<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 29, 1996
[ ] 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 - 2,633,533 shares as of May 10, 1996
10-Q
<PAGE> 2
INDEX
FIRST OF MICHIGAN CAPITAL CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - March 29, 1996 and September
29, 1995
Condensed consolidated statements of income - Three months ended March
29, 1996 and six months ended March 31, 1995
Consolidated statements of cash flows - Six months ended March 29,
1996 and March 31, 1995
Notes to condensed consolidated financial statements - March 29, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
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 29, SEPTEMBER 29,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . $ 2,991,894 $ 2,995,513
Receivable from brokers and dealers . . . . . . . . . . 2,342,752 4,527,882
Receivable from customers . . . . . . . . . . . . . . . 84,583,504 79,368,761
Notes receivable from employees . . . . . . . . . . . . 1,703,949 2,126,096
Other accounts receivable . . . . . . . . . . . . . . . 1,329,636 1,879,608
Securities owned . . . . . . . . . . . . . . . . . . . 8,579,137 8,387,294
Memberships in exchanges, at cost (market value-
$1,296,000 at March 29, 1996 and
$856,000 at September 29, 1995) . . . . . . . . . . 430,503 430,503
Equipment and leasehold improvements, at . . . . . . .
depreciated cost . . . . . . . . . . . . . . . . . . 3,184,723 2,828,932
Other investments . . . . . . . . . . . . . . . . . . . 256,319 711,609
Net cash surrender value of life insurance . . . . . . --- 1,816,471
Deferred income taxes . . . . . . . . . . . . . . . . . 3,081,000 2,892,000
Other assets . . . . . . . . . . . . . . . . . . . . . 2,919,612 2,492,805
------------ ------------
$111,403,029 $110,457,474
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable to banks . . . . . . . . . . . . . . . $ 42,750,000 $ 29,500,000
Payable to brokers and dealers . . . . . . . . . . . 14,824,933 18,165,571
Payable to customers . . . . . . . . . . . . . . . . 12,583,032 14,070,912
Securities sold, not yet purchased . . . . . . . . . 566,095 530,748
Employee compensation payable . . . . . . . . . . . 6,257,807 12,964,140
Income taxes payable . . . . . . . . . . . . . . . . 259,083 452,587
Other accounts payable and accrued liabilities . . . 4,663,364 3,762,123
Capital lease obligation . . . . . . . . . . . . . . 1,085,206 1,226,623
------------ ------------
82,989,520 80,672,704
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 . . . . . . . . . . . . 3,676,635 3,687,348
Retained earnings . . . . . . . . . . . . . . . . . . . 26,835,430 26,803,153
------------ ------------
30,801,221 30,779,657
------------ ------------
Less treasury stock, at cost (258,025 shares
at March 29, 1996 and 80,116 at
September 29, 1995) . . . . . . . . . . . . . . . . . . (2,387,712) ( 994,887)
------------ ------------
28,413,509 29,784,770
------------ ------------
$111,403,029 $110,457,474
============ ============
</TABLE>
Note: The balance sheet at September 29, 1995 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 29, MARCH 31, MARCH 29, MARCH 31,
1996 1995 1996 1995
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Commissions . . . . . . . . . . . . . . . . . . . $ 11,051,925 $ 7,775,398 $20,771,876 $15,182,206
Principal transactions . . . . . . . . . . . . . 1,123,049 1,445,078 2,138,815 2,261,371
Investment banking . . . . . . . . . . . . . . . 2,420,177 2,285,732 4,722,058 4,718,132
Interest . . . . . . . . . . . . . . . . . . . . 1,854,992 1,597,162 3,730,793 3,026,460
Insurance commissions . . . . . . . . . . . . . . 680,018 595,154 1,320,354 1,329,700
Other . . . . . . . . . . . . . . . . . . . . . . 1,333,959 945,474 2,787,831 2,174,784
------------ ----------- ----------- -----------
TOTAL REVENUES . . . . . . . . . . . . . . . . 18,464,120 14,643,998 35,471,727 28,692,653
------------ ----------- ----------- -----------
EXPENSES:
Employee compensation and benefits . . . . . . . 11,204,051 7,134,070 20,582,257 14,904,981
Floor brokerage, exchange, clearance and other
fees . . . . . . . . . . . . . . . . 1,271,037 1,273,368 2,514,383 2,393,339
Communications . . . . . . . . . . . . . . . . . 267,889 288,315 579,876 574,350
Interest . . . . . . . . . . . . . . . . . . . . 797,103 827,892 1,654,146 1,383,918
Occupancy and equipment rental . . . . . . . . . 1,315,969 1,140,453 2,599,846 2,156,934
Taxes, other than income taxes . . . . . . . . . 958,368 849,757 1,540,642 1,365,253
Office supplies and expenses . . . . . . . . . . 1,136,265 946,898 2,164,057 1,693,622
Other operating expenses . . . . . . . . . . . . 2,107,489 2,326,965 3,794,240 3,867,303
------------ ----------- ----------- -----------
TOTAL EXPENSES . . . . . . . . . . . . . . . 19,058,171 14,787,718 35,429,447 28,339,700
------------ ----------- ----------- -----------
Income (loss) before income taxes . . . . . . . . . . . . (594,051) (143,720) 42,280 352,953
Provision (credit) for income taxes . . . . . . . . . . . 210,000 105,000 (10,000) (25,000)
------------ ----------- ----------- -----------
NET INCOME (LOSS) . . . . . . . . . . . . . . $ (384,051) $ (38,720) $ 32,280 $ 327,953
============ =========== =========== ===========
Net income (loss) per share . . . . . . . . . . . . . . . $ (.14) $ (.02) $ .01 $ .11
Average number of common and common equivalent
shares outstanding for income (loss) per share . . . . . 2,662,015 2,851,427 2,708,427 2,889,549
Cash dividends per share . . . . . . . . . . . . . . . . --- $ .06 --- $ .12
</TABLE>
See notes to condensed consolidated financial statements.
I-2
<PAGE> 5
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
MARCH 29, MARCH 31,
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,280 $ 327,953
Noncash items included in Net Income:
Depreciation and amortization . . . . . . . . . . . . . . . . . 422,059 189,855
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . (189,000) (402,000)
Loss (gain) on sale of fixed assets . . . . . . . . . . . . . . 83 (3,323)
Gain on sale on investment account securities . . . . . . . . . --- (261,013)
------------ ------------
265,422 (148,528)
------------ ------------
(Increase) decrease in operating receivables:
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,214,743) 3,296,410
Brokers and dealers . . . . . . . . . . . . . . . . . . . . . . 2,185,130 (1,299,547)
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 422,147 41,011
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549,972 481,680
Increase (decrease) in operating payables:
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,487,880) 5,454,582
Brokers and dealers . . . . . . . . . . . . . . . . . . . . . . (3,340,638) 2,133,700
Employee compensation . . . . . . . . . . . . . . . . . . . . . (6,706,333) (961,182)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (193,504) 140,414
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901,241 427,141
(Increase) decrease in:
Securities inventory . . . . . . . . . . . . . . . . . . . . . . (191,843) (5,047,787)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,389,664 (558,500)
Increase (decrease) in:
Securities sold, not yet purchased . . . . . . . . . . . . . .
35,347 (44,861)
------------ ------------
(11,651,440) 4,063,061
------------ ------------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES . . . . . . . . . . . . (11,386,018) 3,914,533
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings . . . . . . . . . . 13,250,000 (1,000,000)
Payments on capital lease obligation . . . . . . . . . . . . . . (141,417) (150,000)
Employee stock transactions . . . . . . . . . . . . . . . . . . 17,609 301,768
Repurchases of common stock . . . . . . . . . . . . . . . . . . (1,421,150) (1,249,372)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . --- (343,041)
------------ ------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES . . . . . . . . . . . . 11,705,042 (2,440,645)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment account securities . . . . . . --- 704,125
Net payments for equipment and leasehold improvements . . . . . (777,933) (243,141)
Purchases, advances and other activity in other
investments - net . . . . . . . . . . . . . . . . . . . . . . . 455,290 (38,344)
------------ ------------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES . . . . . . . . . . . .
(322,643) 422,640
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . (3,619) 1,896,528
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . . . . . . . . . . 2,995,513 2,612,487
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . . $ 2,991,894 $ 4,509,015
============ ============
Income tax payments . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 392,554 $ 152,585
Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,609,718 $ 1,219,348
</TABLE>
See notes to condensed consolidated financial statements.
I-3
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 29, 1996 AND MARCH 31, 1995
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
The condensed 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 29, 1996 and March 31, 1995.
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 for the period.
INCOME TAXES
The provision (credit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
MARCH 29, 1996 MARCH 31, 1995
-------------- --------------
FEDERAL STATE & LOCAL FEDERAL STATE & LOCAL
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
Current . . . . . . . . . . . . . . . $ 189,000 $ 10,000 $ 415,000 $ 12,000
Deferred . . . . . . . . . . . . . . (179,000) (10,000) (393,000) (9,000)
--------- --------- ---------- ---------
Total . . . . . . . . . . . . . $ 10,000 $ --- $ 22,000 $ 3,000
========== ========= ========== =========
</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 29, 1996 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
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 29, 1996
First of Michigan Corporation's net capital of $16,776,433 was 20 percent of
aggregate debit balances, and was $15,047,805 in excess of the 2 percent
minimum net capital required and $12,454,862 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 29, 1995.
I-5
<PAGE> 8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Second quarter fiscal 1996 compared to second quarter fiscal 1995.
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 546 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.
On March 18, 1996, the Company announced the appointment of Kenneth C. Eich as
President and Chief Executive Officer. Mr. Eich is a former Executive Vice
President and Chief Financial Officer of Oppenheimer Management Corporation,
Denver, Co., a leading sales force distributor and advisor of mutual funds with
more than $47 billion in assets under management.
The Company is focused exclusively on growing its business in the state of
Michigan and on significantly improving its financial results.
RESULTS OF OPERATIONS
Total revenues increased 26% for the quarter and 24% for the six month period.
Overall, retail trading volume continues to outpace both the prior year
periods. The largest dollar increase for both the three month and six
month periods was from commission revenues on listed and over-the-counter
equities as well as increased revenues from mutual fund transactions. Revenues
from principal transactions decreased primarily in the area of municipal bond
trading as recent interest fluctuations have had a negative impact on prices.
Investment banking revenues showed a modest net increase due to an increase in
revenues from equity underwritings which was partially offset by a decrease in
fees received from underwriting syndications as well as financial consulting
engagements. Interest income has increased due to increased customer margin
loan balances coupled with the increase in short-term rates. Insurance
commissions were unchanged for the six month period, but have increased during
the quarter as the increase in interest rates was attracting investors to fixed
rate annuities again. Other income increased primarily due to additional
service fees received for money management as well as distribution,
administrative and advisory fees for certain money market funds. New account
openings and assets under management have continued to grow.
Total expenses increased 29% for the quarter and 25% for the six months. The
largest expense category, employee compensation and benefits, increased in
conjunction with the increase in commission revenues. Included in compensation
expense for both the quarter and six month period was an accrual of
approximately one million dollars for certain one-time expenses, resulting from
a realignment of the Company's operations and management structure, as
discussed below. Communications expenses have decreased for the quarter due to
a change in long distance telephone carriers as well as a rate reduction
through contract re-negotiation. Interest expense for the six month period
increased because of increased borrowings to support the increase in customer
margin loan balances as well as increased activity in the area of stock loans.
Occupancy and equipment rental costs increased due to new office openings,
expansions and relocations as well as increased costs associated with a new
broker-workstation network. Taxes, other than income taxes, increased due to
the payroll taxes associated with the increase in compensation expense as well
as an increase in the Michigan Single Business Tax associated with the increase
in revenues and related payroll costs. Other expense increases occured in the
areas of legal, recruiting fees, postage and statement processing costs and
sales promotion.
I-6
<PAGE> 9
Due to certain one-time expenses resulting from a realignment of the Company's
operations and management structure in the second quarter, net income was
reduced by approximately $600,000 or $.22 per share, for both the three month
and six month periods ended March 29, 1996. Exclusive of the costs associated
with these changes, net income would have been $215,949 or $.08 per share for
the quarter and $632,280 or $.23 per share for the six month period.
LIQUIDITY AND CAPITAL RESOURCES
Cash used for operating activities showed a net increase due to an increase in
customer receivables as well as a decrease in employee compensation payable.
The largest uses of cash for operating activities was to purchase securities
inventories as well as pay down balances on stock loaned to other brokers. 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 use of cash for operations. Cash provided by
financing activities consisted of an increase in bank loans outstanding which
was partially offset by the Company's repurchases of its common stock. At
March 29, 1996, approximately 88% of the Company's assets were liquid,
consisting mainly of cash or assets readily convertible into cash. The
Company's largest asset was its receivable from customers, representing
borrowings from the Company by customers to finance the purchase of securities
on margin. Such receivables from customers were 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 29, 1996, of which $42,750,000 was
outstanding.
Under separate agreements, First of Michigan Capital Corporation had available
short-term lines of credit on an unsecured basis, aggregating $8,000,000.
There were no borrowings against these lines of credit at March 29, 1996.
The Company is subject to the net capital requirements of the Securities and
Exchange Commissions 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 29, 1996, the Company's net capital of $16,776,433 exceeded the
minimum requirement by $15,047,805.
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.
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.
OUTLOOK
The Company is refocusing exclusively on growing its business in the state of
Michigan and on significantly improving its financial results. Significant
cost reductions have occured resulting from the realignment of the Company's
management structure.
The Company has experienced increased costs as a result of additional space
leased at the corporate offices as well as increased costs associated with its
newly enhanced computer systems that have been installed throughout the entire
branch network. While these increased expenses initially have a negative
impact on earnings, management believes that the tools provided to the
Company's Investment Executives, as well as increased marketing efforts, will
result in superior client service and ultimately will have a positive impact on
the Company's profitability.
I-7
<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
(11) Statement Re Computation of Per Share Earnings
(19) Resignation of Chief Executive Officer
(27) Financial Data Schedule
(b) Reports on Form 8-K:
On March 21, 1996, the Company filed a report on Form 8-K
containing a press release dated March 18, 1996, announcing
the appointment of Kenneth C. Eich as President and Chief
Executive Officer. There were no financial statements filed
with this form 8-K and the only exhibit filed with this form
8-K was a copy of the March 18, 1996 press release.
<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 10, 1996 /s/ Kenneth C. Eich
-------------------------------
KENNETH C. EICH - PRESIDENT AND
CHIEF EXECUTIVE OFFICER
May 10, 1996 /s/ Conrad W. Koski
------------------------------------------
CONRAD W. KOSKI
EXECUTIVE VICE PRESIDENT & TREASURER
(PRINCIPAL FINANCIAL & ACCOUNTING OFFICER)
S-1
<PAGE> 12
Exhibit Index
Exhibit No. Description
- ----------- -----------
11 Statement Re Computation of Per Share Earnings
19 Resignation of Chief Executive Officer
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
TO REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 29, 1996
FIRST OF MICHIGAN CAPITAL CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
MARCH 29, 1996 MARCH 31, 1995
-------------- --------------
PRIMARY FULLY DILUTED PRIMARY FULLY DILUTED
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding:
Common shares ...................... 2,660,459 2,660,459 2,831,196 2,831,196
Dilutive shares available
under stock options .............. 1,556 (65,298) 20,231 20,066
Weighted average common shares
and common stock equivalents ----------- ----------- ---------- ----------
outstanding ............................ 2,662,015 2,595,161 2,851,427 2,851,262
=========== =========== ========== ==========
Net earnings applicable to
common shares .......................... $ (384,051) $ (384,051) $ (38,720) $ (38,720)
=========== =========== ========== ==========
Earnings per share ..................... $ (.14) $ (.15) $ (.02) $ (.02)
=========== =========== ========== ==========
<CAPTION>
FOR THE SIX MONTHS ENDED
------------------------
MARCH 29, 1996 MARCH 31, 1995
-------------- --------------
PRIMARY FULLY DILUTED PRIMARY FULLY DILUTED
-------- -------------- -------- -------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding:
Common shares ...................... 2,706,185 2,706,185 2,849,419 2,849,419
Dilutive shares available
under stock options .............. 2,242 (64,977) 40,130 39,159
Weighted average common shares
and common stock equivalents ----------- ----------- --------- ----------
outstanding ............................ 2,708,427 2,641,208 2,889,549 2,888,578
=========== =========== ========= ==========
Net earnings applicable to
common shares .......................... $ 32,280 $ 32,280 $ 327,953 $ 327,953
=========== =========== ========== ==========
Earnings per share ..................... $ .01 $ .01 $ .11 $ .11
=========== =========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 19
TO REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 29, 1996
FIRST OF MICHIGAN CAPITAL CORPORATION
RESIGNATION OF CHIEF EXECUTIVE OFFICER
This agreement, made, executed, and delivered as of the 18th day of March,
1996, by and among First of Michigan Capital Corporation, a Delaware
corporation, and its subsidiaries including First of Michigan Corporation and
Cranbrook Capital Management, Inc., and Steve Gasper, Jr., its President and
Chief Executive Officer.
Board of Directors
First of Michigan Capital Corporation
100 Renaissance Center, 26th Floor
Detroit, Michigan 48243-1182
Gentlemen:
Bill Cuddy and I have discussed over the past seven weeks my
accomplishments at First of Michigan, the future course of the company and my
objectives. I have now decided to resign effective immediately as a director,
officer and employee of First of Michigan Capital Corporation and its
subsidiaries, including First of Michigan Corporation and Cranbrook Capital
Management, Inc., so that I may pursue other opportunities. I will be
available for a reasonable time to respond to requests for help with the
transition to new management.
You have agreed through Bill Cuddy that despite my resignation I will
continue through March 31, 1997 (i) to be paid the cash compensation
specified in subsections (a) and (b) of Section 3 of my Employment Agreement
dated April 1, 1994, as amended, (ii) to participate in the existing medical,
life, disability and dental and vision insurance plans of First of Michigan
on the same basis as I now participate and (ii) to use the Aurora automobile
which First of Michigan currently leases for me, with First of Michigan
paying the lease, maintenance and insurance expenses. In return, I agree
that I will not continue to receive any of the other fringe and other
employee benefits referred to in Sections 4 and 5 of the Employment
Agreement. I also agree that the Continuing Rights and Obligations as
defined in that Employment Agreement will continue to be effective despite
my resignation.
Very truly yours,
/s/ Steve Gasper, Jr.
----------------------
Approved on Behalf of the Board of Directors
/s/ William Cuddy
------------------
First of Michigan Capital Corporation
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-27-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> MAR-29-1996
<CASH> 2,991,894
<RECEIVABLES> 87,748,437
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 2,211,404
<INSTRUMENTS-OWNED> 8,579,137
<PP&E> 3,184,723
<TOTAL-ASSETS> 111,403,029
<SHORT-TERM> 42,750,000
<PAYABLES> 22,222,729
<REPOS-SOLD> 0
<SECURITIES-LOANED> 9,848,600
<INSTRUMENTS-SOLD> 566,095
<LONG-TERM> 0
0
0
<COMMON> 289,156
<OTHER-SE> 28,124,353
<TOTAL-LIABILITY-AND-EQUITY> 111,403,029
<TRADING-REVENUE> 2,138,815
<INTEREST-DIVIDENDS> 3,730,793
<COMMISSIONS> 20,771,876
<INVESTMENT-BANKING-REVENUES> 4,722,058
<FEE-REVENUE> 2,787,831
<INTEREST-EXPENSE> 1,654,146
<COMPENSATION> 20,582,257
<INCOME-PRETAX> 42,280
<INCOME-PRE-EXTRAORDINARY> 32,280
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,280
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
