Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10854
THE ZIEGLER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1148883
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 North Main Street, West Bend, Wisconsin 53095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 334-5521
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 the registrant's Common Stock, par
value $1.00 per share, at September 30, 1996 was 2,435,572 shares.
<PAGE>
PART I
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,September 30,
1996 1995
<S> <C> <C>
Revenues:
Investment banking and commission
income $ 8,121,935 $ 6,303,485
Interest and dividends 1,198,668 1,069,831
Lease income 1,973,487 2,375,346
Gross profit on chemical products 1,302,880 1,288,849
Insurance agency 272,369 239,711
Other 1,682,009 1,286,507
Total revenues 14,551,348 12,563,729
Expenses:
Employee compensation and benefits 6,317,681 5,002,155
Commissions and clearing fees 261,259 207,135
Communications 719,906 678,297
Occupancy and equipment 1,977,315 2,123,997
Promotional 654,383 520,066
Professional and regulatory 181,858 103,408
Interest 1,181,918 1,349,473
Other operating expenses 1,517,701 1,385,324
Total expenses 12,812,021 11,369,855
Income before income taxes 1,739,327 1,193,874
Provision for income taxes 626,800 418,400
Net income $ 1,112,527 $ 775,474
Earnings per share $ .46 $ .32
Dividends per share $ .13 $ .13
Average number of shares outstanding 2,401,080 2,384,130
</TABLE>
The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.
<PAGE>
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,September 30,
1996 1995
<S> <C> <C>
Revenues:
Investment banking and commission
income $21,232,183 $18,563,676
Interest and dividends 3,456,551 3,092,173
Lease income 6,369,672 7,306,031
Gross profit on chemical products 3,032,692 2,854,148
Insurance agency 787,048 758,551
Other 5,024,557 4,291,222
Total revenues 39,902,703 36,865,801
Expenses:
Employee compensation and benefits 17,417,138 15,032,396
Commissions and clearing fees 722,851 594,893
Communications 2,084,599 2,002,954
Occupancy and equipment 6,344,745 6,582,136
Promotional 1,777,694 1,466,862
Professional and regulatory 531,893 543,704
Interest 3,849,814 4,098,944
Other operating expenses 4,692,383 4,128,903
Total expenses 37,421,117 34,450,792
Income before income taxes 2,481,586 2,415,009
Provision for income taxes 852,000 848,200
Net income $ 1,629,586 $ 1,566,809
Earnings per share $ .68 $ .65
Dividends per share $ .39 $ .39
Average number of shares outstanding 2,397,439 2,392,342
</TABLE>
The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.
<PAGE>
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30,December 31,
1996 1995
<S> <C> <C>
ASSETS
Cash $ 3,366,691 $ 4,231,808
Short-term investments 4,854,831 12,430,129
Bonds due and called as of
October 1, 1996 and January 1,
1996, respectively 7,306,361 3,472,297
Total cash and cash
equivalents 15,527,883 20,134,234
Securities inventory 15,407,034 28,151,740
Accounts receivable --
securities sales 5,165,231 3,434,916
Accounts receivable -- other 6,409,726 4,612,320
Investment in and receivables
from affiliates 2,666,159 2,638,456
Investment in leases 46,393,953 51,090,834
Receivable for purchase of
leveraged lease equipment 589,342 -
Notes receivable 24,867,167 26,564,818
Land, buildings and equipment,
at cost, net of accumulated
depreciation of $15,125,789
and $14,425,733, respectively 7,235,054 7,090,543
Other assets 8,631,067 12,127,533
Total assets $132,892,616 $155,845,394
LIABILITIES AND STOCKHOLDERS'
EQUITY
Short-term notes payable $ 14,900,384 $ 18,394,420
Payable to customers 3,917,397 2,567,092
Payable to broker-dealers 363,268 409,425
Accounts payable 1,544,228 3,910,191
Dividends payable 316,624 1,167,207
Accrued income taxes 647,737 1,138,008
Deferred income taxes 5,035,000 5,358,583
Notes payable to banks 9,187,490 24,559,972
Bonds payable 36,197,886 37,403,990
Other liabilities and
deferred items 7,663,314 8,694,508
Total liabilities 79,773,328 103,603,396
Commitments
Stockholders' equity
Common stock, $1.00 par,
authorized 7,500,000 shares,
issued 3,544,030 shares 3,544,030 3,544,030
Additional paid-in capital 5,968,684 5,968,737
Retained earnings 61,340,036 60,659,742
Treasury stock, at cost,
1,108,458 and 1,112,348
shares, respectively (17,161,828) (17,229,903)
Unearned compensation (571,634) (700,608)
Total stockholders' equity 53,119,288 52,241,998
Total liabilities and
stockholders' equity $132,892,616 $155,845,394
</TABLE>
The accompanying notes to consolidated condensed financial statements
are an integral part of these balance sheets.
<PAGE>
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, September 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 1,629,586 $ 1,566,809
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 4,323,281 4,726,220
Provision for losses 341,919 165,134
Loss on sale of equipment 23,546 38,727
Gain on sale of leased equipment (663,514) (383,075)
Unrealized loss (gain) on
securities inventory 133,897 (52,040)
Compensation related to
restricted stock grants 128,974 148,063
Deferred income taxes (303,583) (1,162,828)
Undistributed earnings of
unconsolidated affiliate (38,899) (163,205)
Changes in operating assets
and liabilities:
Decrease/(Increase) in -
Securities inventory 12,610,809 4,337,247
Accounts receivable --
security sales (1,730,315) 482,112
Accounts receivable --
other (1,180,189) (1,186,682)
Other operating assets 3,362,856 (4,105,592)
Increase/(Decrease) in -
Payable to customers and
broker-dealers 1,304,148 (1,417,669)
Accounts payable net of
payments for purchase of
assets to be leased (2,222,102) (352,598)
Income taxes payable (490,271) 820,111
Notes payable to banks (8,462,000) 4,661,000
Other operating liabilities (1,220,230) (1,497,515)
Net cash provided by
operating activities 7,547,913 6,624,219
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from:
Sale of equipment 60,510 23,157
Principal payments received
under leases 11,262,634 11,841,858
Sale of leased equipment 2,521,876 3,793,329
Payments received on notes
receivable 13,297,222 10,299,658
Decrease in investment in
affiliate - 158,646
Payments for:
Purchase of assets to be leased (5,133,781) (7,457,638)
Issuance of notes receivable (19,012,390) (22,909,836)
Capital expenditures (1,087,152) (711,188)
Net cash provided by (used in)
investing activities 1,908,919 (4,962,014)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from:
Issuance of short-term notes
payable 64,017,000 70,030,000
Issuance of notes payable to
banks 256,258 634,829
Issuance of nonrecourse debt 1,423,386 848,858
Exercise of employee stock
options 68,022 69,545
Issuance of bonds payable 4,875,000 7,200,000
Payments of:
Principal on short-term notes
payable (67,519,000) (68,180,000)
Principal on notes payable
to banks (7,166,740) (3,134,010)
Principal on nonrecourse debt (2,009,234) (1,668,434)
Repayment of bonds payable (6,208,000) (3,663,000)
Purchase of treasury stock - (257,496)
Dividends (1,799,875) (1,439,340)
Net cash provided by (used
in) financing activities (14,063,183) 440,952
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (4,606,351) 2,103,157
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 20,134,234 25,498,481
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 15,527,883 $ 27,601,638
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid during the period $ 4,121,944 $ 3,790,000
Income taxes paid during
the period $ 2,182,932 $ 1,074,000
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING ACTIVITIES:
Conversion of Notes Receivable
to Investment in Leases at
the initiation of a lease $ 7,483,296 $ 7,373,403
Granting of restricted stock
from treasury stock $ - $ 168,988
</TABLE>
The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 1996
Note A -- Basis of Presentation
The consolidated condensed financial statements included herein have
been prepared by The Ziegler Companies, Inc. (the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. Management believes, however, that these condensed
financial statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the periods
presented. All such adjustments are of a normal recurring nature. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
Note B -- Commitments and Contingent Liabilities
In the normal course of business, B. C. Ziegler and Company (BCZ) enters
into firm underwriting commitments for the purchase of debt issues. These
commitments require BCZ to purchase debt issues at a specified price. To
manage the off-balance sheet credit and market risk exposure related to
these commitments, BCZ presells the issues to customers. BCZ had no such
commitments outstanding at September 30, 1996.
As of September 30, 1996, Ziegler Leasing Corporation (ZLC) had
outstanding written agreements to provide equipment lease financing for
approximately $2,384,000. To manage the off-balance sheet credit and
interest rate risk exposure related to those commitments, ZLC retains the
right to adjust or cancel the commitments if adverse interest rate or
credit conditions arise.
As of September 30, 1996, Ziegler Financing Corporation (ZFC) had
financial commitments to unrelated entities for construction and other
loans of approximately $4,000,000.
WRR Environmental Services Co., Inc. (WRR) is subject to a consent order
of the Wisconsin Department of Natural Resources for further testing and
surface water control, and to remedial action under the federal Research
Conservation and Recovery Act ("RCRA"), of contaminants in ground water
directly underneath and adjacent to the plant site.
WRR has disposed of wastes at other recycling sites which may be added
to the National Priority List, and may be required to share in the cost of
the clean-up of these sites. As of September 30, 1996, WRR had been
identified as a potentially responsible party ("PRP") in connection with
three sites. For the first site, a reserve of $128,000 was established
based on WRR's review of documents, its knowledge of the site and its
experience with the clean-up of similar sites. No engineering studies have
yet been done to arrive at a more reliable cost estimate. Payments on this
site are expected to occur over the next five years. The estimated cost of
cleaning up a second site is between $10,000,000 and $30,000,000 based on
preliminary estimates from various consulting firms. Based on the
identification of other PRPs and the present interim allocation schedule,
WRR would be responsible for costs ranging from $500,000 to $1,800,000. In
accordance with Financial Accounting Standards Board Interpretation No. 14,
"Reasonable Estimation of the Amount of a Loss," WRR established a reserve
of $604,000 to cover its share of the clean-up costs of this second site.
Payments on this site are expected to occur over the next five years. In
June 1994, WRR was notified by the United States Environmental Protection
Agency ("EPA") that WRR is a PRP at a third site to which WRR delivered
materials from 1982 to 1985. WRR's review of the remediation investigation
and feasibility study, and other materials prepared by EPA on account of
this site, indicates that WRR has valid defenses to any action by EPA to
collect remediation costs. The EPA's estimate of WRR's proportionate share
of anticipated remediation costs at this third site approximates $200,000.
No reserve has been established on account of this third site.
WRR is jointly and severally liable on two of the previously mentioned
sites. To the extent that WRR is found liable for contributing to the
pollution at the third site, its liability will be joint and several.
Management for the Company is not aware of circumstances which could lead
to non-performance by the other PRP's when viewed as a group. No potential
insurance recovery or reimbursements from WRR's liability insurance
carriers have been accrued in the financial statements. The reserve for
accrued loss contingencies totaled $732,000 at September 30, 1996.
Note C -- Stock Option Plans
The Ziegler Company, Inc. 1989 Employees' Stock Purchase Plan (the "1989
Plan") was established for substantially all full-time employees. As of
September 30, 1996, unexercised options for 88,025 shares were outstanding.
All outstanding options are currently exercisable through April 30, 1997,
at 85% of the market value on the date of exercise. Options for a total of
2,190 shares were exercised at prices averaging $15.87 per share during
1996. Under the 1989 Plan, 30,865 options are available for future
granting at 85% of the market value on the date of exercise. Options
granted under the 1989 Plan that expire, terminate, or are cancelled are
again available for the granting of future options. Options for a total of
6,800 shares were forfeited during the period.
Note D -- Earnings Per Share
Earnings per share calculations were computed based on the weighted
average number of common shares outstanding including restricted common
stock using the treasury stock method. The dilutive effect of shares
issuable under the various employee stock option plans in the computation
of earnings per share is not significant.
Note E -- Net Capital Requirements and Customer Reserve Accounts
As registered broker-dealers, BCZ and Ziegler Thrift Trading, Inc. (ZTT)
are subject to the requirements of Rule 15c3-1 (the "net capital rule")
under the Securities Exchange Act of 1934. The basic concept of the rule
is liquidity, requiring a broker-dealer to have sufficient liquid assets at
all times to cover current indebtedness. Specifically, the rule prohibits
a broker-dealer from permitting "aggregate indebtedness" to exceed 15 times
"net capital" (15 to 1) as those terms are defined.
Approximate net capital data as of September 30, 1996, is as follows:
<TABLE>
<CAPTION>
BCZ ZTT
<S> <C> <C>
Aggregate indebtedness $ 9,165,000 $1,267,000
Net capital $15,250,000 $1,336,000
Ratio of aggregate
indebtedness to net
capital .60 to 1 .95 to 1
Required net capital $ 611,000 $ 250,000
</TABLE>
In accordance with Securities and Exchange Commission Rule 15c3-3, BCZ
and ZTT maintain separate bank accounts for the exclusive benefit of
customers. The amounts maintained in these accounts are determined by
periodic computations required under the rule, which allows the companies
to maintain the computed amounts in cash or other qualified securities. As
of September 30, 1996, there was approximately $468,000 in the customer
reserve accounts.
Note F -- Investment in Ziegler Mortgage Securities, Inc. II
The Company has a 50% interest in Ziegler Mortgage Securities, Inc. II
(ZMSI II), an unconsolidated entity accounted for by the equity method.
Summarized income statement information is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,September 30,
1996 1995
<S> <C> <C>
Income, primarily interest $ 2,518,449 $ 2,656,683
Expenses:
Interest 2,265,653 2,470,617
Amortization of Bond
Issuance Costs 128,249 49,727
Management fees 66,989 101,843
Other 57,558 34,496
Total Expenses 2,518,449 2,656,683
Net Income $ - $ -
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,September 30,
1996 1995
<S> <C> <C>
Income, primarily interest $ 7,924,788 $ 7,944,778
Expenses:
Interest 7,030,427 7,301,061
Amortization of Bond
Issuance Costs 558,216 250,994
Management fees 194,294 282,640
Other 141,851 110,083
Total Expenses 7,924,788 7,944,778
Net Income $ - $ -
</TABLE>
Note G -- Securities Inventory
Securities inventory consisted of the following:
<TABLE>
<CAPTION>
September 30,December 31,
1996 1995
<S> <C> <C>
Municipal bond issues $13,095,447 $20,351,886
Corporate bond issues 66,250 2,230,918
Institutional bond issues 665,674 2,589,739
Preferred Stock 611,292 1,263,826
Other securities 968,371 1,715,371
$15,407,034 $28,151,740
</TABLE>
Note H -- Notes Payable to Banks
The Company has various unsecured and secured borrowing facilities in
place to obtain short-term funds. Short-term borrowings are used for
general corporate purposes as well as to fund specific underwriting
purchases or purchases of other large blocks of securities. The Company
had $2,558,000 in short-term borrowings outstanding at September 30, 1996.
Such short-term borrowings are generally repaid within 30 days. Such
amounts are treated as operating items in the Statement of Cash Flows.
Note I -- Ziegler Collateralized Securities, Inc.
Ziegler Collateralized Securities, Inc. (ZCSI), a wholly-owned
subsidiary of the Company, was organized to facilitate the financing of
equipment purchases and leases by securitizing such purchases and leases
for offerings to the public.
Summarized balance sheet information of ZCSI as of September 30, 1996
and December 31, 1995 and income statements for the nine month periods
ended September 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Balance Sheets as of:
September 30,December 31,
1996 1995
<S> <C> <C>
Investment in leases $ 8,347,018 $ 8,818,566
Notes receivable 7,666,659 6,865,720
Other assets 2,983,120 2,614,081
Total assets $18,996,797 $18,298,367
Bonds payable $15,369,000 $15,070,000
Other liabilities 3,617,797 3,218,367
Total liabilities 18,986,797 18,288,367
Stockholder's equity 10,000 10,000
Total liabilities and
stockholder's equity $18,996,797 $18,298,367
</TABLE>
<TABLE>
<CAPTION>
Income Statements for the
Nine Months Ended
September 30, September 30,
1996 1995
<S> <C> <C>
Lease income $ 626,654 $ 652,478
Other, primarily interest
income 577,230 334,178
Total income 1,203,884 986,656
Interest expense 888,575 685,330
Amortized bond issue costs 142,633 92,128
Management and servicing fees 74,532 96,071
Other expenses 98,144 113,127
Total expenses 1,203,884 986,656
Net income $ - $ -
</TABLE>
In accordance with a written agreement with ZLC, which provides
management and administrative services to ZCSI, management fees paid to ZLC
were limited to the amount which prevented ZCSI from incurring a loss.
An analysis of each outstanding bond series as of September 30, 1996 and
for the nine month period then ended indicates the income from each series
exceeds the interest expense on the corresponding bonds and the other
expenses directly related to each specific series.
<TABLE>
<CAPTION>
Collateral Lease/ Bond Other Excess
Series Bonds Value Note Interest Related of
No. Outstanding at Cost Income Expense Expenses Income
<S> <C> <C> <C> <C> <C> <C>
2 $ 265,000 $ 299,804 $ 36,091 $ 24,206 $ 6,633 $ 5,252
3 181,000 226,638 35,136 24,460 8,631 2,045
4 1,219,000 1,373,914 107,658 66,515 18,027 23,116
5 3,543,000 4,645,969 263,332 197,399 62,335 3,598
6 5,161,000 5,891,649 448,850 321,832 92,396 34,622
7 5,000,000 5,857,792 166,403 108,046 29,758 28,599
</TABLE>
Note J -- Subsequent Event
The Ziegler Companies, Inc. has signed a nonbinding letter of intent to
sell its Ziegler Leasing Corporation subsidiary to a major financial
services company. The proposed transaction, which is expected to be
completed in the fourth quarter of 1996, is subject to the completion by
the buyer of its due diligence investigation, the approval of its board,
Hart-Scott-Rodino approval, and the negotiation of a definitive purchase
agreement. The proposed transaction is valued at approximately $17
million, and will be paid in cash at closing. The after-tax net proceeds
of the sale which Ziegler Leasing Corporation expects to realize will be
approximately $11 million. The book value of Ziegler Leasing Corporation
as of September 30, 1996 also approximated $11 million.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended
September 30, 1996 and 1995
The predominant activity of The Ziegler Companies, Inc. and
subsidiaries (the "Company") has been and continues to be investment
banking, primarily the underwriting and marketing of debt securities for
the healthcare industry and for churches and private schools. The Company
is also involved in other financial service activities, specifically
equipment leasing services to the healthcare industry and
commercial/industrial customers, securitization of leases for offerings to
the public, full commission retail securities brokerage services, reduced
commission brokerage services, investment management and advisory services,
and interim lending to investment banking clients. The nonfinancial
services of the Company are pollution abatement and the recycling,
reclaiming, and disposing of chemical wastes.
Total revenues of the Company in 1996 were $14,551,000 compared to
$12,564,000 in 1995, an increase of $1,987,000 or 16%. Operating expenses
in 1996 were $12,812,000 compared to $11,370,000 in 1995, an increase of
$1,442,000 or 11%. There was a provision for income taxes in 1996 of
$627,000 compared to $418,000 in 1995 using a federal statutory tax rate of
34% in both periods under comparison. Net income in 1996 was $1,113,000
compared to $775,000 in 1995, an increase of $338,000 or 44%. Earnings per
share in 1996 were $.46 compared to $.32 in 1995. The changes in revenues,
operating expenses and net income for 1996 compared to 1995 were primarily
a reflection of factors related to investment banking, broker-dealer and
lease financing activities, as well as factors related to the Company's
nonfinancial services subsidiary, WRR Environmental Services Co., Inc.
These factors, as well as the impact of other factors, are explained more
fully in the information that follows. All references to 1996 and 1995
refer to the three months ended September 30, unless otherwise noted.
Investment Banking and Broker-Dealer Activities
B. C. Ziegler and Company (BCZCO), the investment banking and primary
broker-dealer subsidiary of the Company, had total revenues of $8,264,000
in 1996 compared to $6,629,000 in 1995, an increase of $1,635,000 or 25%.
Revenues from securities activities involving underwriting activity and
nonunderwritten product sales increased $1,720,000 compared to 1995.
Underwriting revenues increased $1,302,000 on both increased taxable and
tax-exempt underwriting revenues. Nonunderwritten product revenues
increased $418,000 primarily as the result of increased sales of mutual
funds and annuities. Other income decreased $171,000 primarily due to the
transfer of investment advisory business to Ziegler Asset Management, Inc.,
an affiliated entity. Insurance agency revenues and interest income did
not change significantly. Total BCZCO expenses were $8,135,000 in 1996
compared to $6,804,000 in 1995, an increase of $1,331,000 or 20%. The
increase in expenses is primarily due to increased commission-based
compensation expense associated with higher sales volumes. Total
compensation and benefit expense increased $997,000 or 24% compared to
1995. Promotional expense increased $104,000 or 25% primarily due to
increased mutual fund promotions. Professional and regulatory fees
increased $89,000 or 51% due to a greater use of outside consultants. All
other expenses did not vary significantly. As a result, BCZCO had net
income of $130,000 in 1996 compared to a net loss of $91,000 in 1995.
Ziegler Thrift Trading, Inc. (ZTT), the reduced commission brokerage
service of the Company, had total revenues of $1,112,000 in 1996 compared
to $1,019,000 in 1995, an increase of $93,000 or 9%. Commission income,
the primary source of revenues, also increased $93,000 or 10% as the
result of a 9% increase in trading volume and a slight increase in the
average commission per trade. Total expenses of ZTT were $924,000 in 1996
compared to $793,000 in 1995, an increase of $131,000 or 17%. Increases in
volume-based compensation and brokerage and clearing fees associated with
higher trading volumes are the primary reasons for the increased expenses.
Net income in 1996 for ZTT was $116,000 compared to $140,000 in 1995, a
decrease of $24,000 or 17%.
Ziegler Asset Management, Inc. (ZAMI), the money management services
subsidiary of the Company, had total revenues of $709,000 in 1996 compared
to $371,000 in 1995, an increase of $338,000 or 91%. An increase in total
assets under management and a transfer of investment advisory business to
ZAMI from BCZCO is the reason for the revenue increase. Total expenses of
ZAMI were $581,000 in 1996 compared to $336,000 in 1995, an increase of
$245,000 or 73%. Substantially all of the increase is due to the
reimbursement of management fees by ZAMI under expense reimbursement
agreements with money market and mutual funds whose assets ZAMI manages and
increases in employee compensation and benefits. Changes in all other
expense categories were not significant. Net income for ZAMI was $71,000
in 1996 compared to $19,000 in 1995.
Lease Financing Activities
Ziegler Leasing Corporation (ZLC), the primary lease financing
subsidiary of the Company, had total revenues of $2,318,000 in 1996
compared to $2,518,000 in 1995, a decrease of $200,000 or 8%. The primary
components of revenue are from equipment leasing and financing, and from
gains on the sale of leased equipment sold at the termination of the
leases. Equipment leasing income was $1,759,000 in 1996 compared to
$2,184,000 in 1995, a decrease of $425,000 or 19%. A lower level of
equipment on lease related to financing and operating leases is the reason
for the decline. Gain on the sale of leased equipment was $282,000 in 1996
compared to $59,000 in 1995, an increase of $223,000. The increase in
gains is due to a greater volume of equipment coming off lease and sold in
1996. Total expenses of ZLC were $1,777,000 in 1996 compared to $2,219,000
in 1995, a decrease of $442,000 or 20%. Depreciation expense on operating
equipment, the largest component of expense, was $798,000 in 1996 and
$1,046,000 in 1995, a decrease of $248,000 or 24%. Interest expense
decreased $155,000, or 21%, due to the lower level of equipment on lease in
1996. The provision for loss expense decreased $55,000 in 1996 compared to
1995. All other expenses did not change significantly. As a result, net
income for ZLC was $339,000 in 1996 compared to $186,000 in 1995, an
increase of $153,000 or 82%.
Ziegler Collateralized Securities, Inc. (ZCSI) facilitates the
financing of equipment leases and sales by securitizing equipment leases or
notes supporting equipment leases or sales, and offering the resulting
securities to the public. ZCSI purchased the leases and notes from ZLC,
which also acts as manager and lease servicer since ZCSI has no employees.
ZCSI had revenues of $419,000 in 1996 compared to $311,000 in 1995, an
increase of $108,000 or 35%. The addition of a sixth series of bonds
issued in the third quarter of 1995 and a seventh series of bonds issued in
the second quarter of 1996, and the related leases and notes is the reason
for the increased revenues. Expenses equaled revenues since management and
servicing fees paid to ZLC are limited to an amount that would prevent ZCSI
from incurring a loss. The largest component of expense is interest
expense. Interest expense was $316,000 in 1996 compared to $218,000 in
1995, an increase of $98,000 or 45%. Management and servicing fees paid to
ZLC were $27,000 in 1996 compared to $32,000 in 1995.
Other Services and Activities
Ziegler Financing Corporation (ZFC) provides construction financing
and interim lending primarily to investment banking clients and is also
recently qualified to originate loans for the Federal Housing
Administration (FHA). Total revenues of ZFC were $146,000 in 1996 compared
to $80,000 in 1995, an increase of $66,000. The increase in 1996 is due to
the receipt of $105,000 in loan origination fees related to an FHA loan
origination during the quarter. This increase was offset by a decrease in
interest income from notes receivable of $51,000 reflecting the lower level
of lending activity in 1996. Total expenses were $85,000 in 1996 compared
to $67,000 in 1995, an increase of $18,000. Approximately $75,000 of
expense is associated with the loan origination activities which did not
exist in 1995. A reduction of $51,000 in interest expense is associated
with the reduction in notes receivable and the corresponding cost of funds
to support those lending activities. ZFC had a net income of $38,000 in
1996 compared to $7,000 in 1995. Both interest expense and net income were
also negatively impacted in 1995 by an interest free loan made in 1993 to a
church experiencing difficulties making required debt service payments on a
bond issue originally underwritten by BCZCO. This loan was transferred to
ZCI during 1995.
First Church Financing Corporation (FCFC) is organized for the
purpose of issuing mortgage-backed bonds collateralized by first mortgages
on church buildings and properties. Total revenues of FCFC were $264,000
in 1996 compared to $204,000 in 1995. FCFC had expenses of $246,000 in
1996 compared to $193,000 in 1995. The addition of a third series of bonds
outstanding in December, 1995 and its related collateral of church loans is
the reason for the increased revenues and expenses, both of which reflect
primarily interest. Net income for FCFC was $10,000 in 1996 compared to
$6,000 in 1995.
WRR Environmental Services Co., Inc. (WRR) is in the business of
providing pollution abatement services and recycling, reclaiming, and
disposing of chemical wastes. Total gross revenues were $3,897,000 in 1996
compared to $4,178,000 in 1995, a decrease of $281,000 or 7%. Decreased
revenues of $747,000 from WRR's regular environmental service product
lines, partially offset by $466,000 generated from the sale, installation
and servicing of truck equipment by WRR's wholly-owned subsidiary which
became operational in October, 1995 accounted for most of the revenue
decrease. The gross margin percentage was 33% in 1996 compared to 31% in
1995. The decrease in WRR's regular environmental service product line
sales is due to a decrease in remediation and spill clean-up revenues.
During 1995 there was an unusually high volume of these projects generating
revenue. The gross margin increase is due to a mix of higher margin
activities specifically related to remediation and product sales. Total
expenses of WRR were $684,000 in 1996 compared to $608,000 in 1995, an
increase of $76,000 or 12%. Net income for WRR was $396,000 in 1996
compared to $456,000 in 1995.
The Ziegler Companies, Inc. (ZCI) is the parent company and also
engages in limited investing activities. Revenues for ZCI in 1996 were
$220,000 compared to $231,000 in 1995, the majority of which was interest
income on a credit facility established by ZCI for a corporation which
generates automobile loans to individual customers. Total expenses for ZCI
in 1996 were $179,000 compared to $145,000 in 1995 an increase of $34,000.
Interest expense decreased $48,000 due to the elimination of a non-interest
bearing note on July 1 with a balance of approximately $3,000,000 that
existed in the third quarter of 1995. The repayment of the note reduced
the need for borrowing and the corresponding interest expense. An accrual
for compensation expense of $100,000 offset the interest expense decrease
and is an allocation of management activity expense. Net income for ZCI in
1996 was $15,000 compared to $54,000 in 1995.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Nine Months Ended
September 30, 1996 and 1995
Total revenues of the Company in 1996 were $39,903,000 compared to
$36,866,000 in 1995, an increase of $3,037,000 or 8%. Operating expenses
in 1996 were $37,421,000 compared to $34,451,000 in 1995, an increase of
$2,970,000 or 9%. There was a provision for income taxes in 1996 of
$852,000 compared to $848,000 in 1995 using a federal statutory tax rate of
34% in both periods. Net income in 1996 was $1,630,000 compared to
$1,567,000 in 1995, an increase of $63,000 or 4%. Earnings per share in
1996 were $.68 compared to $.65 in 1995. The changes in revenues,
operating expenses, and net income for 1996 compared to 1995 were primarily
a reflection of factors related to investment banking, broker-dealer and
lease financing activities, as well as factors related to the Company's
nonfinancial services subsidiary, WRR Environmental Services Co., Inc.
These factors, as well as the impact of other factors, are explained in the
information that follows. All references to 1996 and 1995 refer to the
nine months ended September 30, unless otherwise noted.
Investment Banking and Broker-Dealer Activities
BCZCO had total revenues of $20,993,000 in 1996 compared to
$19,651,000 in 1995, an increase of $1,342,000 or 7%. Revenues from
securities activities increased $1,775,000 or 11% compared to 1995.
Underwriting revenues increased $299,000 or 3% compared to 1995.
Nonunderwritten product revenues increased $1,476,000 or 22% compared to
1995 on increased mutual fund, annuity and equity sales. Other income
decreased $473,000 primarily due to the transfer of investment advisory
business to Ziegler Asset Management, Inc. an affiliated entity. Insurance
agency revenues and interest income did not change significantly. Total
BCZCO expenses were $22,415,000 in 1996 compared to $20,361,000 in 1995, an
increase of $2,054,000 or 10%. The increase was primarily due to increased
commission-based compensation expense associated with higher sales volumes.
Total compensation and benefit expense increased $1,764,000 or 14%. All
other expenses did not vary significantly. As a result, BCZCO had a net
loss of $760,000 in 1996 compared to a net loss of $384,000 in 1995.
ZTT had total revenues of $4,074,000 in 1996 compared to $3,201,000
in 1995, an increase of $873,000 or 27%. Commission income, the primary
source of revenues, increased $830,000 or 29%, as the result of a 23%
increase in trading volume and a 5% increase in the average commission per
trade. Total expenses of ZTT were $3,064,000 in 1996 compared to
$2,428,000 in 1995, an increase of $636,000 or 26%. Higher trading volumes
caused increased volume-based compensation and increased brokerage and
clearing fees. Increased promotion also contributed to the increased
expenses. ZTT experienced heavier trading volumes in 1996. Net income in
1996 for ZTT was $626,000 compared to $479,000 in 1995, an increase of
$147,000 or 31%.
ZAMI had total revenues of $2,005,000 in 1996 compared to $1,106,000
in 1995, an increase of $899,000 or 81%. An increase in total assets under
management and a transfer of investment advisory business to ZAMI from
BCZCO is the reason for the revenue increase. Total expenses of ZAMI were
$1,604,000 in 1996 compared to $1,034,000 in 1995, an increase of $570,000
or 55%. Substantially all of the increase is due to the reimbursement of
management fees by ZAMI under expense reimbursement agreements with money
market and mutual funds whose assets ZAMI manages and increases in employee
compensation and benefits. Net income for ZAMI was $224,000 in 1996
compared to $40,000 in 1995.
Lease Financing Activities
ZLC had total revenues of $7,319,000 in 1996 compared to $7,777,000
in 1995, a decrease of $458,000 or 6%. The primary components of revenue
are from equipment leasing and financing, and from gains on the sale of
leased equipment sold at the termination of the leases. Equipment leasing
income was $5,743,000 in 1996 compared to $6,654,000 in 1995, a decrease of
$911,000 or 14%. A lower level of equipment on lease related to financing
and operating leases is the reason for the decline. Gain on the sale of
leased equipment was $664,000 in 1996 compared to $383,000 in 1995, an
increase of $281,000. ZLC realized a $64,000 increase in commission and
fee income and a $225,000 increase in interest income generated primarily
by an increase in notes receivable from ZLC customers to finance equipment
purchases or leases. A decrease of $116,000 in revenues from medical
equipment refurbishing activities, the operation of a wholly-owned
subsidiary whose business was discontinued in the second quarter of 1996,
also contributed to the ZLC decline in total revenues. Total expenses of
ZLC were $6,641,000 in 1996 compared to $7,024,000 in 1995, a decrease of
$383,000 or 5%. Depreciation expense on operating equipment, the largest
component of expense, decreased $462,000, or 14%, to $2,898,000 in 1996
from $3,360,000 in 1995, again reflecting the lower level of equipment on
lease. Interest expense was also down $239,000, or 11%, also due to the
lower level of equipment on lease in 1996. ZLC's provision for loss
expense increased $308,000 from $123,000 in 1995 to $431,000 in 1996. The
majority of this increase was caused by ZLC suspending all future
refurbishing activities in its wholly-owned subsidiary and establishing a
reserve for the losses associated with the sale of assets and settlement of
all affairs. The resulting net income for ZLC was $406,000 in 1996
compared to $444,000 in 1995, a decrease of $38,000.
ZCSI had revenues of $1,204,000 in 1996 compared to $987,000 in 1995,
an increase of $217,000 or 22%. The addition of a sixth series of bonds
issued in the third quarter of 1995 and a seventh series of bonds issued in
the second quarter of 1996, and the related leases and notes is the reason
for the increased revenues. Expenses equaled revenues since management and
servicing fees paid ZLC are limited to an amount that would prevent ZCSI
from incurring a loss. The largest component of expense is interest
expense. Interest expense was $889,000 in 1996 compared to $685,000 in
1995, an increase of $204,000, or 30%. Management and servicing fees paid
ZLC were $75,000 in 1996 compared to $96,000 in 1995.
Other Services and Activities
Total revenues of ZFC were $250,000 in 1996 compared to $197,000 in
1995, an increase of $53,000. The increase in 1996 is due to the receipt
of $105,000 in loan origination fees related to an FHA loan origination in
1996. This increase was offset by a decrease in interest income from notes
receivable of $69,000 reflecting a lower level of lending activity in 1996.
Outside lending was insignificant as all loans being warehoused for an
affiliate had been sold at the end of 1995. Substantially all interest
income of $49,000 in 1996 was related to lending to affiliates consolidated
in the Company's financial statements. Total expenses were $134,000 in
1996 compared to $244,000 in 1995. Approximately $75,000 of expense is
associated with the loan origination activities which did not exist in
1995. A reduction of $180,000 in interest expense is associated with the
reduction in notes receivable and the corresponding reduction in the levels
of borrowing and cost of funds to support those lending activities.
Interest expense was $43,000 in 1996 compared to $223,000 in 1995. ZFC had
a net income of $71,000 in 1996 compared to a net loss of $29,000 in 1995.
Both interest expense and net income were negatively impacted in 1995 by an
interest free loan made in 1993 to a church experiencing difficulties
making required debt service payments on a bond issue originally
underwritten by BCZCO. This loan was transferred to ZCI during 1995.
Total revenues of FCFC were $852,000 in 1996 compared to $642,000 in
1995. FCFC had expenses of $804,000 in 1996 compared to $604,000 in 1995.
The addition of a third series of bonds outstanding in December, 1995 and
its related collateral of church loans is the reason for the increased
revenues and expenses, both of which reflect primarily interest. Net
income for FCFC was $29,000 in 1996 compared to $23,000 in 1995.
WRR had gross revenues of $10,617,000 in 1996 compared to $9,835,000
in 1995, an increase of $782,000 or 8%. Revenues from WRR's regular
environmental service product lines decreased $608,000, or 6%, in 1996
compared to 1995. A reduction in remediation services is the primary
reason for the decrease. This decrease is offset by $1,391,000 of revenues
generated from the sale, installation and servicing of truck equipment by
WRR's wholly-owned subsidiary which became operational in October, 1995.
The gross margin percentages were 29% in both 1996 and 1995. Total
expenses of WRR were $1,955,000 in 1996 compared to $1,749,000 in 1995, an
increase of $206,000 or 12%. The increase in expenses is primarily due to
the addition of the new subsidiary. Net income for WRR was $723,000 in
1996 compared to $741,000 in 1995.
Revenues for ZCI in 1996 were $760,000 compared to $833,000 in 1995,
a decrease of $73,000. ZCI realized $127,000 of gains from equity trading
in 1995 which was not repeated in 1996. ZCI also recognized a $30,000
increase in its equity in earnings from its Heartland Capital Corporation
joint venture in 1996 over 1995. Interest income in 1996 increased
$28,000. Total expenses for ZCI in 1996 were $257,000 compared to $432,000
in 1995, a decrease of $175,000 or 41%. The low expense level in 1996 was
created by the reversal of $336,000 of a previously established loss
reserve related to the interest free loan transferred to ZCI from ZFC
mentioned earlier. Interest expense increased $61,000 in 1996, primarily
due to the increased need for borrowing prior to receipt of the repayment
amount on the interest free loan. An accrual of compensation expense in
1996 of $100,000 also offset the effect of the reversal and is an
allocation of management activity expense. Net income for ZCI in 1996 was
$316,000 compared to $259,000 in 1995.
Liquidity and Capital Resources
The Company's primary activities involve investment banking, retail
brokerage, equipment leasing and other financial services. Capital
expenditures for assets other than leased equipment were relatively
insignificant. Land, buildings and equipment, net of related depreciation
and amortization, was 5% of total Company assets and investment in leases
was 35% of total Company assets. The Company, specifically its financial
subsidiaries, has a continuing requirement for cash to finance its
activities. A primary source of cash has been and continues to be the
issuance of short-term notes of the Company. These notes vary in
maturities up to 270 days. In the first nine months of 1996, a total of
$64,017,000 of notes were issued and $67,519,000 were repaid. In the first
nine months of 1995 a total of $70,030,000 of notes were issued and
$68,180,000 were repaid. The total balance of short-term notes
outstanding, without regard to interest discounts was $15,051,000 at
September 30, 1996. This source of additional cash was used primarily to
finance leasing and lending activity and remains an important source of
cash for the Company.
ZLC also uses intermediate term, fixed-rate bank borrowings and five-
year extendable/redeemable, fixed-rate bonds issued to the public. The
bank borrowings are structured to mature in a pattern approximating the
lease agreements they support. Total indebtedness to the banks under these
borrowings was $4,000,000 at September 30, 1996 and $11,000,000 at
September 30, 1995. The $10,000,000 of five-year extendable/redeemable
bonds previously issued by ZLC mature December 1, 2006. ZLC exercised its
right to reset the interest rate on the bonds from 8.75% to 7.5% effective
October 1, 1996. ZLC has the right to reset the interest rate on the bonds
again in August, 2001. The holders of the extendable/redeemable bonds have
the option of tendering the bonds for repayment in whole or in part on
December 1, 1996, and December 1, 2001. A total of $3,052,000 has been
tendered by the holders of the bonds for payment on December 1, 1996. ZLC
was also involved in nonrecourse debt issuance and repayments in
conjunction with leveraged leasing activities. As of September 30, 1996
there was $1,788,000 of nonrecourse debt recorded by ZLC and $6,461,000 at
September 30, 1995.
Since 1993, the Company had a loan with an organization which was
experiencing difficulties making required debt service payments on an
outstanding bond issue underwritten by BCZCO. The loan was due on demand,
was interest free and required weekly principal payments of $7,000. The
loan proceeds were used to redeem the organization's outstanding bond issue
in full. The loan was secured by a first mortgage on the underlying real
estate. The loan was recorded at cost, net of allowances for possible
losses previously provided and was included in Other Assets on the balance
sheet. This loan was repaid on July 1, 1996. The total amount received
was $3,145,000.
ZCSI issues bonds to the public as a source of cash. One new series
of bonds totaling $5,000,000 was issued in the second quarter of 1996.
Total bonds outstanding were $15,369,000 at September 30, 1996, and
$16,874,000 at September 30, 1995. The bonds are due serially from
October, 1996 to October, 2001. The bonds were used to finance the
purchase of lease obligations and lease financing notes that serve as
collateral.
FCFC issues bonds to the public as a source of cash. Mandatory
redemption on the bonds is made from principal payments received on the
mortgage loans which serve as collateral for the bonds. Principal payments
on the mortgage loans are received in regular installments over a 15-year
amortization schedule through 2008. No new bonds were issued in the first
nine months of 1996. Total bonds outstanding were $10,390,000 at September
30, 1996, and $7,799,000 at September 30, 1995.
WRR has bonds outstanding at a face value of $450,000. The bonds
mature serially each December through the year 2004. The bonds were issued
in 1980 to finance continuing operations. WRR also has outstanding debt
incurred in a 1995 purchase of assets of a company, WRR Northwest
Enterprises Co., Inc. (NWE), engaged primarily in the sale, installation,
and servicing of truck equipment. The amount due the seller is $460,000
and matures serially through October, 2002. NWE also has a line of credit
with a local bank in the amount of $500,000 to fund current working capital
requirements. The line of credit is secured by the accounts receivable of
NWE and is guaranteed by WRR. As of September 30, 1996, NWE had $382,000
outstanding under this facility.
BCZCO finances most activities from its own resources and also relies
upon unsecured lines of credit available through banking relationships, if
necessary. Any utilization of these credit facilities is generally repaid
in less than 30 days. As of September 30, 1996, BCZCO had $2,558,000 of
amounts outstanding under these facilities. There were $14,678,000 of
amounts outstanding under these facilities at September 30, 1995.
The Company's cash and cash equivalent position allows a certain
flexibility in its financial activities. In order to maximize income,
available cash is invested in short-term investments such as commercial
paper, money market funds and reverse repurchase agreements at very short
maturities in accordance with the Company's liquidity requirements.
The proceeds of the pending sale of Ziegler Leasing Corporation are
anticipated to be reinvested in securities related activities. If suitable
reinvestment opportunities are not identified within a reasonable period of
time, a special dividend, distribution or partial buyback of the Company's
common stock through open market purchases or a tender offer may be
effected. The after-tax net proceeds of the sale which the Company expects
to realize will be approximately $11 million.
<PAGE>
PART II
Items 1 through 5.
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on Form 8-K:
Registrant filed a Current Report on form 8-K dated
November 1, 1996 indicating that the Company has signed a
nonbinding letter of intent to sell its Ziegler Leasing
Corporation subsidiary to a major financial services
company. No financial statements were filed as part of
that report.
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.
THE ZIEGLER COMPANIES, INC.
Dated: November 13, 1996 By /s/ Peter D. Ziegler
Peter D. Ziegler
President
Dated: November 13, 1996 By /s/ Lynn R. Van Horn
Lynn R. Van Horn
Senior Vice President -
Finance
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from The
Ziegler Companies, Inc. and subsidiaries financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,366,691
<RECEIVABLES> 11,574,957
<SECURITIES-RESALE> 0<F1>
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 89,923,655<F2>
<PP&E> 7,235,054
<TOTAL-ASSETS> 132,892,616
<SHORT-TERM> 17,458,384<F3>
<PAYABLES> 6,141,517<F4>
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 0
<LONG-TERM> 42,827,376<F5>
0
0
<COMMON> 3,544,030
<OTHER-SE> 49,575,258
<TOTAL-LIABILITY-AND-EQUITY> 132,892,616
<TRADING-REVENUE> 0<F6>
<INTEREST-DIVIDENDS> 3,456,551
<COMMISSIONS> 0<F6>
<INVESTMENT-BANKING-REVENUES> 21,232,183<F6>
<FEE-REVENUE> 5,024,557
<INTEREST-EXPENSE> 3,849,814
<COMPENSATION> 17,417,138
<INCOME-PRETAX> 2,481,586
<INCOME-PRE-EXTRAORDINARY> 2,481,586
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,629,586
<EPS-PRIMARY> .68
<EPS-DILUTED> .68
<FN>
<F1>Short-term investments includes some securities purchased under resale
agreements.
<F2>Financial instruments includes securities inventory, investment in
leases, notes receivable, and investment in and receivables from
affiliates.
<F3>Includes short-term notes payable and unsecured notes payable to banks
under line of credit arrangements.
<F4>Includes payable to customers, payable to broker-dealers, accounts
payable and dividends payable.
<F5>Includes bonds payable and notes payable to banks other than line of
credit borrowings.
<F6>Revenue from investment banking activities includes revenues from
trading activities and commission income.
</FN>
</TABLE>
