<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
X SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
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: 1-8408
THE ADVEST GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0950444
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
90 State House Square
Hartford, Connecticut 06103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 509-1000
NONE
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 the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value 8,551,764 Shares
Class Outstanding at April 30, 1997
Total of sequentially numbered pages 18
Exhibit index seqential page number 15
<PAGE>
THE ADVEST GROUP, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1997 and September 30, 1996 3
Consolidated Statements of Earnings
Three and Six Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1997 and 1996 5
Consolidated Statement of Changes in Shareholders' Equity
Six Months Ended March 31, 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 4. Submission of Matters to a Vote of
Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 14
2
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<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Advest Group, Inc.
Consolidated Balance Sheets
In thousands, except share and per share amounts March 31, 1997 September 30, 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets (Unaudited)
Cash and short-term investments
Cash and cash equivalents $ 16,962 $ 11,461
Cash and securities segregated under federal and other regulations 2,247 265
---------------------------------
19,209 11,726
---------------------------------
Receivables
Brokerage customers, net 371,363 352,434
Loans, net 192,886 195,288
Securities borrowed 235,516 219,919
Brokers and dealers 2,666 5,394
Other 11,675 11,212
---------------------------------
814,106 784,247
---------------------------------
Securities
Trading, at market value 99,129 93,937
Held to maturity (market values of $15,950 and $22,876) 16,147 22,959
Available for sale, at market value 12,958 15,127
---------------------------------
128,234 132,023
---------------------------------
Other assets
Equipment and leasehold improvements, net 14,940 14,187
Other 25,286 22,994
---------------------------------
40,226 37,181
---------------------------------
$ 1,001,775 $965,177
=================================
Liabilities & shareholders' equity
Liabilities
Brokerage customers 323,081 282,618
Deposits 181,860 191,186
Securities loaned 233,528 213,996
Short-term borrowings 25,528 39,301
Securities sold, not yet purchased, at market value 38,509 47,438
Compensation and benefits 17,147 21,517
Checks payable 11,175 16,976
Brokers and dealers 7,080 7,634
Other 17,492 14,973
---------------------------------
855,400 835,639
Long-term borrowings 50,716 19,744
Subordinated borrowings 0 20,552
---------------------------------
906,116 875,935
---------------------------------
Shareholders' equity
Common stock, par value $.01, authorized 25,000,000 shares,
issued 10,772,404 and 10,710,289 shares 108 107
Paid-in capital 70,013 68,842
Retained earnings 40,961 34,754
Net unrealized gain (loss) on securities available for sale, net of taxes (262) (223)
Treasury stock, at cost, 2,240,697 and 2,306,948 shares (14,622) (14,182)
Unamortized restricted stock compensation (539) (56)
---------------------------------
95,659 89,242
---------------------------------
$ 1,001,775 $ 965,177
=================================
<FN>
See Notes to Consolidated Financial Statements
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<TABLE>
The Advest Group, Inc.
Consolidated Statements of Earnings
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
(In thousands, except per share amounts) 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Commissions $ 29,844 $ 29,067 $ 58,344 $ 54,006
Interest 14,736 13,044 29,632 27,217
Principal transactions 10,218 9,567 20,545 20,166
Investment banking 5,281 7,128 13,984 15,064
Asset management and administration 6,249 4,806 11,966 9,481
Other 2,154 2,288 3,889 5,015
--------------- --------------- --------------- ---------------
Total revenues 68,482 65,900 138,360 130,949
--------------- --------------- --------------- ---------------
Expenses
Compensation and benefits 38,147 36,710 77,391 72,068
Interest 8,202 6,858 16,204 14,471
Communications 5,586 5,072 10,821 9,824
Occupancy and equipment 4,433 4,712 8,779 9,495
Business development 1,413 1,371 3,032 2,517
Professional 1,605 1,361 3,195 2,590
Brokerage, clearing and exchange 1,174 1,061 2,339 2,044
Provision for credit losses and
asset devaluation 145 353 317 516
Other 2,316 2,113 4,943 5,335
--------------- --------------- --------------- ---------------
Total Expenses 63,021 59,611 127,021 118,860
--------------- --------------- --------------- ---------------
Income before taxes 5,461 6,289 11,339 12,089
Provision for income taxes 2,289 2,772 4,876 5,440
--------------- --------------- --------------- ---------------
Net Income $ 3,172 $ 3,517 $ 6,463 $ 6,649
=============== =============== =============== ===============
Net income per common and common equivalent shares:
Primary $ 0.36 $ 0.40 $ 0.74 $ 0.76
Assuming full dilution $ 0.35 $ 0.36 $ 0.70 $ 0.69
Average common and common equivalent shares outstanding:
Primary 8,765 8,745 8,717 8,757
Assuming full dilution 9,153 10,269 9,598 10,284
<FN>
See Notes to Consolidated Financial Statements
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<TABLE>
The Advest Group,Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended March 31,
In thousands 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 6,463 $ 6,649
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,932 3,913
Provision for credit losses and asset devaluation 317 516
Loss on retirement of debentures 608 0
Deferred income taxes (21) 1,657
Other 138 (2,206)
(Increase) decrease in operating assets:
Receivables from brokerage customers (18,976) (10,332)
Securities borrowed (15,597) (16,408)
Receivables from brokers and dealers 2,728 (1,119)
Trading securities (5,192) (18,900)
Cash and securities segregated under federal and other regulations (1,982) (17,187)
Other (1,732) 796
Increase (decrease) in operating liabilities:
Brokerage customers 40,463 12,836
Securities loaned 19,532 5,149
Brokers and dealers (554) (5,016)
Checks payable (5,801) 8,041
Other (10,550) 8,793
----------------- -----------------
Net cash provided by (used for) operating activities 13,776 (22,818)
----------------- -----------------
FINANCING ACTIVITIES
Net decrease in deposits (9,326) (22,114)
Proceeds from short-term borrowings 539 0
Repayment of short-term borrowings (1,970) (2,965)
Short-term brokerage borrowings, net (12,800) 28,700
Proceeds from long-term borrowings 35,000 1,250
Repayment of long-term borrowings (3,570) 0
Retirement of debentures (20,545) 0
Other (1,117) (1,127)
----------------- -----------------
Net cash (used for) provided by financing activities (13,789) 3,744
----------------- -----------------
INVESTING ACTIVITIES
Proceeds from (payments for):
Sales of available for sale securities 3,818 17,572
Maturities of available for sale securities 898 634
Maturities of held to maturity securities 11,907 10,861
Purchase of available for sale securities (27) (3,017)
Purchase of held to maturity securities (5,000) (12,238)
Investment advisory business, net 160 0
Loans sold 13,808 18,827
Sales of OREO, net 515 3,137
Principal collections on loans 12,695 12,024
Loans originated (27,632) (23,861)
Other (5,628) (3,675)
----------------- -----------------
Net cash provided by investing activities 5,514 20,264
----------------- -----------------
Increase in cash and cash equivalents 5,501 1,190
Cash and cash equivalents at beginning of period 11,461 7,294
----------------- -----------------
Cash and cash equivalents at period end $ 16,962 $ 8,484
================= =================
Interest paid $ 15,383 $ 14,529
Income taxes paid $ 3,576 $ 6,192
Non-cash activities:
Securities available for sale from held to maturity $ 0 $ 9,962
Securitization of mortgages $ 2,633 $ 12,982
<FN>
See Notes to Consolidated Financial Statements.
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<TABLE>
The Advest Group,Inc.
Consolidated Statements of Changes in Shareholders' Equity
<CAPTION> (Unaudited)
Net unrealized
gain (loss) on
securities
available
for
$.01 par value Unamortized sale, Total
Common stock Treasury stock restricted net Share-
In thousands, except --------------------- Paid-in Retained --------------------------- stock of holders'
share and per share Shares Amount capital earnings Shares Amount compensation taxes Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of
September 30, 1996 10,710,289 $107 $68,842 $34,754 (2,306,948) ($14,182) ($56) ($223) $89,242
Net income 6,463 6,463
Exercise of
Stock Options 43,399 1 131 58,620 180 312
Dividends declared
($.03 per share) (256) (256)
Repurchase of
common stock (183,200) (1,835) (1,835)
Sale of treasury
stock to
equity plans 591 143,302 905 1,496
Change in unrealized
gains (losses),
net of taxes (39) (39)
Conversion of
subordinated
debentures
at $13.57
per share 18,716 254 254
Stock issued under
restricted stock
plans, less
amortization
of $22 195 47,529 310 (483) 22
---------------------------------------------------------------------------------------------------------------
Balance as of
March 31, 1997 10,772,404 $108 $70,013 $40,961 (2,240,697) ($14,622) ($539) ($262) $95,659
===============================================================================================================
<FN>
See Notes to Consolidated Financial Statements.
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statements:
The consolidated financial statements include the accounts of The Advest
Group, Inc. and all subsidiaries (collectively the "Company"). The Company
provides diversified financial services including securities brokerage,
trading, investment banking, consumer lending, trust and asset management.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Management believes that all adjustments (consisting of normal recurring
accruals) necessary for a fair statement of the results of operations for the
periods have been included. All material intercompany accounts and
transactions have been eliminated. Certain fiscal 1996 amounts have been
reclassified in the accompanying consolidated financial statements to provide
comparability with the current year presentation. The results of operations
for the interim periods are not necessarily indicative of the results for a
full year.
The statements should be read in conjunction with the Notes to
Consolidated Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's
Annual Report for the year ended September 30, 1996, as filed with the
Securities and Exchange Commission on Form 10-K.
2. Summary of Significant Accounting Policies:
The Financial Accounting Standards Board ("FASB") has issued Statements
of Financial Accounting Standards ("SFAS") 125, "Accounting for Transfers and
Servicing for Financial Assets and Extinguishments of Liabilities" and SFAS
127, "Deferral of the Effective Date of Certain Provisions of FASB Statement
No. 125". As required, the Company adopted SFAS 125 as of January 1, 1997,
which did not have a material impact on the Company's financial condition or
results of operations. The Company will adopt SFAS 127 in its 1998 fiscal year,
as required, and has not made a determination as to whether the
implementation will have a material impact on the Company's financial condition
or results ofoperations.
The FASB issued SFAS 128, "Earnings Per Share" and SFAS 129, "Disclosure
of Information about Capital Structure" in February 1997. The Company will
adopt these pronouncements in its 1998 fiscal year, as required. The Company
does not believe the implementation of SFAS 128 and SFAS 129 will have a
material impact on the Company's financial condition or results of operations.
3. Capital and Regulatory Requirements:
Advest is subject to the net capital rule adopted and administered by
the New York Stock Exchange, Inc. ("NYSE") and the Securities and Exchange
Commission. Advest has elected to compute its net capital under the
alternative method of the rule which requires the maintenance of minimum net
capital equal to 2% of aggregate debit balances arising from customer
transactions, as defined. The NYSE also may require a member firm to reduce
its business if net capital is less than 4% of aggregate debit balances and
may prohibit a member firm from expanding its business and declaring cash
dividends if net capital is less than 5% of aggregate debit balances. At
March 31, 1997,
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<PAGE>
Advest's regulatory net capital of $56.0 million was 13.95% of aggregate
debit balances and exceeded required net capital by $48.0 million.
Under state bank regulatory restrictions, Advest Bank (the "Bank") is
required to maintain a minimum level of capital and to limit annual dividends
to the total of the current and prior two years retained net income. As a
result of these restrictions, the Bank with an accumulated deficit at March
31, 1997 is prohibited from declaring dividends. At March 31, 1997, the
Bank's leverage capital, risk-based and Tier 1 capital ratios were 6.81%,
10.76% and 9.51%, respectively, which met all regulatory requirements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
The Company provides diversified financial services including securities
brokerage, trading, investment banking, consumer lending, trust and asset
management. All aspects of the Company's business are highly competitive and
regulated and impacted by a variety of factors outside of its control
including the economy, interest rates, the political climate and investor
sentiment. Consequently, revenues and operating results can vary
significantly from one reporting period to the next.
On January 30, 1997, the Company redeemed $20.3 million outstanding
principal amount of its 9% convertible subordinated debentures due 2008. The
redemption price was 101.2% of the par value of the debentures, together with
accrued interest. A total of 18,716 shares was issued to debenture
holders electing to convert $.3 million par value of debentures into
the Company's common stock at the conversion price of $13.57. Cash was
issued in lieu of fractional shares.
The Company paid a quarterly dividend of $.03 per share on April 15,
1997 to shareholders of record on March 31, 1997. It represented the first
dividend declared by the Company since December 1990. In February 1991, the
Company's Board of Directors voted to suspend dividends primarily as a result
of losses at Advest Bank.
The Company reported net income of $3.2 million ($.36 per share) for its
second quarter ending March 31, 1997 compared with net income of $3.5 million
($.40 per share) a year ago, a 10% decline. Total revenues increased 4% to
$68.5 million and total expenses increased 6% to $63.0 million.
Advest, Inc.
The Dow achieved a record high 7085 on March 11,1997, but subsequently
lost momentum and closed the quarter at 6583, up 17% and 2%, respectively,
from the prior year and quarter, but down 7% from its high. The other major
equity indices experienced similar volatility due to various factors
including concerns of additional interest rate hikes by the Fed and
anticipated first quarter earnings reports of corporate issuers.
Advest posted pre-tax income of $5.9 million compared with $6.8 million
last year, a 13% decline. Total revenues increased 6% to $63.8 million, with
year-to-year gains posted in all areas, except investment banking. Agency
commissions increased 3% to $29.9 million, second only to the June 1996
quarter. Asset management revenues increased 30% to $5.6 million, a record
level for the eighth consecutive quarter. Investment banking revenues
declined 25% to $5.3 million, primarily related to a $1.1 million gain on the
exercise of warrants in the prior year as well as lower current quarter
merger and acquisition fees.
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<PAGE>
Advest Bank
Advest Bank was profitable for a sixth consecutive quarter, remains in
full compliance with all capital and regulatory requirements and is deemed a
"well-capitalized" bank. The Bank posted pre-tax earnings of $.1 million
compared with $.3 million a year ago. Current quarter earnings were
negatively impacted by interest income reversals on $2.2 million in
commercial loans classified as impaired during the quarter as well as
carrying costs related to other real estate owned ("OREO") and the mark-to-
market adjustment on mortgages available for sale related to higher
interest rates.
During the quarter, the Office of Thrift Supervision approved the Bank's
application to convert from a state savings bank charter to a federal savings
bank charter. The conversion will enable the Bank to offer trust and
residential lending services in all fifty states. Concurrent with the
charter conversion, which became effective April 15, 1997, the Bank has been
renamed Advest Bank and Trust Company.
Results of Operations
Three Months Ended March 31, 1997 Versus
Three Months Ended March 31, 1996
Net revenues, total revenues less interest expense, were $60.3 million,
an increase of $1.2 million (2%). Expenses, excluding interest, increased
$2.1 million (4%) to $54.8 million, primarily related to higher firm payroll
and sales-related compensation at Advest. The effective tax rate was 42% in
the current quarter (annualized at 43%) compared with 44 % last year. The
lower rate is related to lower state tax obligations, primarily in
Connecticut.
Agency commissions increased $.8 million (3%) overall, led by a $.8
million (18%) increase in over-the-counter issues and a $.6 million (5%)
increase in listed securities. Year-to-year declines of $.3 million (3%) and
$.3 million (15%), respectively, were posted for mutual fund sales, including
distribution fees, and insurance products.
Investment banking revenues declined $1.8 million (26%) with most of the
decline attributable to a $1.1 gain on the exercise of warrants in the prior
year. During the current quarter, corporate finance earned $1.0 million in
underwriting and private placement fees, a $.7 million (187%) increase from
the prior year. Unit trust commissions increased $.3 million (40%). Merger
and acquisition revenues declined $1.8 million (90%) to $.2 million.
Revenue from principal transactions increased $.7 million (7%) to $10.2
million. Corporate and municipal bond trading profits increased $1.0
million, collectively. Commissions on debt securities declined $.7 million
(14%). Commissions on equities increased $.6 million (15%) while related
trading losses were $.2 million.
Asset management revenues increased $1.4 million (30%) to $6.2 million.
Advest's income increased $1.3 million (30%) primarily as a result of a 24%
year-to-year increase in fee-based assets (to $2.1 billion at March 31, 1997)
and higher service fees.
Net interest income increased 6% to $6.5 million. Advest's net interest
gained $.5 million (10%), primarily due to significantly higher average
margin debits, partly offset by increased bank borrowing and reduced interest
spreads. The Bank's net interest income declined $.4 million (17%) primarily
due to current quarter interest income reversals as previously discussed.
Compensation costs increased $1.4 million (4%) primarily due to higher
general payroll, including personnel additions in research, investment
banking and trading associated with the Company's investment excellence
initiative. Communications costs increased $.5 million (10%), primarily
related to sales volume-driven increases in clearing costs by Advest's third
party data processor as well as higher service bureau and phone costs.
Professional fees increased $.2 million (18%) primarily related to personnel
agency fees associated with recruiting.
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<PAGE>
Six Months Ended March 31, 1997 Versus
Six Months Ended March 31, 1996
Net revenues increased $5.7 million (5%) to $122.2 million. Year-to-
date principal transactions, asset management and net interest revenues are
consistent with the March quarter analysis.
Agency commissions increased $4.3 million (8%), led by over-the-counter
commissions, up $2.1 million (23%), and listed commissions up $1.8 million
(8%). Mutual fund commissions, including distributions fees, increased $.5
million (3%).
Investment banking revenues declined $1.1 million (7%) to $14.0 million.
Underwriting commissions increased across the board, led by equities, up $1.1
million (31%) unit trusts, up $.6 million (44%) and municipal bonds, up $.2
million (28%). Corporate finance underwriting fees declined $.9 million
(39%) primarily as a result of a substantial conversion fee in the prior
year. Consulting and valuation fees increased $.4 million (75%) while merger
and acquisition fees declined $1.5 million (42%). Prior year revenues also
include a $1.1 million gain on the exercise of warrants.
Other income decreased $1.1 million (22%) to $3.9 million primarily due
to a $.9 million prior year gain on the sale of an equity investment held by
Advest and a $.2 million current year decline in gains on sales of
residential mortgages.
Net expenses increased $6.4 million (6%) to $110.8. Compensation costs
increased $5.3 million (7%) primarily as a result of increased general
payroll, higher volume-related compensation and incentives and recruiting
incentives. Communications costs increased $1.0 million (10%) primarily
related to sales volume-driven increases in clearing costs by Advest's third
party data processor as well as higher service bureau and phone costs.
Professional fees increased $.6 million (23%) due to increased personnel
agency fees and consulting costs. Occupancy and equipment costs decreased $.7
million (8%) primarily due to a primarily to a $1.0 million prior year cost
related to an early lease termination. This decline was partly offset by
higher current year equipment rental and depreciation costs associated with
ongoing firm-wide hardware and software upgrades. Other expenses declined $.4
million (7%) primarily due to lower settlement expenses at Advest and lower OREO
costs and FDIC premiums at the Bank. These declines were partly offset by a
$.6 million current year charge related to the retirement of the Company's
convertible debentures.
Liquidity and Capital Resources
Six Months Ended March 31, 1997
In December 1996, AGI issued $35 million 7.95% seven year senior notes
in an unsecured private placement transaction with three institutional
investors. During the current quarter, as previously discussed, the Company
disbursed $20.3 million to retire its outstanding convertible debentures. The
conversion of the debentures eliminates the potential dilution of the
Company's common stock by 15%. During the first quarter, the Company repaid
its full outstanding indebtedness of $4.4 million, including accrued interest
and fees, under a loan from a third party bank.
During the current quarter, AGI loaned Advest $10.0 million at a rate of
8% per annum, utilizing proceeds of its $35.0 million subordinated borrowing.
The loan is unsecured and subordinated to certain other corporate
obligations. The purpose of the loan was to increase
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<PAGE>
Advest's regulatory net capital. On April 1, 1997, Advest repaid in full an
outstanding secured equipment note in the amount of $6.3 million to an
unrelated third party lender.
As previously discussed, the Company paid a quarterly dividend of $.03
per share on April 15, 1997 to shareholders of record on March 31, 1997. The
total amount paid was $.3 million.
Payables to brokerage customers increased $40.5 million (14%)
contributing substantially to the pay down of $13.8 million (35%) of short-
term borrowings and the financing of a $18.9 million (5%) increase in margin
debits.
There have been no other material changes to the Company's liquidity or
capital resources since September 30, 1996.
Part II. Other Information
Item 1. Legal Proceedings
The Company has been named as defendant in a number of lawsuits arising
principally from its securities and investment banking business. Some of
these actions involve claims by plaintiffs for substantial amounts. While
results of litigation cannot be predicted with certainty, in the opinion of
management, based on discussion with counsel, the outcome of these matters
will not result in a material adverse effect on the financial condition or
future results of operations of the Company.
Item 2. Changes in Securities
During the current quarter the Company collectively assigned
47,529 shares of its common stock as compensation to an employee
under an Employment Agreement.
Item 4. Submission of Matters to a Vote of Security Holders
The Company commenced solicitation of proxies on December 24, 1996 in
connection with its Annual Meeting held on January 30, 1997. The
solicitation was performed in accordance with Section 14 of the Securities
and Exchange Act of 1934 and the rules thereunder. There was no solicitation
in opposition to management's solicitation. A total of 8,294,420 shares were
represented at the meeting out of the total of 8,392,396 issued and
outstanding as of the December 10, 1996 record date for the meeting.
At the Annual Meeting, the reelection as directors of Sanford Cloud,
Jr., Grant W. Kurtz, Barbara L. Pearce and Allen Weintraub to serve for three
year terms expiring in 2000 was considered. All such nominees were reelected
to the Board of Directors. The nominees received the following votes:
In Favor
---------------------------------------------------
Nominee In Person By Proxy Total Withheld
Sanford Cloud, Jr. 0 7,825,617 7,825,617 468,803
Grant W. Kurtz 0 7,819,446 7,819,446 474,974
Barbara L. Pearce 0 7,803,976 7,803,976 490,444
Allen Weintraub 0 7,815,628 7,815,628 478,792
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The terms of office of the following continuing directors expire in
1998: George A. Boujoukos, Anthony A. LaCroix, Corine T. Norgaard. The terms
of office of the following continuing directors expire in 1999: Richard G.
Dooley, Robert W. Fiondella, and John A. Powers.
No other matters were voted upon at the annual meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 -- Computation of Net Income Per Share
Exhibit 27 -- Financial Data Schedule (Selected financial data-for
EDGAR electronic filing only to SEC)
The interim financial information contained herein has been
subjected to a review by Coopers & Lybrand L.L.P., the registrant's
Independent Accountants, whose report is included on page 13 of
this filing.
(b) Reports on Form 8-K
None
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Report of Independent Accountants
To the Shareholders and Board of Directors of
The Advest Group, Inc.:
We have reviewed the accompanying balance sheet of The Advest
Group, Inc. and subsidiaries as of March 31, 1997, and the
related statements of earnings for the three-month and six-month periods
ended March 31, 1997 and 1996, and cash flows for the six-month periods
ended March 31, 1997 and 1996, and changes in shareholders' equity
for the six-month period ended March 31, 1997. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquires of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the aforementioned financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of September 30, 1996, and the
related statements of earnings, changes in shareholders' equity and cash
flows for the year then ended (not presented herein), and in our report,
dated October 23, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying balance sheet as of September 30, 1996, is fairly stated,
in all material respects, in relation to the balance sheet from which it has
been derived.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 16, 1997
-13-
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant duly caused this report to be signed on its behalf by the
thereunto duly authorized.
The Advest Group, Inc.
Registrant
Date May 9, 1997 /s/ Allen Weintraub
Allen Weintraub,
Chairman of the Board and
Chief Executive Officer
Date May 9, 1997 /s/ Martin M. Lilienthal
Martin M. Lilienthal,
Senior Vice President and
Chief Financial Officer
-14-
<PAGE>
Exhibit Index
Exhibit Description
11 Computation of Net Income Per Share
27 Financial Data Schedule (Selected financial data - for EDGAR
electronic transmission only for SEC.)
-15-
<PAGE>
Exhibit 11
The Advest Group, Inc. and Subsidiaries
Computation of Net Income Per Common Share
For the quarters ended March 31,
---------------------------------------------------
Assuming
Primary Full Dilution
In thousands, except ---------------- ----------------
per share amounts 1997 1996 1997 1996
- ----------------------------------------------------------------------------
Net income $3,172 $3,517 $3,172 $3,517
Interest expense
on debentures, net -- -- 69 166
------ ------ ------ ------
Net income applicable
to common stock $3,172 $3,517 $3,241 $3,683
====== ====== ====== ======
Average number of common
shares outstanding during
the period 8,464 8,425 8,464 8,425
Additional shares assuming:
Exercise of stock
options 301 320 310 329
Conversion of
debentures -- -- 379 1,515
----- ----- ----- -----
Average number of common
shares outstanding 8,765 8,745 9,153 10,269
====== ====== ====== ======
Net income per share $ .36 $ .40 $ .35 $ .36
====== ====== ====== ======
-16-
<PAGE>
Exhibit 11
(Continued)
The Advest Group, Inc. and Subsidiaries
Computation of Net Income Per Common Share
For the six months ended March 31,
--------------------------------------------------
Assuming
Primary Full Dilution
In thousands, except --------------- ---------------
per share amounts 1997 1996 1997 1996
- ---------------------------------------------------------------------------
Net income $6,463 $6,649 $6,463 $6,649
Interest expense
on debentures, net -- -- 274 416
----- ----- ----- -----
Net income applicable to
common stock $6,463 $6,649 $6,737 $7,065
====== ====== ====== ======
Average number of common
shares outstanding during
the period 8,443 8,409 8,443 8,409
Additional shares assuming:
Exercise of stock
options 274 348 289 360
Conversion of
debentures -- -- 866 1,515
------ ------ ------ ------
Average number of common
shares outstanding 8,717 8,757 9,598 10,284
======= ====== ====== ======
Net income per share $ .74 $ .76 $ .70 $ .69
====== ======= ====== =======
-17-
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 17209
<RECEIVABLES> 578590
<SECURITIES-RESALE> 2000
<SECURITIES-BORROWED> 235516
<INSTRUMENTS-OWNED> 128234
<PP&E> 14940
<TOTAL-ASSETS> 1001775
<SHORT-TERM> 25528
<PAYABLES> 217607
<REPOS-SOLD> 0
<SECURITIES-LOANED> 233528
<INSTRUMENTS-SOLD> 38509
<LONG-TERM> 50716
<COMMON> 108
0
0
<OTHER-SE> 95551
<TOTAL-LIABILITY-AND-EQUITY> 1001775
<TRADING-REVENUE> 20545
<INTEREST-DIVIDENDS> 29632
<COMMISSIONS> 58344
<INVESTMENT-BANKING-REVENUES> 13984
<FEE-REVENUE> 11966
<INTEREST-EXPENSE> 16204
<COMPENSATION> 77391
<INCOME-PRETAX> 11339
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6463
<EPS-PRIMARY> .74
<EPS-DILUTED> .70
</TABLE>
