<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2000 Commission File Number 001-12629
OLYMPIC CASCADE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-4128138
- ------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)
875 North Michigan Avenue, Suite 1560, Chicago, Illinois 60611
--------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (312) 751-8833
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
----- -----
The number of shares outstanding of registrant's common stock, par value $0.02
per share, at May 2, 2000 was 2,076,613.
1
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OLYMPIC CASCADE FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, September 24,
2000 1999
(unaudited) (audited)
------------ -------------
CASH, subject to immediate withdrawal $ 1,011,000 $ 384,000
CASH, CASH EQUIVALENTS AND SECURITIES 63,347,000 41,416,000
DEPOSITS 5,435,000 1,679,000
RECEIVABLES
Customers 65,356,000 38,038,000
Brokers and dealers 5,571,000 2,342,000
Other 233,000 976,000
SECURITIES HELD FOR RESALE, at market 429,000 298,000
FIXED ASSETS, net 1,160,000 1,176,000
GOODWILL, net 36,000 45,000
OTHER ASSETS 670,000 343,000
------------ ------------
$143,248,000 $ 86,697,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
PAYABLES
Customers $ 97,717,000 $ 67,158,000
Brokers and dealers 26,175,000 7,581,000
SECURITIES SOLD, BUT NOT YET
PURCHASED, at market 359,000 139,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND
OTHER LIABILITIES 6,763,000 3,167,000
INCOME TAX PAYABLE 35,000 -
REVOLVING CREDIT LINE 3,000,000 2,100,000
NOTES PAYABLE 1,039,000 1,648,000
CAPITAL LEASE PAYABLE 721,000 865,000
------------ ------------
135,809,000 82,658,000
------------ ------------
CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value,
100,000 shares authorized, none
issued and outstanding - -
Common stock, $.02 par value,
6,000,000 shares authorized,
2,056,075 and 1,694,595 shares
issued and outstanding, respectively 41,000 34,000
Additional paid-in capital 8,144,000 6,375,000
Deficit (746,000) (2,370,000)
------------ ------------
7,439,000 4,039,000
------------ ------------
$143,248,000 $ 86,697,000
============ ============
2
See notes to these financial statements.
<PAGE> 3
OLYMPIC CASCADE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
----- Quarter Ended ----- ---- Six Months Ended ----
March 31, March 26, March 31, March 26,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
REVENUES:
Commissions $ 12,650,000 $ 7,202,000 $ 22,032,000 $ 12,838,000
Net dealer inventory gains 4,580,000 790,000 6,361,000 1,256,000
Interest 2,079,000 1,239,000 3,741,000 2,408,000
Transfer fees 419,000 226,000 711,000 437,000
Underwriting 792,000 574,000 2,008,000 1,138,000
Other 503,000 324,000 640,000 437,000
------------ ----------- ------------ ------------
TOTAL REVENUES 21,023,000 10,355,000 35,493,000 18,514,000
------------ ----------- ------------ ------------
EXPENSES:
Commissions 12,664,000 5,960,000 21,192,000 10,547,000
Salaries 2,328,000 1,119,000 3,933,000 2,077,000
Clearing fees 606,000 385,000 1,227,000 710,000
Communications 300,000 295,000 625,000 574,000
Occupancy costs 940,000 580,000 1,656,000 1,237,000
Interest 1,534,000 888,000 2,488,000 1,711,000
Professional fees 379,000 687,000 885,000 1,066,000
Taxes, licenses, registration 245,000 107,000 453,000 220,000
Other 773,000 315,000 1,375,000 613,000
------------ ----------- ------------ ------------
TOTAL EXPENSES 19,769,000 10,336,000 33,834,000 18,755,000
------------ ----------- ------------ ------------
Income (loss) from operations before
income taxes 1,254,000 19,000 1,659,000 (241,000)
Income tax (expense) benefit (35,000) 1,000 (35,000) (2,000)
------------ ----------- ------------ ------------
NET INCOME (LOSS) $ 1,219,000 $ 20,000 $ 1,624,000 $ (243,000)
============ =========== ============ ============
EARNINGS (LOSS) PER COMMON SHARE
Basic Earnings (Loss) Per Share $ 0.64 $ 0.01 $ 0.92 $ (0.16)
============ =========== ============ ============
Diluted Earnings (Loss) Per Share $ 0.53 $ 0.01 $ 0.81 $ (0.16)
============ =========== ============ ============
</TABLE>
3
See notes to these financial statements
<PAGE> 4
OLYMPIC CASCADE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
--------Six Months Ended--------
March 31, March 26,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $ 1,624,000 $ (243,000)
Adjustments to reconcile net loss to net
cash from operating activities
Depreciation and amortization 232,000 197,000
Issuance of common stock in
lawsuit settlement - 135,000
Issuance of common stock as payment
of expenses - 120,000
Compensation related to issuance of
stock options 41,000 -
Changes in assets and liabilities
Cash, cash equivalents and securities (21,931,000) (32,311,000)
Deposits (3,756,000) (372,000)
Receivables (29,769,000) 6,031,000
Securities held for resale (131,000) (285,000)
Other assets (327,000) (267,000)
Customer and broker payables 49,153,000 27,647,000
Securities sold, but not yet purchased 220,000 437,000
Accounts payable, accrued expenses,
and other liabilities 3,622,000 937,000
------------ ------------
(1,022,000) 2,026,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (207,000) (97,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on line of credit 900,000 300,000
Payments on capital lease (170,000) (170,000)
Payments on notes (609,000) (300,000)
Exercise of stock options
and warrants 1,735,000 183,000
------------ ------------
1,856,000 13,000
------------ ------------
INCREASE (DECREASE) IN CASH 627,000 1,942,000
CASH BALANCE
Beginning of the period 384,000 551,000
------------ ------------
End of the period $ 1,011,000 $ 2,493,000
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for
Interest $ 2,442,000 $ 1,675,000
============ ============
Income taxes $ - $ 2,000
============ ============
4
See notes to these financial statements.
<PAGE> 5
OLYMPIC CASCADE FINANCIAL CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND MARCH 26, 1999
The accompanying consolidated financial statements of Olympic Cascade Financial
Corporation ("Olympic" or the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial statements and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and disclosures required
for annual financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The consolidated financial statements as of and
for the periods ended March 31, 2000 and March 26, 1999 are unaudited. The
results of operations for the interim periods are not necessarily indicative of
the results of operations for the fiscal year. These financial statements should
be read in conjunction with the consolidated financial statements and related
footnotes included thereto in the Company's Annual Report on Form 10-K for the
fiscal year ended September 24, 1999.
NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS - The Company is a financial services organization,
operating through its two wholly owned subsidiaries, National Securities
Corporation ("National"), and WestAmerica Investment Group ("WestAmerica").
Olympic is committed to establishing a significant presence in the financial
services industry by providing financing options for emerging, small and middle
capitalization companies both in the United States and abroad through (i)
research, financial advisory services and sales, (ii) investment banking
services for both public offerings and private placements and (iii) retail
brokerage and trade clearance operations. In April 2000, the Company commenced
online trading services for its customers on the Internet through NSCdirect
(www.nscdirect.com).
EARNINGS (LOSS) PER SHARE - Basic earnings (loss) per common share
is based upon the net income (loss) for the period divided by the weighted
average number of common shares outstanding during the period. For the second
quarter of fiscal 2000 and 1999, the number of shares used in the basic earnings
(loss) per share calculation was 1,918,493 and 1,505,799, respectively. For the
first six months of fiscal 2000 and 1999, the number of shares used in the basic
earnings (loss) per share calculation was 1,762,616 and 1,482,992, respectively.
Diluted earnings (loss) per common share assumes that all common stock
equivalents have been converted to common shares using the treasury stock method
at the beginning of the period. For the second quarter of fiscal 2000 and 1999,
the number of shares used in the diluted earnings (loss) per share calculation
was 2,295,485 and 1,507,276, respectively. For the first six months of fiscal
2000 and 1999, the number of shares used in the diluted earnings (loss) per
share calculation was 1,995,589 and 1,482,992, respectively.
5
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NOTE 2 - LINE OF CREDIT
National has a secured line of credit of up to $3,000,000. The line is subject
to renewal in January 2001. Borrowings bear interest at the bank's prime rate.
Interest is payable monthly. The line is secured by certain assets of National,
excluding items prohibited from being pledged and assets included the SEC
Customer Protection Rule 15c3-3 formula. These borrowings are short-term and
generally do not extend beyond a few days. At March 31, 2000, National had
$3,000,000 in borrowings outstanding.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. This Quarterly Report may contain certain statements
of a forward-looking nature relating to future events or future business
performance. Any such statements that refer to the Company's estimated or
anticipated future results or other non-historical facts are forward-looking and
reflect the Company's current perspective of existing trends and information.
These statements involve risks and uncertainties that cannot be predicted or
quantified and, consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, among others, risks and uncertainties detailed in the
Company's Registration Statement on Form S-3 (Registration No. 333-80247), filed
with the Securities and Exchange Commission on June 9, 1999 and the Company's
other Securities and Exchange Commission filings, including the Company's Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking
statements contained in or incorporated into this Quarterly Report speak only as
of the date of this Quarterly Report. The Company undertakes no obligation to
update publicly any forward-looking statement, whether as a result of new
information, future events or otherwise.
Quarter Ended March 31, 2000 Compared to Quarter Ended March 26, 1999
- ---------------------------------------------------------------------
The Company's second quarter of fiscal 2000 resulted in a dramatic increase in
revenues and net income compared with the same period of fiscal 1999. The
increase in revenue is due to growth in retail brokerage and dealer operations
causing a significant increase in commission revenue and net dealer inventory
gains. The Company reported net income of $1,219,000 in the second quarter of
fiscal 2000 compared with net income of $20,000 during the second quarter of
fiscal 1999.
Total revenues more than doubled with an increase of $10,668,000, or 103%, to
$21,023,000 from $10,355,000. The continued strong stock market and increased
growth in the Company's retail brokerage contributed significantly to this
increase. Additionally, the very active and volatile market place and the
addition of institutional and fixed income traders at National as well as
continued revenue growth from National's European offices, played a role in this
overall increase. Commission revenue increased $5,448,000, or 76%, to
$12,650,000
6
<PAGE> 7
from $7,202,000 during the second quarter fiscal 2000 compared with the second
quarter fiscal 1999. This increase is due to favorable market conditions and the
additional production of registered representatives at National. Additionally,
net dealer inventory gains, which include trading profits and losses and
mark-ups and mark-downs from all sources, increased $3,790,000, or 480%, to
$4,580,000 from $790,000 during the second quarter fiscal 2000 compared with the
second quarter fiscal 1999.
Underwriting revenue increased $218,000, or 38%, to $792,000 from $574,000
during the second quarter fiscal 2000 compared to the second quarter fiscal
1999. During both the second quarter fiscal 2000 and fiscal 1999, the Company
did not manage a public underwriting. Underwriting revenue during the second
quarter fiscal 2000 and 1999 was generated primarily from the completion of
several private placement transactions and advisory fees.
Transfer fees increased $193,000, or 85%, to $419,000 from $226,000 during the
second quarter fiscal 2000 compared to the second quarter fiscal 1999. This
increase was due primarily to the increased retail agency trade volume.
As expected, with the significant increase in revenue, expenses also increased
significantly. Total expenses increased $9,433,000, or 91%, to $19,769,000 from
$10,336,000. The largest component of this increase was commission expense.
Commission expense increased 112%, or $6,704,000, to $12,664,000 from $5,960,000
during the second quarter fiscal 2000 compared with the second quarter fiscal
1999. This increase is consistent with the dramatic increases in both commission
revenue and net dealer inventory gains. Salaries increased $1,209,000, or 108%,
to $2,328,000 from $1,119,000. In September 1998, certain management of the
Company had received temporary reductions in compensation ranging from 10% to
62%. These reductions had been reinstated in full prior to the first quarter of
fiscal 2000. Overall, combined commissions and salaries as a percentage of
revenue increased 3% to 71% in the second quarter fiscal 2000 compared with 68%
in the second quarter fiscal 1999.
Consistent with the increased commission revenue and overall trading volume,
outside clearing fees increased $221,000, or 57%, to $606,000 from $385,000
during the second quarter fiscal 2000 from the second quarter fiscal 1999.
Occupancy expense, consisting mainly of rent, office supplies, computer services
and depreciation, increased $360,000, or 62%, to $940,000 from $580,000. This
increase is due mainly to increased rent and computer services. Rent increased
approximately $112,000 at National due to a new office lease signed in July 1999
at a higher rate per square foot. Additionally, with the increased trade volume,
National incurred much higher back office trade processing fees through its
outside vendor BETA Systems, Inc. These fees are calculated on a sliding scale
based on the number of trades processed. Other expenses increased $458,000 or
145% to $773,000 from $315,000 in the second quarter of fiscal 2000 and 1999,
respectively. In the second quarter of fiscal 2000, the Company incurred travel
and moving expense of approximately $230,000, an increase of approximately
$105,000 from the prior year. Also, the Company incurred additional employment
agency fees totaling $25,000 as the Company hired more people to accommodate
growth. Finally, customer write-offs and bad debt expense increased
approximately $280,000 from the second quarter of fiscal 1999.
7
<PAGE> 8
As anticipated interest expense increased during the second quarter fiscal 2000
as compared with the second quarter fiscal 1999. Interest expense increased
$646,000, or 73%, to $1,534,000 from $888,000. The main reason for this increase
is the increase in customer deposits, on which the Company pays interest and the
accelerated accretion of interest on original issue discount notes, which were
repaid during the quarter. Original issue discount interest for the quarter
totaled $232,000. The remaining interest expense increase was due to the
increase in customer deposits of $17.4 million during the current quarter. This
increase was more than offset by increased interest income from customer margin
debt that increased by $20.9 million during the current quarter. Interest income
increased $840,000, or 68%, to $2,079,000 from $1,239,000 during the second
quarter fiscal 2000 as compared with the second quarter fiscal 1999.
Despite the general increase in expenses during the second quarter fiscal 2000
as compared with the second quarter fiscal 1999, professional fees decreased
$308,000, or 45%, to $379,000 from $687,000. This decrease is due to the Company
resolving several of its lawsuits during the previous fiscal year.
Overall, diluted earnings were $0.53 per share as compared with $0.01 per share
for the second quarters of fiscal 2000 and 1999, respectively.
Six Months Ended March 31, 2000 Compared to Six Months Ended March 26, 1999
- ---------------------------------------------------------------------------
The Company's first six months of fiscal 2000 resulted in a dramatic increase in
revenues and net income compared with the same period of fiscal 1999. The
increase in revenue is due to growth in retail brokerage and dealer operations
causing a significant increase in commission revenue and net dealer inventory
gains. The Company reported net income of $1,624,000 in the first six months of
fiscal 2000 compared with a loss of $243,000 during the first six months of
fiscal 1999.
Revenues increased $16,979,000, or 92% to $35,493,000 from $18,514,000. This
increase is due primarily to the increase in commission revenue and dealer
inventory gains resulting from the continued strong markets and the additional
production of investment executives at National. Commission revenue increased
$9,194,000 or 72% to $22,032,000 from $12,838,000. National added additional
offices in New York as well as adding an office in Florida. Net dealer inventory
gains increased $5,105,000 or 406% to $6,361,000 in the first six months of
fiscal 2000 from $1,256,000 in the first six months of fiscal 1999.
The other category in which revenue increased was underwriting revenue.
Underwriting revenue increased $870,000, or 76% to $2,008,000 from $1,138,000.
National participated in seven private placements raising approximately $13.0
million in gross proceeds for clients in the first six months of fiscal 2000.
During the same period in fiscal 1999, National participated in two private
placements raising approximately $7.0 million in gross proceeds for clients. The
Company did not manage any public underwritings during either the first six
months of fiscal 2000 or fiscal 1999.
8
<PAGE> 9
Concurrent with the 92% increase in revenues, total expenses increased 80%.
Total expenses increased by $15,079,000 to $33,834,000 from $18,755,000. This
increase in expenses was anticipated due to significant increases in revenues.
The most significant increases were commission expense and salaries.
Commission expense increased $10,645,000 or 101% to $21,192,000 in the first six
months of fiscal 2000 from $10,547,000 in the first six months of fiscal 1999.
Salaries increased $1,856,000 or 89% to $3,933,000 from $2,077,000. In September
1998, certain management of the Company had received temporary reductions in
compensation ranging from 10% to 62%. These reductions had been reinstated in
full prior to the first quarter of fiscal 2000. Additionally, with the increased
growth the Company has hired additional employees at National. These increases
were mainly relating to the information technology department, including
NSCdirect.com, the online brokerage division of National. Overall, combined
commissions and salaries as a percentage of revenue increased 3% to
approximately 71% from approximately 68% in the first six months of fiscal 2000
and 1999, respectively. This increase is also due to a higher payout percentage
based on higher commission levels for the investment executives at National.
Consistent with the increased revenues, expenses regarding occupancy, clearing,
taxes, licenses and registration and other have increased from the first six
months fiscal 1999 to the first six months of fiscal 2000. The most significant
expense increases were clearing, occupancy, interest and other.
Clearing fees increased $517,000, or 73%, to $1,227,000 from $710,000, which
mainly relates to the increased business in National's European offices and the
business generated from the additional New York offices. Occupancy expenses
increased $419,000, or 34%, to $1,656,000 from $1,237,000 in the first six
months of fiscal 2000 as compared with the first six months of fiscal 1999. As
discussed in the quarterly results above, this increase was due mainly to
increased rent and computer services. Other expenses increased $762,000 or 124%
to $1,375,000 from $613,000 in the first six months of fiscal 2000 and 1999,
respectively. In the first six months of fiscal 2000, the Company incurred
travel and moving expense of approximately $445,000, an increase of
approximately $181,000 from the prior year's six month period. Also, the Company
incurred additional employment agency fees totaling $55,000 as the Company hired
more people to accommodate growth. Finally, customer write-offs and bad debt
expense increased approximately $463,000 from the first six months of fiscal
1999.
As anticipated, interest expense increased during the first six months of fiscal
2000 as compared with the first six months of fiscal 1999. Interest expense
increased $777,000, or 45%, to $2,488,000 from $1,711,000. The main reason for
this increase is the increase in customer deposits, on which the Company pays
interest and the accelerated accretion of interest on original issue discount
notes, which were repaid during the second quarter of fiscal 2000. Original
issue discount interest for the six months totaled $232,000. The remaining
interest expense increase was due to the increase in customer deposits of $30.6
million during
9
<PAGE> 10
the current six-month period. This increase was more than offset by increased
interest income from customer margin debt that increased by $27.3 million during
the current six-month period. Interest income increased $1,333,000, or 55%,
to $3,741,000 from $2,408,000 during the first six months of fiscal 2000 as
compared with the first six months of fiscal 1999.
Concurrent with the increase in revenues, most expenses increased during the six
month period of fiscal 2000 as compared with the six month period of fiscal
1999. However, professional fees decreased $181,000, or 17%, to $885,000 from
$1,066,000. This decrease is due to the Company resolving several of its
lawsuits during the previous fiscal year.
Overall, diluted earnings were $0.81 per share as compared with a net loss of
$0.16 per share for the first six months of fiscal 2000 and 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As with most financial firms, substantial portions of the Company's assets are
liquid, consisting mainly of cash or assets readily convertible into cash. These
assets are financed primarily by National's interest bearing and non-interest
bearing customer credit balances, other payables and equity capital.
Occasionally, National utilizes short-term bank financing to supplement its
ability to meet day-to-day operating cash requirements. Such financing has been
used to maximize cash flow and is regularly repaid. National has a $3,000,000
revolving secured credit facility with Bank of America, and additionally may
borrow up to 70% of the market value of eligible securities pledged with an
unrelated broker-dealer. These borrowings are short-term and generally do not
extend beyond a few days. At March 31, 2000 National had $3,000,000 in borrowing
outstanding.
National, as a registered broker-dealer is subject to the SEC's Uniform Net
Capital Rule 15c3-1, which requires the maintenance of minimum net capital.
National has elected to use the alternative standard method permitted by the
rule. This requires that National maintain minimum net capital equal to the
greater of $250,000 or 2% of aggregate debit items. Accordingly, the increased
customer margin debt during the current quarter resulted in an increase in the
net capital requirements. At March 31, 2000, National's net capital exceeded the
requirement by $2,237,000.
WestAmerica, as a registered broker-dealer is also subject to the SEC's Net
Capital Rule 15c3-1, which, under the standard method, requires that the company
maintain minimum net capital equal to the greater of $100,000 or 6 2/3% of
aggregate indebtedness. At March 31, 2000, WestAmerica's net capital exceeded
the requirement by $263,000.
Any advances, dividend payments and other equity withdrawals from National or
WestAmerica maybe restricted by the regulations of the SEC, and other regulatory
agencies. These regulatory restrictions may limit the amounts that these
subsidiaries may dividend or advance to Olympic.
10
<PAGE> 11
The objective of liquidity management is to ensure that the Company has ready
access to sufficient funds to meet commitments, fund deposit withdrawals and
efficiently provide for the credit needs of customers.
The Company believes its internally generated liquidity, together with access to
external capital and debt resources is sufficient to satisfy existing
operations. However, as the Company expands its operations, including its new
online trading services, or acquires other businesses, the Company will likely
require additional capital.
PART II
ITEM 1 - LEGAL PROCEEDINGS
1. The Maxal Trust, et al.. v. National Securities Corporation et al., United
States District Court, Central District of California, Case No. CV-97-4392
ABC (Shx). See disclosure in the Company's Form 10-Q for the quarter ended
December 31, 1998 and Form 10-K for the fiscal year ended September 24,
1999.
2. In re Complete Management, Inc. Securities Litigation, United States
District Court, Southern District of New York, Case No. 99 Civ. 1454 (NRB).
See disclosure in the Company's Form 10-Q for the quarter ended December
31, 1999. National has been named together with others as a defendant in a
consolidated class action dated March 15, 2000, that alleges violations of
Section 11 of the Securities Act of 1933 by the management of Complete
Management, Inc. ("CMI"), together with its auditing firm and several
underwriters involved in various public offerings of CMI securities in the
years 1996 to 1998. The complaint alleges that National violated certain
securities laws in connection with two securities offerings of CMI
securities in 1996. No specific amount of damages has been sought against
National in the complaint. National believes that it has strong defenses to
this claim and intends to vigorously defend itself.
The Company is a defendant in various other arbitrations and administrative
proceedings, lawsuits and claims that arise out of the normal course of
business. The Company believes that the resolution of these matters will not
have an adverse material effect on the Company's financial statements or
business operations.
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<PAGE> 12
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on March 8, 2000. The
shareholders elected for the ensuing year all of the nominees for the Board of
Directors as follows: Steven A. Rothstein, Gary A. Rosenberg, James C. Holcomb,
Jr. and D.S. Patel. Also, the shareholders ratified the appointment of Feldman
Sherb Horowitz & Co., P.C. as independent accountants for the fiscal year ending
September 29, 2000.
The voting results are as follows:
Number of Shares
----------------
For Against Abstentions
--- ------- -----------
Election of the Board
of Directors (for each nominee) 1,540,760 5,457 4,471
Ratify the appointment of
Feldman Sherb Horowitz
& Co., P.C. as independent
accountants 1,544,785 2,697 3,224
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27. Financial Data Schedule (This financial data schedule is only required to
be submitted with the registrant's Quarterly Report on Form 10-Q as filed
electronically with the SEC's EDGAR database.)
b) Reports on Form 8-K (None)
12
<PAGE> 13
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES
May 10, 2000 By: /s/ Steven A. Rothstein
Date -------------------------------------
Steven A. Rothstein, Chairman,
President and Chief Executive Officer
May 10, 2000 By: /s/ Robert H. Daskal
Date -------------------------------------
Robert H. Daskal, Senior Vice
President, Chief Financial Officer,
Secretary and Treasurer
May 10, 2000 By: /s/ David M. Williams
Date -------------------------------------
David M. Williams
Corporate Controller and
Chief Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-29-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,011
<RECEIVABLES> 71,160
<SECURITIES-RESALE> 429
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 63,347
<PP&E> 1,160
<TOTAL-ASSETS> 143,248
<SHORT-TERM> 3,000
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<LONG-TERM> 1760
0
0
<COMMON> 41
<OTHER-SE> 7,398
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<TRADING-REVENUE> 4,580
<INTEREST-DIVIDENDS> 2,079
<COMMISSIONS> 12,650
<INVESTMENT-BANKING-REVENUES> 792
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 1,534
<COMPENSATION> 14,992
<INCOME-PRETAX> 1,254
<INCOME-PRE-EXTRAORDINARY> 1,254
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,219
<EPS-BASIC> 0.64
<EPS-DILUTED> 0.53
</TABLE>
