SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For Quarter Ended August 26, 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 August 26, 1994
INDEX
Page Number
Part I.
Item 1. Financial Statements
Consolidated Statements of
Financial Condition - August 26, 1994
(Unaudited) and February 28, 1994 1
Consolidated Statements of Income
(Unaudited) - Three Months Ended
August 26, 1994 and August 27, 1993 2
Consolidated Statements of Income
(Unaudited) - Six Months Ended
August 26, 1994 and August 27, 1993 3
Consolidated Statements of Cash
Flows (Unaudited) - Six Months Ended
August 26, 1994 and and August 27, 1993 4
Notes to Consolidated Financial
Statements ( Unaudited) 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7
SIGNATURE PAGE
<TABLE>
The Quick & Reilly Group, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
August 26, February 28,
<CAPTION>
(In thousands except share amounts) 1994 1994
----------------------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash & Cash Equivalents $91,195 $41,824
Receivable from Brokers, Dealers and
Clearing Organizations 1,758,122 1,610,695
Receivable From Customers 693,946 731,353
Securities Owned at Market Value -
U.S. Government 6,556 8,991
Municipal 60,019 43,796
Equities and Other 13,528 11,998
Exchange Memberships- At Cost
(Market Value $9,942 and $9,000) 3,908 3,908
Furniture, Equipment and Leasehold
Improvements- At Cost Less Accumulated
Depreciation and Amortization of
$8,665 and $7,837 5,582 5,923
Other Assets 18,432 18,367
----------------------------------
TOTAL ASSETS $2,651,288 $2,476,855
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Money Borrowed From Banks $1,000 $38,003
Drafts Payable 22,417 46,552
Payable to Brokers, Dealers and
Clearing Organizations 1,939,317 1,758,738
Payable to Customers 417,070 376,569
Securities Sold, But Not Yet
Purchased- At Market Value 7,028 8,059
Income Taxes Payable 2,118 1,702
Accrued Expenses and Other
Liabilities 42,695 42,274
----------------------------------
Total Liabilities 2,431,645 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 147,756 131,585
----------------------------------
223,059 206,888
Less: Common Stock in Treasury, at
Cost - 126,400 shares in August 1994, and
69,400 in February 1994 (3,416) (1,930)
----------------------------------
TOTAL SHAREHOLDERS' EQUITY 219,643 204,958
----------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,651,288 $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
------------------------------------
August 26, August 27,
1994 1993
------------------------------------
REVENUES
<S> <C> <C>
Commisssions and Clearance Income $30,988 $36,672
Interest 30,582 15,117
Specialist Trading and Commissions 9,488 7,985
Other 2,005 1,555
------------------------------------
Total Revenues 73,063 61,329
------------------------------------
EXPENSES
Employee Compensation and Benefits 20,114 18,843
Interest 19,784 8,153
Brokerage, Exchange and Clearance Fees 3,259 3,076
Data Processing and Equipment Rental 3,829 3,920
Communication 678 722
Printing, Postage, Stationery and Office Supplies 1,409 1,724
Advertising 1,386 1,617
Rent and Other Occupancy 1,597 1,422
Professional Services 469 644
Amortization of Intangibles 545 652
Other 2,914 2,720
------------------------------------
Total Expenses 55,984 43,493
------------------------------------
Income Before Provision for Income Taxes 17,079 17,836
Provision for Income Taxes 8,560 7,889
------------------------------------
NET INCOME $8,519 $9,947
====================================
Earnings Per Share $0.766 $0.888
Weighted Average Number Of Shares
Outstanding During the Period 11,115 11,203
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 Income
(Unaudited)
<CAPTION>
(In thousands, except per share amounts) Six Months Ended
------------------------------------
August 26, August 27,
1994 1993
------------------------------------
REVENUES
<S> <C> <C>
Commisssions and Clearance Income $68,994 $73,802
Interest 55,976 28,913
Specialist Trading and Commissions 20,304 16,368
Other 3,227 2,382
------------------------------------
Total Revenues 148,501 121,465
------------------------------------
EXPENSES
Employee Compensation and Benefits 42,072 36,209
Interest 35,815 15,674
Brokerage, Exchange and Clearance Fees 6,680 6,488
Data Processing and Equipment Rental 8,415 7,974
Communication 1,503 1,466
Printing, Postage, Stationery and Office Supplies 2,966 3,532
Advertising 2,834 3,130
Rent and Other Occupancy 3,155 2,795
Professional Services 1,105 1,217
Amortization of Intangibles 1,067 1,253
Other 5,881 5,347
------------------------------------
Total Expenses 111,493 85,085
------------------------------------
Income Before Provision for Income Taxes 37,008 36,380
Provision for Income Taxes 18,169 16,208
------------------------------------
NET INCOME $18,839 $20,172
====================================
Earnings Per Share $1.694 $1.803
Weighted Average Number Of Shares
Outstanding During the Period 11,124 11,189
Cash Dividends Declared Per Share $0.24 $0.20
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) Six Months Ended
----------------------------------
August 26, August 27,
1994 1993
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $18,839 $20,172
Adjustments to Reconcile Net Income to
Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization 2,065 2,137
Decreases (Increases) in Operating Assets:
Receivable from Brokers, Dealers, and
Clearing Organizations (147,427) (411,095)
Receivable from Customers 37,407 (66,141)
Securities Owned (15,317) (27,244)
Other Assets (1,133) (6,880)
Increases (Decreases) in Operating Liabilities:
Money Borrowed From Banks (37,003) (23,582)
Drafts Payable (24,135) (22,199)
Payable to Brokers, Dealers, and
Clearing Organizations 180,579 519,393
Payable to Customers 40,501 25,482
Securities Sold, But Not Yet Purchased (1,031) 107
Income Taxes Payable 416 (4,091)
Accrued Expenses and Other Liabilities 421 (581)
----------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 54,182 5,478
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid on Common Stock (2,668) (2,082)
Cash Paid in Lieu of Shares Issued on Account
of 5% Stock Dividend - (4)
Sale of Treasury Stock Under Stock Option Plan
and Related Tax Benefits - 712
Purchase of Treasury Stock (1,486) -
----------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (4,154) (1,374)
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Purchase of Funiture, Equipment
and Leasehold Improvements (657) (773)
----------------------------------
NET CASH USED IN INVESTING ACTIVITIES (657) (773)
----------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 49,371 3,331
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR 41,824 46,231
----------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF
THE QUARTER $91,195 $49,562
==================================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Paid During the Quarter For:
Interest $34,546 $16,530
Income Taxes 14,254 21,187
Noncash Financing and Investing Activities:
Five 5% Stock Dividend Paid - 13,236
Issuance of Common Stock Pursuant to
Stokes, Hoyt & Co. Acquisiton - 2
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 $58,581,000 with a clearing
corporation at August 26, 1994 have been satisfied by
obtaining letters of credit of $62,000,000 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 August 27,
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 August 26, 1994 and August
27, 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 August 26, 1994, the
subsidiaries had net capital, in the aggregate, of
$167,800,000 which exceeded aggregate minimum net capital
requirements by $139,000,000.
6. Dividends Declared
On June 28, 1994, the Board of Directors declared a cash
dividend of $0.12 per share payable on October 3, 1994 to
holders of record on September 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 $174,433,000 or 7% for August 26, 1994 versus
February 28, 1994. Receivable From Brokers, Dealers and
Clearing Organizations increased $147,427,000 or 9% primarily
due to increases in stock borrowed activity. Receivable From
Customers decreased $37,407,000 or 5% due to decreased
customer purchases. Investments in Municipal securities
owned increased $16,223,000 or 37% in order to take advantage
of higher, short-term interest rates.
Total Liabilities of the Quick & Reilly Group, Inc.
increased $159,748,000 or 7% for August 26, 1994 versus
February 28, 1994. Money Borrowed From Banks decreased
$37,003,000 or 97% due to the increase in stock loan
activities, as did Drafts Payable, decreasing $24,135,000 or
52%. Payable to Brokers, Dealers and Clearing Organizations
increased $180,579,000 or 10% primarily due to the increase
in stock loan activities. Payable to Customers increased
$40,501,000 or 11% due to increased customer sales. Income
Taxes Payable increased $416,000 or 24% due to lower
estimated tax payments for the current year.
Total Revenues increased $11,734,000 or 19% for the
quarter ended August 26, 1994 versus the quarter ended August
27, 1993. Total Revenues increased $27,036,000 or 22% for
the six month period ended August 26, 1994 versus the six
month period ended August 27, 1993. Commission and Clearance
Income decreased $5,684,000 or 15% for the quarterly
comparison and $4,808,000 for the six month comparison due to
decreased volume in the securities markets. Interest Income
increased $15,465,000 or 102% for the quarterly comparison
and $27,063,000 or 94% for the six month comparison due to
increased margin debits and stock borrowed activities.
Interest Expense increased $11,631,000 or 143% for the
quarterly comparison and $20,141,000 or 129% for the six
month comparison primarily due to increased stock loan
activities and higher interest rates. Specialist Trading and
Commissions increased $1,503,000 or 19% for the quarterly
comparison and $3,936,000 or 24% for the six month comparison
due to an increase in the number of assigned issues and more
favorable market conditions. Other Revenues increased
$450,000 or 29% for the quarterly comparison and $845,000 or
35% for the six month comparison primarily due to increased
fee income.
Total Expenses for the quarter ended August 26, 1994
increased $12,491,000 or 29% versus the quarter ended August
27, 1993 and increased $26,408,000 or 31% for the six month
period ended August 26, 1994 versus the six month period
ended August 26, 1993. Employee Compensation and Benefits
increased $1,271,000 or 7% for the quarterly comparison and
$5,863,000 or 16% for the six month comparison primarily due
to an increase in the number of employees. Data Processing
and Equipment Rental decreased 2% for the quarterly
comparison due to the decrease in volume while increasing
$441,000 or 6% for the six month comparison 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 $315,000 or 18% for the quarterly
comparison and $566,000 or 16% for the six month comparison
primarily due to the decrease in volume. Rent and Other
Occupancy increased $175,000 or 12% for the quarterly
comparison and $360,000 for the six month comparison
primarily due to the expansion of the branch network in Quick
& Reilly, Inc. Other Expenses increased $193,000 or 7% for
the quarterly comparison and $534,000 or 10% for the six
month comparison 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
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> AUG-26-1994
<CASH> 91,195
<RECEIVABLES> 766,269
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 1,685,839
<INSTRUMENTS-OWNED> 80,103
<PP&E> 5,582
<TOTAL-ASSETS> 2,651,288
<SHORT-TERM> 23,417
<PAYABLES> 460,373
<REPOS-SOLD> 0
<SECURITIES-LOANED> 1,896,014
<INSTRUMENTS-SOLD> 7,028
<LONG-TERM> 0
<COMMON> 1,124
0
0
<OTHER-SE> 221,935
<TOTAL-LIABILITY-AND-EQUITY> 2,651,288
<TRADING-REVENUE> 7,265
<INTEREST-DIVIDENDS> 30,582
<COMMISSIONS> 33,817
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 623
<INTEREST-EXPENSE> 19,784
<COMPENSATION> 20,114
<INCOME-PRETAX> 17,079
<INCOME-PRE-EXTRAORDINARY> 17,079
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,519
<EPS-PRIMARY> .766
<EPS-DILUTED> .766
</TABLE>
