities (in thousands): February 29, February 28, 1996 1995 Deferred Tax Liability: Valuation of securities owned $288 $ - Total Deferred Tax Liability $288 $ -
NOTE 12 - CAPITAL REQUIREMENTS As registered broker-dealers and member firms of the NYSE, the primary subsidiaries are subject to certain capital rules of both the SEC and the NYSE. These rules require registrants to maintain minimum levels of net capital, as defined, and may require a member to reduce its business or prohibit a member from expanding its business and declaring dividends as its net capital approaches specified levels. As of February 29, 1996, and February 28, 1995, the primary subsidiaries had net capital, in the aggregate, of $196,501,000 and $176,176,000, respectively, which exceeded aggregate minimum net capital requirements by $139,726,000 and $145,850,000, respectively. While the primary subsidiaries' aggregate equity capital is includable in net capital, $99,460,000 is not available for payment of cash dividends and advances to the Company. As of February 29, 1996, this limitation does not restrict the Company from declaring its regular dividends to its shareholders. NOTE 13 - STOCK OPTION PLAN On June 25, 1991, the Company amended the JJC Stock Option Plan to (a) change its name to The Quick & Reilly Stock Option Plan (the "Plan"), (b) expand the Plan participants to cover directors, officers and employees of the Company and each of its wholly owned subsidiaries and (c) increase the number of shares of common stock to 1,500,000. Pursuant to the Plan, all options are granted at not less than fair market value on the date of grant and for not more than a five-year time period. All options outstanding on the last day of February 1996, 1995 and 1994 are exercisable. The number of shares of common stock authorized under the Plan has been increased to 3,720,937, to reflect the two three-for-two stock splits declared during the year ended February 29, 1996, and the two five percent dividends declared during the year ended February 28, 1994. On March 15, 1996, six officers of the Company were granted options at fair market value to purchase 50,000 shares each of the Company's common stock and a member of the Board of Directors was granted options at fair market value to purchase 25,000 shares of the Company's stock. In October 1995, Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") was issued. SFAS 123 encourages companies to adopt a fair value based method of accounting for stock- based compensation plans in place of the intrinsic value based method provided for by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees" ("APB 25"). Companies which continue to apply the provisions of APB 25 must make pro forma disclosures in the notes to their financial statements of net income and earnings per share as if the fair value based method of accounting as defined in SFAS 123 had been applied. The Company plans to adopt SFAS 123 in fiscal year ending 1997 on a pro forma disclosure basis. STOCK OPTION Number of Market Price Shares Per Share Total Outstanding at February 28, 1993 421,705 $10.48 $4,420,000 Cancelled at $12.46 per share (24,806) $10.40 258,000 Cancelled at $12.74 per share (24,806) $10.40 258,000 Granted at $14.84 per share 124,031 $13.55 1,680,000 Less: Exercised at $5.53 per share (82,687) $ 11.49 950,000 Exercised at $5.53 per share (41,343) $13.98 578,000 Outstanding at February 28, 1994 372,094 $12.61 $4,693,000 Granted at $12.11 per share 124,031 $11.61 1,440,000 Granted at $14.64 per share 67,500 $12.28 829,000 Outstanding at February 28, 1995 583,625 $15.56 $8,768,000 Granted at $14.64 per share 33,750 $25.75 869,000 Exercised at $14.64 per share (33,750) $23.83 804,000 Exercised at $14.64 per share (67,500) $29.84 2,014,000 Exercised at $9.15 per share (124,031) $23.62 2,930,000 Outstanding at February 29, 1996 372,094 $26.25 $9,767,000 Available for grant at February 29, 1996 1,327,591 The quantity of stock options granted as well as the related exercise prices have been retroactively adjusted to reflect the two three-for-two stock splits declared during the fiscal year ended February 29, 1996, and the two five percent stock dividends declared during the fiscal year ended February 28, 1994.
Note 14 - Put Options on Common Stock During the fiscal year ended February 29, 1996, the Company sold listed put options on 49,000 shares of its common stock. The put options give the holders the right to require the Company to repurchase shares of its common stock at specified prices. Proceeds of $56,000 from the sale of put options were credited to Paid-in Capital. The amount that the Company would be obligated to pay to repurchase shares of its common stock if all outstanding put options at February 29, 1996 were exercised is recorded in a temporary equity account. Options on 24,500 shares expired unexercised during the fiscal year ended February 29, 1996, as the price of the Company's stock was in excess of the strike price at maturity. Options on 2,500 shares were exercised in January 1996. The remaining options on 22,000 shares expire in March, April and July of 1996 at strike prices ranging from $20.00 to $22.50 per share. NOTE 15 - SEGMENT REPORTING The Company, through its primary subsidiaries, operates predominantly in the securities industry. Operations in the securities industry include agency and principal transactions, as well as other securities-related financial services. NOTE 16 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS OF CREDIT RISK In the normal course of business, the primary subsidiaries' securities activities involve execution, settlement and financing of various securities transactions for a nationwide customer and noncustomer client base, as well as specialist trading activities with counterparties. These activities may expose the primary subsidiaries to risk in the event customers, other broker-dealers, banks, depositories or clearing organizations are unable to fulfill contractual obligations. The primary subsidiaries conduct business with broker-dealers, clearing organizations and depositories. Banking activities are conducted mainly with commercial banks throughout the country primarily to support customer securities activities. For transactions in which the primary subsidiaries extend credit to customers and noncustomers, the primary subsidiaries seek to control the risks associated with these activities by requiring the maintenance of margin collateral in compliance with various regulatory and internal guidelines. The primary subsidiaries monitor required margin levels daily and, pursuant to such guidelines, request the deposit of additional collateral, or reduce securities positions when necessary. In addition, the primary subsidiaries' correspondent broker-dealers may be required to maintain deposits relating to security clearance activities. The primary subsidiaries record clearance of securities transactions on a settlement date basis, which is generally three business days after trade date. They are therefore exposed to off-balance-sheet risk of loss on unsettled transactions in the event customers and other counterparties are unable to fulfill contractual obligations. The Company's primary subsidiaries are also exposed to off-balance-sheet risk of loss should the value of securities sold, but not yet purchased, rise. The Company's financing and securities lending activities require the Company to pledge securities as collateral for various secured financing sources such as bank loans, securities loaned and letters of credit. In the event the counterparty is unable to meet its contractual obligations, the Company may be exposed to off-balance- sheet risk of acquiring securities at prevailing market prices. The Company monitors the credit standing of counterparties with whom it conducts business. Risk is further controlled by monitoring the market value of securities pledged on a daily basis and by requiring adjustments of collateral level in the event of excess market exposure or by instituting securities buy-in procedures when required.
The Quick & Reilly Group, Inc. and Subsidiaries QUARTERLY FINANCIAL DATA (In Thousands, Except Per share Amounts) For the Fiscal Year Ended February 29, 1996 (Unaudited) Quarter First Second Third Fourth Revenues $102,708 $107,746 $113,739 $134,453 Interest Expense 35,243 31,304 34,652 32,847 Net Revenues 67,465 76,442 79,087 101,606 Total Non-Interest Expenses 42,490 47,697 50,629 61,569 Income Before Provisions for Income Taxes 24,975 28,745 28,458 40,037 Net Income 13,567 15,347 15,132 25,397 Earnings Per Share(1) $ 0.55 $ .061 $ 0.61 $ 1.01 For the Fiscal Year Ended February 28, 1995 (Unaudited) Quarter First Second Third Fourth Revenues $ 75,437 $ 73,063 $ 80,003 $ 86,668 Interest Expense 16,030 19,784 22,806 25,135 Net Revenues 59,407 53,279 57,197 61,533 Total Non-Interest Expenses 39,479 36,200 37,484 37,851 Income Before Provisions for Income Taxes 19,928 17,079 19,713 23,682 Net Income 10,320 8,519 10,141 12,481 Earnings Per Share(1) $ 0.41 $ 0.34 $ 0.41 $ 0.50 (1) See Note 8 to Consolidated Financial Statements for the method of calculating earnings per share.
EX-22.1 3 Exhibit 22.1 The Subsidiaries of The Quick & Reilly Group, Inc. Quick & Reilly, Inc. U.S. Clearing Corp. JJC Specialist Corp. Q&R Charter, Inc. Quick & Reilly Ltd. Q&R Capital Corp. EX-23.1 4 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports dated April 17, 1996 on the consolidated financial statements (and schedule) of The Quick & Reilly Group, Inc. and subsidiaries incorporated by reference (included) in this Form 10-K, into the Company's previously filed Registration Statements on Form S-3 (Nos. 33-63950 and 33-64053) and Registration Statement on Form S-8 (No. 33-28345). Arthur Andersen LLP New York, NY May 28, 1996 EX-27 5
BD 1,000 YEAR FEB-29-1996 FEB-29-1996 133,287 1,312,749 0 1,837,018 155,473 15,307 3,522,903 82,331 1,058,449 0 2,065,112 14,847 0 0 0 2,528 299,636 3,522,903 52,648 187,605 206,562 0 10,178 134,046 105,739 122,215 122,215 0 0 69,443 1.66 1.66
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