SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For Quarter Ended May 27, 1994
Commissions File #2-83667
THE QUICK & REILLY GROUP, INC.
State of Incorporation - Delaware
IRS Employer ID# - 13-3082841
230 South County Road
Palm Beach, FL 33480
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,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
THE QUICK & REILLY GROUP, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED May 27, 1994
INDEX
Page Number
Part I.
Item 1. Financial Statements
Consolidated Statements of
Financial Condition - May 27, 1994
(Unaudited) and February 28, 1994 1
Consolidated Statements of Income
(Unaudited) - Three Months Ended
May 27, 1994 and May 28, 1993 2
Consolidated Statements of Cash
Flows (Unaudited) - Three Months Ended
May 27, 1994 and and May 28, 1993 3
Notes to Consolidated Financial
Statements ( Unaudited) 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 5
SIGNATURE PAGE
<TABLE>
The Quick & Reilly Group and Subsidiaries
<CAPTION>
The Quick & Reilly Group, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
May 27, February 28,
(In thousands except share amounts) 1994 1994
----------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash & Cash Equivalents $90,772 $41,824
Receivable from Brokers, Dealers and
Clearing Organizations 1,848,264 1,610,695
Receivable From Customers 724,175 731,353
Securities Owned at Market Value -
U.S. Government 7,193 8,991
Municipal 45,150 43,796
Equities and Other 13,660 11,998
Exchange Memberships- At Cost
(Market Value $9,961 and $9,000) 3,908 3,908
Furniture, Equipment and Leasehold
Improvements- At Cost Less Accumulated
Depreciation and Amortization of
$8,248 and $7,837 5,794 5,923
Other Assets 19,009 18,367
----------------------------------
TOTAL ASSETS $2,757,925 $2,476,855
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Money Borrowed From Banks $1,000 $38,003
Drafts Payable 23,139 46,552
Payable to Brokers, Dealers and
Clearing Organizations 2,130,544 1,758,738
Payable to Customers 343,453 376,569
Securities Sold, But Not Yet
Purchased- At Market Value 4,576 8,059
Income Taxes Payable 7,732 1,702
Accrued Expenses and Other
Liabilities 34,783 42,274
----------------------------------
Total Liabilities 2,545,227 2,271,897
----------------------------------
Commitments and Contingencies
Shareholders' Equity
Preferred Stock, $.01 par value;
authorized 1,000,000 shares, none
issued and outstanding
Common Stock, $.10 par value;
authorized 20,000,000 shares,
issued 11,237,475 shares 1,124 1,124
Paid-In Capital 74,179 74,179
Retained Earnings 140,571 131,585
----------------------------------
215,874 206,888
Less: Common Stock in Treasury, at
Cost - 116,400 shares in May 1994, and
69,400 in February 1994 (3,176) (1,930)
----------------------------------
TOTAL SHAREHOLDERS' EQUITY 212,698 204,958
----------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,757,925 $2,476,855
==================================
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
The Quick & Reilly Group, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
<CAPTION>
(In thousands, except per share amounts) Three Months Ended
------------------------------------
May 27, May 28,
1994 1993
------------------------------------
<S> <C> <C>
REVENUES
Commisssions and Clearance Income $38,005 $37,130
Interest 25,395 13,796
Specialist Trading and Commissions 10,816 8,383
Other 1,221 826
------------------------------------
Total Revenues 75,437 60,135
EXPENSES
Employee Compensation and Benefits 21,958 17,366
Interest 16,030 7,521
Brokerage, Exchange and Clearance Fees 3,422 3,412
Data Processing and Equipment Rental 4,586 4,054
Communication 825 744
Printing, Postage, Stationery and Office Sup 1,557 1,807
Advertising 1,448 1,514
Rent and Other Occupancy 1,558 1,373
Professional Services 636 574
Amortization of Intangibles 523 601
Other 2,966 2,625
------------------------------------
Total Expenses 55,509 41,591
------------------------------------
Income Before Provision for
Income Taxes 19,928 18,544
Provision for Income Taxes 9,608 8,320
------------------------------------
NET INCOME $10,320 $10,224
====================================
Earnings Per Share $0.927 $0.915
Weighted Average Number Of Shares
Outstanding During the Period 11,133 11,175
Cash Dividends Declared Per Share $0.12 $0.10
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
The Quick & Reilly Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
(In Thousands) Three Months Ended
----------------------------------
May 27, May 28,
1994 1993
----------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $10,320 $10,224
Adjustments to Reconcile Net Income to
Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization 1,004 1,031
Decreases (Increases) in Operating Assets:
Receivable from Brokers, Dealers, and
Clearing Organizations (237,568) (309,866)
Receivable from Customers 7,178 (39,425)
Securities Owned (1,218) (18,924)
Other Assets (1,165) 349
Increases (Decreases) in Operating Liabilities:
Money Borrowed From Banks (37,003) (27,758)
Drafts Payable (23,413) (5,966)
Payable to Brokers, Dealers, and
Clearing Organizations 371,806 388,627
Payable to Customers (33,116) 8,686
Securities Sold, But Not Yet Purchased (3,483) (5,432)
Income Taxes Payable 6,030 1,666
Accrued Expenses and Other Liabilities (7,491) (6,774)
----------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 51,881 (3,562)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid on Common Stock (1,335) (1,014)
Purchase of Treasury Stock (1,246) -
----------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (2,581) (1,014)
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Purchase of Funiture, Equipment
and Leasehold Improvements (352) (318)
----------------------------------
NET CASH USED IN INVESTING ACTIVITIES (352) (318)
----------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQIVALENTS 48,948 (4,894)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR 41,824 46,231
----------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF
THE QUARTER $90,772 $41,337
==================================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Paid During the Quarter For:
Interest $14,203 $8,052
Income Taxes 4,863 6,712
Noncash Financing and Investing Activities:
Five 5% Stock Dividend Paid - 13,241
The accompanying notes are an integral part of these statements.
</TABLE>
The Quick & Reilly Group, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying interim financial statements reflect all
adjustments which are, of a normal recurring nature, and, in the
opinion of management, necessary for a fair presentation of the
interim periods presented. It is recommended that these financial
statements be read in conjunction with the Company's Financial
Statements and Notes thereto included in the 1994 Annual Report
which is incorporated by reference on Form 10-K.
2. Commitments and Contingencies
Margin requirements of $40,559,000 with a clearing corporation
at May 27, 1994 have been satisfied by obtaining letters of credit
of $47,000,000 secured by customers' margin account securities.
In the ordinary course of their securities business, certain of
the Company's subsidiaries have been named defendants in a number of
lawsuits. In the opinion of management, based upon discussion with
counsel, the resolutions of such lawsuits will not in the aggregate
have a material adverse effect on the consolidated financial condition
of the Company or on its results of operations.
3. Earnings Per Share
Earnings per share have been calculated by dividing net income
by the weighted average number of shares outstanding for the fiscal
quarter. For the quarter ended May 28, 1993, the weighted average
number of shares outstanding have been adjusted to give effect for
the two five percent dividends declared during the fiscal year ended
February 28, 1994.
4. Income Taxes
For the three months ended May 27, 1994 and May 28, 1993,
respectively, the effective income tax rate differs from the expected
federal statutory rate applied to income before income taxes primarily
due to state and local taxes.
5. Net Capital Requirements
As registered broker-dealers and member firms of the New York
Stock Exchange, Inc. (the "NYSE"), three subsidiaries are subject to
certain rules of both the Securities and Exchange Commission and the
NYSE. These rules require registrants to maintain minimum levels of
net capital, as defined, and may restrict a member from expanding its
business and declaring dividends as its net capital approaches
specified levels. At May 27, 1994, the subsidiaries had net capital,
in the aggregate, of $160,521,000 which exceeded aggregate minimum net
capital requirements by $130,787,000.
6. Dividends Declared
On May 2, 1994, the Board of Directors declared a cash dividend
of $0.12 per share payable on July 1, 1994 to holders of record on
June 1, 1994.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Total Assets of the Quick & Reilly Group, Inc. increased
$281,071,000 or 11% for May 27, 1994 versus February 28, 1994.
Receivable From Brokers, Dealers and Clearing Organizations
increased $237,569,000 or 15% primarily due to increases in
stock borrowed activity. Other Assets increased $643,000 or
4% primarily due to increases in miscellaneous receivables.
Total Liabilities of the Quick & Reilly Group, Inc.
increased $273,331,000 or 12% for May 27, 1994 versus February
28, 1994. Money Borrowed From Banks decreased $37,000,000 or
97% due to the increase in stock loan activities, as did Drafts
Payable, decreasing $23,413,000 or 50%. Payable to Brokers,
Dealers and Clearing Organizations increased $371,806,000 or
21% primarily due to the increase in stock loan activities.
Payable to Customers decreased $33,116,000 or 9% due to increased
customer investment in money market funds. Income Taxes
Payable increased $6,030,000 or 354% primarily due to an
increased first quarter tax liability paid in June, 1994.
Accrued Expenses and Other Liabilities decreased $7,491,000 or
18% primarily due to payments for liabilities existing at year end.
Total Revenues increased $15,302,000 or 25% for the quarter
ended May 27, 1994 versus the quarter ended May 28, 1993.
Commission and Clearance Income increased $875,000 or 2%
reflecting almost similar trading volumes. Interest Income
increased $12,000,000 or 84%, due to increased margin debits
and stock borrowed activities. Interest Expense increased
$8,509,000 or 113% primarily due to increased stock loan activities.
Specialist Trading and Commissions increased $2,433,000 or 29% due
to an increase in the number of assigned issues and more
favorable market conditions. Other Revenues increased $395,000
or 48% primarily due to increased fee income.
Total Expenses for the quarter ended May 27, 1994 increased
$13,918,000 or 34% versus the quarter ended May 28, 1993.
Employee Compensation and Benefits increased $4,592,000 or
26% primarily due to an increase in the number of employees
and increases in incentive compensation. Data Processing and
Equipment Rental increased $532,000 or 13% primarily due to the
increased costs of maintaining and expanding the capabilities of
the computer systems of the various subsidiaries. Printing,
Postage, Stationery and Office Supplies decreased $250,000 or 14%
primarily due to increased printing expenditures in the quarter
ended May 28, 1993. Rent and Other Occupancy increased $185,000 or
14% primarily due to the expansion of the branch network in
Quick & Reilly, Inc. Other Expenses increased $341,000 or 13%
primarily due to the expansion of the Quick & Reilly branch
network and normal increases in operating costs.
Liquidity and Capital Resources
Management of the Company believes that funds generated from
operations will provide it with sufficient resources to meet all
present and reasonably foreseeable future capital needs. The
Company's assets are highly liquid and consist mainly of cash or
assets readily convertible into cash.
SIGNATURES
---------
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
THE QUICK & REILLY GROUP, INC.
BY: -------------------
Leslie C. Quick, Jr.
Chairman of the Board
Chief Executive Officer
BY: -------------------
Peter Quick
President
BY: -------------------
Robert J. Rabinoff
Controller
