<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended MARCH 31, 1995
[ ] Transaction report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________.
Commission file number: 1-7467
FIRST OF MICHIGAN CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-2780197
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 RENAISSANCE CENTER/26TH FLOOR
DETROIT, MICHIGAN 48243
(Address of principal executive offices) (Zip Code)
(313) 259-2600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.10 Par Value - 2,810,917 shares as of May 12, 1995
10-Q
<PAGE> 2
INDEX
FIRST OF MICHIGAN CAPITAL CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - March 31, 1995 and September
30, 1994
Condensed consolidated statements of income - Three months ended March
31, 1995 and March 25, 1994; Six months ended March 31, 1995 and March
25, 1994
Consolidated statements of cash flows - Six months ended March 31,
1995 and March 25, 1994
Notes to condensed consolidated financial statements - March 31, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 3
FIRST OF MICHIGAN CAPITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1995 1994
--------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . $ 4,509,015 $ 2,612,487
Receivable from brokers and dealers . . . . . . . . . . 3,973,129 2,673,582
Receivable from customers . . . . . . . . . . . . . . . 70,239,895 73,536,305
Notes receivable from employees . . . . . . . . . . . . 2,237,662 2,278,673
Other accounts receivable . . . . . . . . . . . . . . . 1,274,531 1,756,211
Securities owned . . . . . . . . . . . . . . . . . . . 9,704,773 4,656,986
Memberships in exchanges, at cost(market value-
$ 949,000 at March 31, 1995 and
$ 918,000 at September 30, 1994) . . . . . . . . . . 430,503 430,503
Equipment and leasehold improvements, at
depreciated cost . . . . . . . . . . . . . . . . . . 2,653,848 2,597,239
Other investments . . . . . . . . . . . . . . . . . . . 730,119 1,134,887
Net cash surrender value of life insurance . . . . . . 7,220,566 6,874,924
Deferred income taxes . . . . . . . . . . . . . . . . . 2,943,000 2,541,000
Other assets . . . . . . . . . . . . . . . . . . . . .
2,888,014 2,675,156
------------ ------------
$108,805,055 $103,767,953
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable to banks . . . . . . . . . . . . . . . $ 25,250,000 $ 26,250,000
Payable to brokers and dealers . . . . . . . . . . . 18,502,027 16,368,327
Payable to customers . . . . . . . . . . . . . . . . 18,140,058 12,685,476
Securities sold, not yet purchased . . . . . . . . . 273,394 318,255
Employee compensation payable . . . . . . . . . . . 11,374,096 12,335,278
Dividend payable . . . . . . . . . . . . . . . . . . 168,655 172,913
Income taxes payable . . . . . . . . . . . . . . . . 266,592 126,178
Other accounts payable and accrued liabilities . . . 3,311,687 2,884,546
Capital lease obligation . . . . . . . . . . . . . . 1,350,000 1,500,000
------------ ------------
78,636,509 72,640,973
Contingencies - See note
Stockholders' equity:
Common stock, $.10 par value 10,000,000
shares authorized, 2,891,558 issued . . . . . . . . 289,156 289,156
Capital in excess of par value . . . . . . . . . . . . 3,689,801 3,767,157
Retained earnings . . . . . . . . . . . . . . . . . . . 27,191,694 27,202,524
------------ ------------
31,170,651 31,258,837
------------ ------------
Less treasury stock, at cost - 80,641 shares
at March 31, 1995 and 9,674 at
September 30, 1994 . . . . . . . . . . . . . . . . .
(1,002,105) (131,857)
------------ ------------
30,168,546 31,126,980
------------ ------------
$108,805,055 $103,767,953
============ ============
</TABLE>
Note: The balance sheet at September 30, 1994 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. See notes to condensed consolidated
financial statements.
I-1
<PAGE> 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
MARCH 31, MARCH 25, MARCH 31, MARCH 25,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Commissions . . . . . . . . . . . . . . . . . . $ 7,775,398 $ 9,965,589 $15,182,206 $20,454,898
Principal transactions . . . . . . . . . . . . 1,445,078 1,056,525 2,261,371 2,074,067
Investment banking . . . . . . . . . . . . . . 2,285,732 1,968,350 4,718,132 4,141,787
Interest . . . . . . . . . . . . . . . . . . . 1,597,162 884,852 3,026,460 1,864,660
Insurance commissions . . . . . . . . . . . . . 595,154 847,689 1,329,700 1,707,860
Other . . . . . . . . . . . . . . . . . . . . . 945,474 630,051 2,174,784 1,584,430
----------- ----------- ----------- -----------
TOTAL REVENUES . . . . . . . . . . . . . . . . 14,643,998 15,353,056 28,692,653 31,827,702
----------- ----------- ----------- -----------
EXPENSES
Employee compensation and benefits . . . . . . 7,438,359 7,502,167 14,904,981 15,646,640
Floor brokerage, exchange, clearance
and other fees . . . . . . . . . . . . . . . . 1,273,368 1,527,694 2,393,339 3,347,339
Communications . . . . . . . . . . . . . . . . 288,315 224,113 574,350 465,236
Interest . . . . . . . . . . . . . . . . . . . 827,892 301,114 1,383,918 590,883
Occupancy and equipment rental . . . . . . . . 1,140,453 882,770 2,156,934 1,767,063
Taxes, other than income taxes . . . . . . . . 849,757 816,659 1,365,253 1,283,909
Office supplies and expenses . . . . . . . . . 946,898 690,922 1,693,622 1,341,121
Merger termination expenses . . . . . . . . . . -- 1,295,724 -- 1,939,902
Other operating expenses . . . . . . . . . . . 2,022,676 1,978,061 3,867,303 3,708,544
----------- ----------- ----------- -----------
TOTAL EXPENSES . . . . . . . . . . . . . . . . 14,787,718 15,219,224 28,339,700 30,090,637
----------- ----------- ----------- -----------
Income (loss) before income taxes . . . . . . . . . (143,720) 133,832 352,953 1,737,065
Provision (credit) for income taxes . . . . . . . .
(105,000) 20,000 25,000 565,000
----------- ----------- ----------- -----------
NET INCOME (LOSS) . . . . . . . . . . . . . . . $ 38,720 $ 113,832 $ 327,953 $ 1,172,065
----------- ----------- ----------- -----------
Net income (loss) per share . . . . . . . . . . $(.02) $ .04 $ .11 $ .40
Average number of common and common
equivalent shares outstanding for
income (loss) per share . . . . . . . . . . . . . . 2,851,427 2,957,854 2,889,549 2,953,435
Cash dividends per share . . . . . . . . . . . . . $ .06 $ .05 $ .12 $ .05
</TABLE>
See accompanying notes.
I-2
<PAGE> 5
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
MARCH 31, MARCH 25,
1995 1994
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 327,953 $ 1,172,065
Noncash items included in Net Income:
Depreciation and amortization . . . . . . . . . . . . . . . . . 189,855 166,338
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . (402,000) (200,000)
Gain on sale of fixed assets . . . . . . . . . . . . . . . . . . (3,323) (519)
Gain on sale of investment account securities . . . . . . . . . (261,013) (2,430)
----------- ------------
(148,528) 1,135,454
----------- ------------
(Increase) decrease in operating receivables:
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,296,410 (3,935,259)
Brokers and dealers . . . . . . . . . . . . . . . . . . . . . . (1,299,547) 654,622
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,011 700,897
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481,680 806,763
Increase (decrease) in operating payables:
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,454,582 (4,741,919)
Brokers and dealers . . . . . . . . . . . . . . . . . . . . . . 2,133,700 4,737,624
Employee compensation . . . . . . . . . . . . . . . . . . . . . (961,182) (1,569,602)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 140,414 (48,315)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427,141 299,681
Increase in:
Securities inventory . . . . . . . . . . . . . . . . . . . . . . (5,047,787) (3,795,092)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (558,500) (1,032,756)
Decrease in:
Securities sold, not yet purchased . . . . . . . . . . . . . . . (44,861) (171,404)
----------- ------------
4,063,061 (8,094,760)
----------- ------------
CASH PROVIDED (USED) FOR OPERATING ACTIVITIES . . . . . . . . . . . . . . 3,914,533 (6,959,306)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings . . . . . . . . . . (1,000,000) 8,000,000
Payments on capital lease obligation . . . . . . . . . . . . . . (150,000) ---
Employee stock transactions . . . . . . . . . . . . . . . . . . 301,768 229,693
Repurchases of common stock . . . . . . . . . . . . . . . . . . (1,249,372) (261,039)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . (343,041) (841,213)
------------ ------------
CASH PROVIDED (USED) FOR FINANCING ACTIVITIES . . . . . . . . . . . . . . (2,440,645) 7,127,441
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment account securities . . . . . . 704,125 138,839
Net payments for equipment and leasehold improvements . . . . . (243,141) (92,819)
Purchases, advances and other activity in other
investments - net . . . . . . . . . . . . . . . . . . . . . . . (38,344) 31,012
------------ ------------
CASH PROVIDED BY INVESTING ACTIVITIES . . . . . . . . . . . . . . . . . . 422,640 77,032
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . 1,896,528 245,167
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . . . . . . . . . . 2,612,487 2,276,928
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . . $ 4,509,015 $ 2,522,095
=========== ===========
Income tax payments . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 152,585 $ 814,581
Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,219,348 $ 597,439
</TABLE>
See notes to condensed consolidated financial statements.
I-3
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1995 AND MARCH 25, 1994
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
The consolidated financial statements include the accounts and operations of
First of Michigan Capital Corporation and its subsidiary companies (the
Company) including First of Michigan Corporation, a registered securities
broker-dealer and a member organization of the New York Stock Exchange, Inc.,
after elimination of all significant intercompany accounts and transactions.
Securities owned and securities sold, not yet purchased, are valued at market
and unrealized gains and losses are reflected in revenues.
Investment account securities are carried at the lower of cost or market.
Certain other investments are accounted for on the equity method. The
Company's equity in such operations was not material in amount during the
periods ended March 31, 1995 and March 25, 1994.
Net income per share is computed on the basis of the weighted average number of
common shares outstanding, assuming dilutive stock options were exercised at
the beginning of the quarter or at the date of issuance, if later, with
applicable proceeds used to acquire additional treasury shares at the average
market price.
INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
MARCH 31, 1995 MARCH 25, 1994
-------------- --------------
FEDERAL STATE & LOCAL FEDERAL STATE & LOCAL
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
Current . . . . . . . . . . . . . . . $ 415,000 $ 12,000 $ 750,000 $ 15,000
Deferred . . . . . . . . . . . . . . (393,000) (9,000) (200,000) ---
----------- ---------- ---------- ---------
Total . . . . . . . . . . . . . . . . $ 22,000 $ 3,000 $ 550,000 $ 15,000
=========== ========== ========== =========
</TABLE>
Deferred income taxes principally arise from deferred compensation expense.
CONTINGENCIES
In the normal course of business, First of Michigan Corporation enters into
underwriting commitments. Transactions relating to such underwriting
commitments which were open at March 31, 1995 and subsequently settled, had no
material effect on the financial statements as of that date.
First of Michigan Corporation is the subject of claims made in several civil
actions arising out of its business as a broker-dealer and as an investment
banker. While these actions in the aggregate seek substantial amounts,
management believes that their disposition will not have a material adverse
effect on the financial position of the Company.
I-4
<PAGE> 7
TERMINATION OF MERGER AND RELATED EXPENSES
Merger termination expense for the three months and six months ended March 25,
1994, includes both legal costs as well as the amortization of certain employee
retention agreements. With the settlement of the lawsuit with Comerica,
Incorporated, in August 1994, the amortization of the retention agreements,
amounting to $343,494 and $654,453 for the three months and six months ended
March 31, 1995, respectively, has been included in employee compensation and
benefits.
CAPITAL REQUIREMENTS
First of Michigan Corporation is subject to the uniform net capital rule (Rule
15c3-1) of the Securities and Exchange Commission and the capital rules of the
New York Stock Exchange, Inc., of which it is a member, and elects to compute
its net capital requirements in accordance with the alternative method.
Under this method, the Corporation is required to maintain minimum net capital,
as defined, equal to 2 percent of aggregate debit balances arising from
customer transactions, as defined. The net capital rules also provide that
equity capital may not be withdrawn or cash dividends paid if the resulting net
capital would be less than 5 percent of aggregate debits. At March 31, 1995
First of Michigan Corporation's net capital of $16,896,008 was 23 percent of
aggregate debit balances, and was $15,431,295 in excess of the 2 percent
minimum net capital required and $13,234,227 in excess of the 5 percent
dividend restriction.
_____________________________________
The preceding information is unaudited and accordingly, does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation of the results of the period have been
included. The results for the interim period are not necessarily indicative of
the results to be expected for the full year. For further information, refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended September 30, 1994.
I-5
<PAGE> 8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Second quarter fiscal 1995 compared to second quarter fiscal 1994.
GENERAL
First of Michigan Capital Corporation's principal subsidiary is First of
Michigan Corporation, a member of the New York Stock Exchange and Michigan's
largest full-service securities firm. Founded more than 60 years ago, First of
Michigan Corporation specializes in a wide range of financial services that
include investment products such as stocks, bonds, unit trusts and mutual
funds; investment services such as retirement plans, money management,
underwriting and trading and investment banking. First of Michigan offers
these services through its 545 employees located in 32 offices throughout
Michigan, as well as an office at 100 Wall Street, New York.
The Company's profitability, to a large degree, is sensitive to the volume of
trading in securities and the volatility and general level of securities market
prices. While the Company places emphasis on controlling fixed costs, many of
its activities have high operating costs which do not decrease proportionately
with reduced levels of activity. Sustained periods of reduced volume, or loss
of clients, could have adverse effects upon profitability.
RESULTS OF OPERATIONS
Total revenues decreased 5% for the quarter and 10% for the six month period.
A general discussion follows as no category changes resulted in significant
dollar amounts. Overall, retail trading volume was down at First of Michigan
Corporation as it has been throughout the securities industry as a whole.
Commission revenues have decreased due to a reduction of retail commissions
generated from listed and over-the-counter stock business as well as reduced
revenues from mutual fund transactions. Revenues from principal transactions
increased primarily in the areas of secondary corporate equity and bond
trading. Fixed income activities in municipal bond trading has also increased
as higher interest rates continue to fuel an increased demand for these
products. Investment banking revenues have increased as both municipal and
corporate bond underwriting has increased. Fees received from the
participation in underwriting syndicates as well as other financial consulting
engagements has also increased. Offsetting these increases is a decrease in
revenues from equity underwritings, particularly in the area of initial public
offerings of stock. Interest income has increased due to increased customer
margin loan balances coupled with the increase in short-term interest rates.
Insurance commissions continue to decrease in the areas of life insurance and
variable rate annuities. Fixed rate annuities are attracting attention again
as interest rates continue to rise. Other income has increased primarily due
to additional service fees received for money management as well as
distribution and advisory fees for certain money market funds. The company
also recognized a gain on the sale of securities in its investment account.
Total expenses decreased 3% and 6%, respectively, which is in line with the
revenue trend. A general discussion follows as no category changes resulted in
significant dollar amounts. The largest expense category, employee
compensation and benefits, decreased in conjunction with the decrease in
commission revenues and also due to a decrease in certain discretionary bonus
programs associated with the level of pre-tax earnings. Offsetting these
declines was an increase in salaries associated with staff additions. Floor
brokerage, exchange, clearance and other fees decreased due to a decrease in
commissions paid to a fully-disclosed broker-dealer because of a decrease in
their revenues. Communications costs, primarily telephone, has increased due
to increased marketing efforts to attract new clients. Interest expense has
increased due to the increased borrowings required to support the increase in
customer margin loan balances. Higher interest rates have also contributed to
the increase. Occupancy and equipment rental costs have increased due to
additional space leased at the corporate offices as well as increased costs
associated with our newly enhanced computer systems that have been installed
throughout the entire branch network. While these expenses initially have a
net expense impact, we believe that these productivity tools for our Investment
Executives as well as our increased marketing efforts will result in superior
client service and ultimately have a positive net impact on the firms
profitability. Office supplies and expenses increased due to increased service
bureau costs associated with trade processing and customer statement
processing. The firm is continuing to update its forms and add new ones as our
products and services continue to expand. The provision for income taxes
decreased due entirely to the decrease in earnings. The effective tax rate as
compared to the prior year declined because the percentage of non-taxable
income to operating income has increased.
I-6
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities increased due to decreases in customer
receivables as well as increases in customer payables and broker-dealer
payables. The largest use of cash for operating activities was to purchase
securities inventories. Due to the nature of the Company's business, the
changes in operating asset and liability account balances relative to net
income for any particular accounting period can be quite large and, therefore,
are not very useful indicators of long-term trends in the Company's cash uses
for operations. Cash used for financing activities consisted of a reduction in
bank loans outstanding as well as for the repurchase of common stock to be held
in treasury. At March 31, 1995, approximately 88% for the Company's assets
were liquid, consisting mainly of cash or assets readily convertible into cash.
The Company's largest asset is its receivable from customers, representing
borrowings from the Company by customers to finance the purchase of securities
on margin. Such receivables from customers are substantially financed by
equity capital and short-term borrowings under established lines of credit with
several banking institutions. A total of $112,000,000 in approved lines of
credit was available to the Company at March 31, 1995, of which $25,250,000 was
outstanding.
The Company is subject to the net capital requirements of the Securities and
Exchange Commission and the New York Stock Exchange which are designed to
measure the general financial soundness and liquidity of broker-dealers. The
Company has consistently operated well in excess of the minimum requirements.
At March 31, 1995, the Company's net capital of $16,896,008 exceeded the
minimum requirement by $15,431,295.
Effective June 7, 1995, the SEC has mandated a reduction in the time allotted
to settle securities transactions from 5 days to 3 days from trade date
("T+3"). Internal studies have shown that a majority of the Company's clients
are already settling their trades in less than 5 days. In addition, the
Company has provided extensive information to its Investment Executives and
clients to educate and prepare them for "T+3". While the full effect of "T+3"
cannot be fully ascertained until it's implementation, management believes that
funds provided by net cash earnings combined with the liquidity of its assets,
its existing capital base and its available lines of credit are fully adequate
to meet the Company's financing needs for the foreseeable future.
The Company does not engage in any derivative trading that would result in any
additional off-balance sheet risk, and in addition, carries no "junk" bonds in
its inventory.
CONTINGENT MATTERS
First of Michigan Corporation is the subject of claims made in several civil
actions arising out of its business as a broker-dealer and as an investment
banker. The Company provides for costs related to contingencies when a loss is
probable and the amount is reasonably determinable. While these actions in the
aggregate seek substantial amounts, management believes that their disposition
will not have a material adverse effect on the financial position of the
Company. However, depending on the amount and timing of a potential
unfavorable resolution to a contingency, it is possible that the Company's
future results of operations or cash flows could be materially adversely
affected in that quarter.
I-7
<PAGE> 10
PART II. OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on February 17,
1995.
(c) At such meeting, one and two directors were elected for terms
expiring in 1996 and 1998, respectively, and a proposal to
ratify the appointment of Ernst & Young LLP to act as
independent public accountants for the fiscal year ending
September 29, 1995 were approved. The votes were as follows:
<TABLE>
<CAPTION> Broker
For Against Withheld Abstained Non Votes
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Election of
Steve Gasper, Jr.
as Director for
term expiring
in 1996 2,733,793 -- -- 11,421 --
Election of
Craig P. Baker
as Director for
term expiring
in 1998 2,651,275 -- -- 93,939 --
Election of
Thomas A.
McDonnell
as Director for
term expiring
in 1998 2,733,766 -- -- 11,448 --
Ratification of
Appointment of
Ernst & Young LLP 2,743,128 1,110 -- 976 --
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are included herein:
(11) Statement Re Computation of Per Share Earnings
(19) First Amendment dated January 24, 1995, to Employment Agreement
dated April 1, 1994, between Registrant and Steve Gasper, Jr.
(27) Financial Data Schedule
The Company did not file any reports on Form 8-K during the three
months ended March 31, 1995.
II-1
<PAGE> 11
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.
FIRST OF MICHIGAN CAPITAL CORPORATION
May 12, 1995 /s/ Steve Gasper, Jr.
------------------------------------------
STEVE GASPER, JR. - PRESIDENT AND
CHIEF EXECUTIVE OFFICER
May 12, 1995 /s/ Conrad W. Koski
------------------------------------------
CONRAD W. KOSKI
EXECUTIVE VICE PRESIDENT & TREASURER
(PRINCIPAL FINANCIAL & ACCOUNTING OFFICER)
S-1
<PAGE> 12
EXHIBIT INDEX
Exhibit Number Description
- - - - - - - - - - -------------- -----------
11 Statement Re Computation
of Per Share Earnings
19 First Amendment to
Employment Agreement
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
TO REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1995
FIRST OF MICHIGAN CAPITAL CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
MARCH 31, 1995 MARCH 25, 1994
-------------- --------------
PRIMARY FULLY DILUTED PRIMARY FULLY DILUTED
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding:
Common shares 2,831,196 2,831,196 2,891,759 2,891,759
Dilutive shares available
under stock options 20,231 20,066 66,095 76,364
Weighted average common shares
and common stock equivalents ---------- ---------- --------- ---------
outstanding 2,851,427 2,851,262 2,957,854 2,968,123
========== ========== ========= =========
Net earnings applicable to
common shares $ (38,720) $ (38,720) $ 113,832 $ 113,832
========== ========== ========= =========
Earnings per share $ (.02) $ (.02) $.04 $.04
========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
------------------------
MARCH 31, 1995 MARCH 25, 1994
-------------- --------------
PRIMARY FULLY DILUTED PRIMARY FULLY DILUTED
--------- -------------- --------- ---------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding:
Common shares 2,849,419 2,849,419 2,891,833 2,891,833
Dilutive shares available
under stock options 40,130 39,159 61,602 66,342
Weighted average common shares
and common stock equivalents --------- ---------- ---------- ----------
outstanding 2,889,549 2,888,578 2,953,435 2,958,175
========= ========== ========== ==========
Net earnings applicable to
common shares $ 327,953 $ 327,953 $1,172,065 $1,172,065
========= ========== ========== ==========
Earnings per share $.11 $.11 $.40 $.40
========= ========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 19
TO REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1995
FIRST OF MICHIGAN CAPITAL CORPORATION
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment, made, executed, and delivered as of the 24th day of January,
1995, by and among First of Michigan Capital Corporation, a Delaware
corporation (the "Company"), its principal subsidiary, First of Michigan
Corporation ("FoM"), and Steve Gasper, Jr. ("Employee")
WITNESSETH
WHEREAS, on April 1, 1994, the Company, FoM, and Employee entered into
an Employment Agreement (the "Existing Employment Agreement") for the
employment of Employee as the chief executive officer of the Company and FoM;
and
WHEREAS, to better reflect their mutual understanding of the terms of
Employee's employment, the parties now desire to amend the Existing Employment
Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises the parties hereto
agree as follows:
1. AMENDMENT OF EXISTING EMPLOYMENT AGREEMENT.
(a) Section 3 of the Existing Employment Agreement
is hereby amended in its entirety to read as
follows:
"3. CASH COMPENSATION. As full cash compensation
for all services to be performed by Employee
hereunder, the Company or FoM shall pay to Employee
the following:
(a) salary at the rate of $100,000 per year
payable at the intervals at which other executive
officers of the Company are paid;
(b) a quarterly bonus payable in arrears
through March 31, 1997 in the amount of $125,000 per
quarter, reduced by a monthly draw of $6,667 to be
advanced to Employee against such quarterly bonus as
of the 15th of each month; and
(c) commencing with the Company's fiscal
year ending September 29, 1995, an additional
incentive bonus (if earned) payable after fiscal
year-end in an amount determined under a performance
formula to be developed by the Company (with Employee
participating) prior to the end of such 1995 fiscal
year in consultation with the Company's compensation
consultants;
provided, however, that the amount of any incentive bonus that otherwise would
become payable hereunder pursuant to subsection (c) above in respect of the
Company's 1995, 1996 or 1997 fiscal years shall be reduced by the aggregate
amount of quarterly bonuses (including draws) paid Employee in respect of such
fiscal year pursuant to subsection (b) above; and provided further, that
although the current members of the Company Board believe it to be appropriate
and in the best interests of the Company and its shareholders to provide
employee with incentive bonus compensation as contemplated in subsection (c),
in the event the Company Board hereafter determines, prior to the Company's
1996 annual meeting of shareholders, that it is advisable in light of the
provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended,
that the performance formula referenced in subsection (c) be submitted to the
Company's shareholders for their approval, then such formula shall be so
submitted for shareholder approval (no later than at such 1996 annual meeting)
and no compensation shall be payable to Employee pursuant to subsection (c)
unless and until such approval is obtained."
(b) Section 6 of the Existing Employment Agreement
is hereby amended in its entirety to read as
follows:
"6. RELOCATION EXPENSES. The Company shall pay
or reimburse to Employee the real estate commissions
upon the sale of his current principal residence, his
reasonable expenses for temporary lodging in the
Detroit metropolitan area (for a period ending no
later than June 30, 1994), the expenses of moving the
household goods currently located
<PAGE> 2
at his principal residence to his new non-temporary
residence in the Detroit metropolitan area and any
necessary expense of storing such goods until such new
residence becomes available (but in any event for no
longer than a period ending June 30, 1994), and the
travel expenses of Employee and the other members of
his household incident to their relocation to Michigan
in connection with his employment hereunder. In
addition, the Company shall make a so-called "gross
up" payment to Employee covering the aggregate amount
of Federal, State of Michigan, and City of Detroit
income taxes, Medicare taxes, and any Social Security
taxes payable by him (whether directly or through
withholding) as a result of the relocation expense
amounts (including, without limitation, the amount of
such gross up payment) payable to him by the Company
under this Section 6."
2. REAFFIRMATION. In all other respects, the
Existing Employment Agreement is hereby reaffirmed as written.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
FIRST OF MICHIGAN CAPITAL
CORPORATION
BY /s/ Joseph M. Mengden
-----------------------------
JOSEPH M. MENGDEN
CHAIRMAN
FIRST OF MICHIGAN CORPORATION
BY /s/ Joseph M. Mengden
-----------------------------
JOSEPH M. MENGDEN
CHAIRMAN
/s/ Steve Gasper, Jr.
-----------------------------
STEVE GASPER, JR.
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-29-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 4,509,015
<RECEIVABLES> 73,044,955
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 2,442,600
<INSTRUMENTS-OWNED> 9,704,773
<PP&E> 2,653,848
<TOTAL-ASSETS> 108,805,055
<SHORT-TERM> 25,250,000
<PAYABLES> 23,817,672
<REPOS-SOLD> 0
<SECURITIES-LOANED> 16,136,100
<INSTRUMENTS-SOLD> 273,394
<LONG-TERM> 0
<COMMON> 289,156
0
0
<OTHER-SE> 29,879,390
<TOTAL-LIABILITY-AND-EQUITY> 108,805,055
<TRADING-REVENUE> 2,261,371
<INTEREST-DIVIDENDS> 3,026,460
<COMMISSIONS> 16,511,906
<INVESTMENT-BANKING-REVENUES> 4,718,132
<FEE-REVENUE> 2,174,784
<INTEREST-EXPENSE> 1,383,918
<COMPENSATION> 14,904,981
<INCOME-PRETAX> 352,953
<INCOME-PRE-EXTRAORDINARY> 327,953
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 327,953
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
