SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1998 Commission File No. 0-9377
KINNARD INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0972952
(State of incorporation) (I.R.S. Employer identification number)
920 Second Avenue South, Minneapolis, Minnesota 55402 (612) 370-2700
(Address of principal executive offices) Telephone number
Former name, former address and former fiscal year, if changed since last report
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 at least the past 90 days.
Yes X No _____
Shares of $0.02 par value common stock outstanding at
November 10, 1998: 5,554,570
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
CONTENTS
PART I Page
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statements of financial condition......................3
Consolidated statements of operations...............................4
Consolidated statements of shareholders' equity.....................5
Consolidated statements of cash flows...............................6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................10
PART II
OTHER INFORMATION.....................................................14
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------- -------------------- --------------------
September 30, December 31,
1998 1997
- ---------------------------------------------------------------------------------- -------------------- --------------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $1,876 $3,886
Funds held in escrow 0 1,593
Receivable from clearing firm 3,376 0
Miscellaneous receivables 3,745 3,311
Trading securities, at market 5,610 10,730
Office equipment at cost, less accumulated depreciation
of $2,373 and $2,876, respectively 1,988 1,267
Investment securities, at fair value 17,170 22,705
Income taxes receivable 1,758 0
Other assets 153 480
- ---------------------------------------------------------------------------------- -------------------- --------------------
Total assets $35,676 $43,972
================================================================================== ==================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Due to clearing firm $0 $1,069
Securities sold but not yet purchased, at market 452 915
Accrued compensation 2,752 3,594
Other accounts payable and accrued expenses 2,415 2,584
Income taxes payable 0 18
Deferred tax liability 0 220
- ---------------------------------------------------------------------------------- -------------------- --------------------
Total liabilities 5,619 8,400
- ---------------------------------------------------------------------------------- -------------------- --------------------
Shareholders' equity
Preferred stock, authorized 1,000 shares; none issued or outstanding 0 0
Undesignated stock, authorized 16,500 shares; none issued or outstanding 0 0
Common stock, $.02 par value; authorized 7,500 shares; issued and
Outstanding 5,555 and 5,955 shares, respectively 111 119
Additional paid-in capital 9,588 11,946
Retained earnings 20,358 23,507
- ---------------------------------------------------------------------------------- -------------------- --------------------
Total shareholders' equity 30,057 35,572
- ---------------------------------------------------------------------------------- -------------------- --------------------
Total liabilities and shareholders' equity $35,676 $43,972
================================================================================== ==================== ====================
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------------------------- ---- ----------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
1998 1997 1998 1997
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Commissions $3,535 $3,669 $10,970 $10,607
Principal transactions 2,974 6,891 11,755 20,035
Investment account (1,545) 1,100 (782) 1,294
Investment banking 1,116 1,678 4,738 3,221
Interest 414 597 1,112 1,737
Other 776 661 2,289 1,772
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Total revenues 7,270 14,596 30,082 38,666
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Expenses:
Compensation and benefits 7,238 9,157 24,011 25,447
Floor brokerage and clearance 729 1,153 2,576 3,049
Communications 269 194 678 577
Occupancy and equipment 1,359 1,319 4,219 3,800
Other 1,123 1,446 3,849 3,798
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Total expenses 10,718 13,269 35,333 36,671
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Income (loss) before income taxes (3,448) 1,327 (5,251) 1,995
Income tax expense (benefit) (1,380) 533 (2,102) 815
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Net income (loss) ($2,068) $794 ($3,149) $1,180
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Earnings (loss) per common share:
Basic ($0.36) $0.13 ($0.53) $0.19
Diluted ($0.36) $0.13 ($0.53) $0.19
================================================= ================ ================= ==== ================= ================
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
Additional Total
Common Stock Paid-in Retained Shareholders'
Shares Amount Capital Earnings Equity
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 6,257 $125 $13,680 $11,500 $25,305
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
Issuance of shares under employee
stock purchase plan 11 0 51 51
Issuance of shares under employee
stock option plan 88 2 311 313
Repurchase of stock (329) (7) (1,332) (1,339)
Net income 11,699 11,699
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
Balance, December 31, 1996 6,027 120 12,710 23,199 36,029
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
Issuance of shares under employee
stock option plan 68 1 230 231
Issuance of new shares 325 7 1,700 1,707
Repurchase of stock (465) (9) (2,694) (2,703)
Net income 308 308
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
Balance, December 31, 1997 5,955 119 11,946 23,507 35,572
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
Issuance of shares under employee
stock purchase plan 13 0 78 78
Issuance of shares under employee
stock option plan 81 2 379 381
Repurchase of stock (494) (10) (2,815) (2,825)
Net loss (3,149) (3,149)
- --------------------------------------------- --------------- --------------- --------------- --------------- ----------------
Balance, September 30, 1998 (unaudited) 5,555 $111 $9,588 $20,358 $30,057
============================================= =============== =============== =============== =============== ================
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------- -------------------------------------------
Nine Months Ended
September 30,
1998 1997
- -------------------------------------------------------------------------------- --------------------- ---------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and clearing firm $31,034 $35,336
Cash paid to suppliers and employees (36,817) (37,490)
Interest:
Received 1,112 1,737
Income taxes paid (received) 98 (3,700)
- -------------------------------------------------------------------------------- --------------------- ---------------------
Net cash used in operating activities (4,573) (4,117)
- -------------------------------------------------------------------------------- --------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of:
Investment securities 14,544 14,128
Office equipment 59 0
Purchase of:
Investment securities (9,790) (17,495)
Office equipment (1,477) (850)
Funds released from escrow 1,593 (59)
- -------------------------------------------------------------------------------- --------------------- ---------------------
Net cash provided by (used in) investing activities 4,929 (4,276)
- -------------------------------------------------------------------------------- --------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 459 1,914
Repurchase of common stock (2,825) (1,434)
- -------------------------------------------------------------------------------- --------------------- ---------------------
Net cash provided by (used in) financing activities (2,366) 480
- -------------------------------------------------------------------------------- --------------------- ---------------------
Decrease in cash and cash equivalents (2,010) (7,913)
Cash and cash equivalents at beginning of period 3,886 12,518
- -------------------------------------------------------------------------------- --------------------- ---------------------
Cash and cash equivalents at end of period $1,876 $4,605
================================================================================ ===================== =====================
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------- -------------------------------------------
Nine Months Ended
September 30,
1998 1997
- -------------------------------------------------------------------------------- --------------------- ---------------------
(Unaudited)
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
Net income (loss) ($3,149) $1,180
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 696 449
Net unrealized (gain) loss on investment securities 506 (1,158)
Net realized (gain) loss on sale of investment securities 276 (136)
Deferred income taxes (220) 429
(Increase) decrease in:
Receivable from clearing firm (3,376) 681
Miscellaneous receivables (434) (525)
Trading securities at market 5,120 (1,118)
Income tax receivable (1,758) (249)
Other assets 327 139
Increase (decrease) in:
Due to clearing firm (1,069) 0
Securities sold but not yet purchased, at market (463) 139
Accrued compensation (842) (658)
Other accounts payable and accrued expenses (169) (62)
Income taxes payable (18) (3,228)
- -------------------------------------------------------------------------------- --------------------- ---------------------
Net cash used in operating activities ($4,573) ($4,117)
================================================================================ ===================== =====================
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Summary of Significant Accounting Policies
The accompanying consolidated financial statements of Kinnard Investments,
Inc., (the "Company") have been prepared in conformity with generally
accepted accounting principles and should be read in conjunction with the
Company's annual report for the year ended December 31, 1997. The results
of operations for the nine months ended September 30, 1998 are not
necessarily indicative of the results to be expected for the year ended
December 31, 1998.
The consolidated statement of financial condition as of September 30, 1998
and other financial information for the nine months ended September 30,
1998 and 1997, are unaudited, but management believes that all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
statement of the results of operations for the periods have been included.
Note 2. Net Capital Requirements
The Company's brokerage subsidiary is subject to the Securities and
Exchange Commission (SEC) Rule 15c3-1, Net Capital Requirements for
Brokers and Dealers, which requires the Company to maintain minimum net
capital of $351,000 as of September 30, 1998. Also, under this rule, the
ratio of aggregate indebtedness to net capital may not exceed 15 to 1, and
the Company may be prohibited from expanding its business or paying cash
dividends if its ratio of aggregate indebtedness to net capital is greater
than 10 to 1. At September 30, 1998, the Company had net capital of $4.7
million, and a ratio of aggregate indebtedness to net capital of 1.1 to 1.
The Company is exempt from the provisions of SEC Rule 15c3-3, Customer
Protection: Reserves and Custody of Securities, as the Company's clearing
firm is responsible for complying with these provisions. Accordingly, the
Computation for Determination of Reserve Requirements and Information
Relating to the Possession or Control Requirements is not required for the
Company.
Note 3. Earnings Per Share
The following reconciliation illustrates the computation of basic and
diluted earnings per share as prescribed under SFAS 128:
<TABLE>
<CAPTION>
(In thousands, except per share data)
------------------------------------------------------- --------------------------- ----------------------------
Three Months ended Nine Months ended
September 30, September 30,
------------------------------------------------------- --------------------------- ----------------------------
1998 1997 1998 1997
------------------------------------------------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) ($2,068) $794 ($3,149) $1,180
------------------------------------------------------- ------------- ------------- -------------- -------------
Weighted average number of common shares
outstanding 5,789 6,226 5,942 6,165
Dilutive effect of stock options and warrants 0 72 0 79
------------------------------------------------------- ------------- ------------- -------------- -------------
Weighted average number of common and potential
dilutive common shares outstanding 5,789 6,298 5,942 6,244
------------------------------------------------------- ------------- ------------- -------------- -------------
Earnings per share:
Basic ($0.36) $0.13 ($0.53) $0.19
Diluted ($0.36) $0.13 ($0.53) $0.19
======================================================= ============= ============= ============== =============
</TABLE>
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 4. Contingent Liabilities
John G. Kinnard and Company, Incorporated ("JGK") is a defendant in
various actions relating to its business, some of which involve claims
for unspecified amounts. Although the resolution of these matters cannot
be predicted with certainty, the Company's management believes that
while their outcome may have a material effect on the earnings in a
particular period, the outcome will not have a material adverse effect
on the financial condition of the Company.
Note 5. Effect of Recent Accounting Standards
In December 1997 the Financial Accounting Standards Board (FASB) issued
Statement No. 130 (SFAS 130), "Reporting Comprehensive Income". The
Company adopted SFAS 130 in the second quarter of 1998. Comprehensive
income is equal to net income on the consolidated statement of operations.
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with Management's Discussion and
Analysis contained in the Company's Annual Report Form 10-K for the year ended
December 31, 1997.
The following table sets forth a summary of three and nine month increases
(decreases) in the categories of revenues and expenses for 1998 versus 1997:
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------------------------- ---- ----------------------------------
Three Months ended Nine months ended
September 30, September 30,
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Amount % Change Amount % Change
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Commissions ($134) (4%) $363 3%
Principal transactions (3,917) (57) (8,280) (41)
Investment account (2,645) (240) (2,076) (160)
Investment banking (562) (33) 1,517 47
Interest (183) (31) (625) (36)
Other 115 17 517 29
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Total revenues (7,326) (50) (8,584) (22)
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Expenses:
Compensation and benefits (1,919) (21) (1,436) (6)
Floor brokerage and clearance (424) (37) (473) (16)
Communications 75 39 101 18
Occupancy and equipment 40 3 419 11
Other (323) (22) 51 1
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Total expenses (2,551) (19) (1,338) (4)
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Income before income taxes (4,775) (360) (7,246) (363)
Income tax expense (1,913) (359) (2,917) (358)
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
Net income ($2,862) (360%) ($4,329) (367%)
- ------------------------------------------------- ---------------- ----------------- ---- ----------------- ----------------
</TABLE>
Results of Operations
The Company recorded a net loss of $2.1 million, or 36 cents per diluted share,
on revenues of $7.3 million for the third quarter ended September 30, 1998. This
result compares with net income of $794,000, or 13 cents per diluted share, on
revenues of $14.6 million for the same quarter one year ago. As a result of the
decline in revenues, the Company has put in place an expense reduction program
that includes a hiring freeze of non-sales employees and a consolidation of its
branch office network.
For the nine months ended September 30, 1998, the net loss was $3.1 million, or
53 cents per diluted share, on revenues of $30.1 million. This compares to net
income of $1.2 million, or 19 cents per diluted share, on revenues of $38.7
million for the same period in 1997.
Commission revenue declined by 4% for the quarter and increased 3% for September
year-to-date period. The most significant changes in both the three and nine
month periods was an increase in mutual fund sales and a decline in revenues
from the sale of listed securities.
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations (continued)
Principal transaction revenue declined by 57% and 41% for the three and nine
month periods, due in part to volatile equity markets particularly small-cap
issues in which the Company focuses its market making activities - and new
trading rules and regulatory changes. The Company has responded to the changing
environment by decreasing the number of stocks in which it makes a market to
under 200 from 350 at December 31, 1997.
The Company incurred a $1.5 million net loss on the valuation of its investment
account in the current quarter, compared to a $1.1 million net gain in the third
quarter of 1997. For the nine month period, revenue from the investment account
declined by $2.1 million compared to the prior year. The investment account has
historically been a volatile source of revenue for the Company.
Investment banking revenue decreased by $562,000, or 33% for the quarter, and
increased by $1.5 million, or 47% for the nine-month period. The Company
completed one private placement in the current quarter, compared to one public
financing in the third quarter of 1997. The public equity financing market was
brought to a virtual standstill in the current quarter as a result of market
volatility.
Interest revenue decreased by 31% and 36% for the three and nine month periods,
respectively, due to lower customer margin balances and fixed income securities
held in the Company's investment account. Other revenue increased by 17% and 29%
for the quarter and year-to-date as a result of increases in fees earned on
managed and cash management accounts.
Compensation expense declined by 21% for the quarter and 6% for the nine month
period. Declines in variable compensation, such as commissions and incentive
compensation, were primarily the result of lower revenues. Fixed salaries also
declined as the Company reduced staffing levels in its efforts to become more
efficient and to increase productivity.
Floor brokerage and clearance fees declined by 37% for the quarter and 16% for
the nine-month period, due to lower revenues and lower clearing rates. The
Company converted its clearing business to NationsBanc Montgomery Securities in
June 1998, which resulted in lower clearing fees per transaction for most
products.
Communication costs increased by 39% and 18% for the three and nine month
periods due in part to additional data lines required for new technologies and
internet services. Occupancy and equipment was little changed for the quarter.
Other expenses declined by 22% due to a decline in expenses for outside
professional services.
Liquidity and Capital Resources
Operating Activities
A large portion of the Company's assets are cash and assets readily convertible
to cash. The liquid portions of the Company's trading and investment securities
are stated at quoted market values and are readily marketable. The less liquid
portions of trading and investment securities, which totaled $1.2 million at
September 30, 1998, are stated at fair value, which is determined by
management's best estimate.
Between December 31, 1997 and September 30, 1998 trading securities decreased
$5.1 million, and securities sold but not yet purchased decreased by $463,000.
Both long and short inventories are generally maintained to facilitate customer
transactions rather than for market speculation.
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating Activities (continued)
Based on the Company's current liquidity positions, available bank lines and
operating plans, it is anticipated that the Company has sufficient resources to
meet the cash requirements of its operations in the foreseeable future.
Year 2000 Issue
Year 2000 readiness presents corporate-wide challenges for financial
institutions. The Company recognizes the importance of the Year 2000 issue and
its impact on information technology and non-information technology systems. As
a result, the Company is actively managing efforts to plan, allocate resources,
and monitor progress to achieve Year 2000 readiness.
The executive sponsor for the Company's Year 2000 project is the Chief Executive
Officer and Chairman of the Board. The managing executive is the Senior Vice
President of Corporate Development. Reporting to the managing executive is the
Year 2000 Committee, which is led by the Director of the MIS/Communications
department and includes managers from most major functional areas of the
Company. This group is responsible for managing critical success factors,
implementation of action plans, and reporting on progress to executive
management.
The Company believes that it has adequate staffing and human resources to
complete its Year 2000 Plan. Although retention has not been an issue, the
Company does rely on certain key individuals who may be difficult to replace in
timely fashion if they were to leave.
The Company has defined mission critical systems as those systems whose loss
would cause an immediate stoppage or significant impairment to core business
areas. Systems identified as mission critical include back office data, quote
delivery, trading, communication and accounting systems. In addition, the
Company clears its trades through third-party clearing firm whose systems it is
reliant on.
The majority of internal systems with a Year 2000 problem are being addressed in
the calendar year 1998. The Company's 1998 capital budget did not specifically
identify expenditures related to the Year 2000, although many items in the
capital budget were to upgrade or replace applications that were not Year 2000
compliant. For the first nine months of 1998, the Company spent $1.5 million for
capital equipment (which includes software purchases), versus $1.1 million for
the entire year in 1997. The costs related to replacing or upgrading
non-compliant systems in future years has not been determined, although the
Company does not expect such costs to have a material effect on the Company's
consolidated financial statements, and expects to be able to fund such costs
from working capital.
In conjunction with the Securities Industry Association ("SIA"), the Company
expects to participate in industry-wide testing of system interdependencies in
1999. Because the Company operates as a fully-disclosed broker-dealer, a large
portion of its information systems are provided by third parties. If these
outside information providers, which includes securities exchanges, clearing
agencies and other financial institutions, should experience a significant
disruption as a result of the Year 2000 problem, such disruption could affect
the Company's ability to conduct business and may have a material adverse effect
on the Company's results of operations.
The Company is currently developing a written contingency plan to provide for
continuity under various scenarios, which it expects to be completed by the end
of 1998.
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Investing Activities
The Company's investment account is invested in fixed income securities,
publicly traded equity securities and privately placed equity securities. Equity
securities are frequently held as a result of past investment banking activities
performed by the Company. In addition, the Company may utilize outside advisors
to manage a portion of the investment portfolio.
The value of certain securities held in the investment account can fluctuate
significantly, with the resulting valuation changes being reported as net gains
or losses on the investment account. These fluctuations in value can have a
material impact on reported earnings.
Financing Activities
John G. Kinnard maintains a credit facility in order to meet short-term
operating needs. At December 31, 1997 and September 30, 1998 there were no
outstanding balances under this facility.
During the first nine months of 1998, the Company repurchased 495,000 shares of
its common stock at a total cost of $2.8 million. For the full year of 1997, a
total of 465,000 shares were repurchased at a cost of $2.7 million. In October
1998, the board of directors authorized the repurchase of 1,000,000 shares in
the open market or through privately negotiated transactions, at the discretion
of the firm's management. The repurchase program will commence after the
completion of the existing 1,600,000 share plan initiated in November 1993, of
which 53,000 shares remain.
Cautionary Statements
The Company wishes to caution investors of the following factors which could
affect the Company's results of operations and cause such results to differ
materially from those anticipated in forward-looking statements made in this
document or elsewhere on behalf of the Company: volatility in the securities
markets, risks in the ownership and underwriting of securities, consolidation in
the financial services industries, volatility in earnings and losses of
investment securities, competition, government regulation, customer litigation
and arbitration, and off-balance-sheet credit and market risks. For a more
complete discussion of these and other factors, see the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
<PAGE>
KINNARD INVESTMENTS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
See Note 4 in Notes to Consolidated Financial Statements.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(filed in electronic format only)
(b) Reports on Form 8-K
None
<PAGE>
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.
KINNARD INVESTMENTS, INC.
/s/ Daniel R. Sass
Daniel R. Sass
Treasurer (principal financial and
accounting officer)
Date 11/10/98
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
KINNARD INVESTMENTS, INC.
(Commission File Number: 0-9377)
EXHIBIT INDEX
for
Form 10-Q for the quarter ended September 30, 1998
27 Financial Data Schedule (filed in electronic form only):
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,876
<RECEIVABLES> 7,121
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 22,780
<PP&E> 1,988
<TOTAL-ASSETS> 35,676
<SHORT-TERM> 0
<PAYABLES> 5,167
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 452
<LONG-TERM> 0
0
0
<COMMON> 111
<OTHER-SE> 29,946
<TOTAL-LIABILITY-AND-EQUITY> 35,676
<TRADING-REVENUE> 11,755
<INTEREST-DIVIDENDS> 1,112
<COMMISSIONS> 10,970
<INVESTMENT-BANKING-REVENUES> 4,738
<FEE-REVENUE> 2,289
<INTEREST-EXPENSE> 0
<COMPENSATION> 24,011
<INCOME-PRETAX> (5,251)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,149)
<EPS-PRIMARY> (0.53)
<EPS-DILUTED> (0.53)
</TABLE>
