SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For Quarter Ended November 25, 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 November 25, 1994
INDEX
Page Number
Part I.
Item 1. Financial Statements
Consolidated Statements of
Financial Condition - November 25, 1994
(Unaudited) and February 28, 1994 1
Consolidated Statements of Income
(Unaudited) - Three Months Ended
November 25, 1994 and November 26, 1993 2
Consolidated Statements of Income
(Unaudited) - Nine Months Ended
November 25, 1994 and November 26, 1993 3
Consolidated Statements of Cash
Flows (Unaudited) - Nine Months Ended
November 25, 1994 and November 26, 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
November 25, February 28,
<CAPTION>
(In thousands except share amounts) 1994 1994
----------------------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash & Cash Equivalents $47,186 $41,824
Receivable from Brokers, Dealers and
Clearing Organizations 1,958,153 1,610,695
Receivable From Customers 721,537 731,353
Securities Owned at Market Value -
U.S. Government 7,570 8,991
Municipal 76,386 43,796
Equities and Other 17,553 11,998
Exchange Memberships- At Cost
(Market Value $9,915 and $9,000) 3,908 3,908
Furniture, Equipment and Leasehold
Improvements- At Cost Less Accumulated
Depreciation and Amortization of
$9,119 and $7,837 5,370 5,923
Other Assets 15,838 18,367
----------------------------------
TOTAL ASSETS $2,853,501 $2,476,855
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Money Borrowed From Banks $1,000 $38,003
Drafts Payable 25,143 46,552
Payable to Brokers, Dealers and
Clearing Organizations 2,089,660 1,758,738
Payable to Customers 456,794 376,569
Securities Sold, But Not Yet
Purchased- At Market Value 2,602 8,059
Income Taxes Payable 2,938 1,702
Accrued Expenses and Other
Liabilities 47,764 42,274
----------------------------------
Total Liabilities 2,625,901 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 156,569 131,585
----------------------------------
231,872 206,888
Less: Common Stock in Treasury, at
Cost - 162,400 shares in November 1994, and
69,400 in February 1994 (4,272) (1,930)
----------------------------------
TOTAL SHAREHOLDERS' EQUITY 227,600 204,958
----------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,853,501 $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
------------------------------------
November 25, November 26,
1994 1993
------------------------------------
REVENUES
<S> <C> <C>
Commisssions and Clearance Income $34,612 $39,307
Interest 35,013 18,685
Specialist Trading and Commissions 9,571 9,241
Other 807 1,466
------------------------------------
Total Revenues 80,003 68,699
Interest Expense 22,806 11,139
------------------------------------
Net Revenues 57,197 57,560
------------------------------------
NON-INTEREST EXPENSES
Employee Compensation and Benefits 20,951 21,166
Brokerage, Exchange and Clearance Fees 3,211 2,956
Data Processing and Equipment Rental 4,115 4,184
Communication 709 562
Printing, Postage, Stationery and Office Supplies 1,414 1,468
Advertising 1,167 1,681
Rent and Other Occupancy 1,575 1,529
Professional Services 748 530
Amortization of Intangibles 509 649
Other 3,085 2,732
------------------------------------
Total Non-Interest Expenses 37,484 37,457
------------------------------------
Income Before Provision for Income Taxes 19,713 20,103
Provision for Income Taxes 9,572 9,919
------------------------------------
NET INCOME $10,141 $10,184
====================================
Earnings Per Share $0.913 $0.907
Weighted Average Number Of Shares
Outstanding During the Period 11,103 11,226
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) Nine Months Ended
------------------------------------
November 25, November 26,
1994 1993
------------------------------------
REVENUES
<S> <C> <C>
Commisssions and Clearance Income $103,606 $113,109
Interest 90,989 47,598
Specialist Trading and Commissions 29,875 25,609
Other 4,034 3,847
------------------------------------
Total Revenues 228,504 190,163
Interest Expense 58,621 26,813
------------------------------------
Net Revenues 169,883 163,350
------------------------------------
NON-INTEREST EXPENSES
Employee Compensation and Benefits 63,023 57,375
Brokerage, Exchange and Clearance Fees 9,892 9,444
Data Processing and Equipment Rental 12,531 12,158
Communication 2,211 2,028
Printing, Postage, Stationery and Office Supplies 4,381 4,999
Advertising 4,001 4,811
Rent and Other Occupancy 4,729 4,324
Professional Services 1,853 1,747
Amortization of Intangibles 1,577 1,902
Other 8,965 8,079
------------------------------------
Total Non-Interest Expenses 113,163 106,867
------------------------------------
Income Before Provision for Income Taxes 56,720 56,483
Provision for Income Taxes 27,739 26,127
------------------------------------
NET INCOME $28,981 $30,356
====================================
Earnings Per Share $2.607 $2.710
Weighted Average Number Of Shares
Outstanding During the Period 11,117 11,201
Cash Dividends Declared Per Share $0.36 $0.30
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
The Quick & Reilly Group, Inc. and Subsid
Consolidated Statements of Cash Flo
(Unaudited)
Nine Months Ended
-------------------------------------
<CAPTION>
(In Thousands) November 25, November 26,
1994 1993
-------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $28,981 30,356
Adjustments to Reconcile Net Income to
Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization 3,053 3,285
Decreases (Increases) in Operating Assets:
Receivable from Brokers, Dealers, and
Clearing Organizations (347,457) (811,783)
Receivable from Customers 9,816 (158,394)
Securities Owned (36,724) (8,716)
Other Assets 952 (1,405)
Increases (Decreases) in Operating Liabilities:
Money Borrowed From Banks (37,003) (27,050)
Drafts Payable (21,409) (34,219)
Payable to Brokers, Dealers, and
Clearing Organizations 330,922 913,684
Payable to Customers 80,225 100,269
Securities Sold, But Not Yet Purchased (5,457) (2,151)
Income Taxes Payable 1,236 (1,609)
Accrued Expenses and Other Liabilities 5,490 2,557
-------------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 12,625 4,824
-------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid on Common Stock (3,997) (3,151)
Cash Paid in Lieu of Shares Issued on Account
of 5% Stock Dividend - (4)
Purchase of Treasury Stock (2,342) -
Sale of Treasury Stock Under Stock Option
Plan and Related Tax Benefits - 1,121
-------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (6,339) (2,034)
-------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Purchase of Funiture, Equipment
and Leasehold Improvements (924) (1,012)
-------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (924) (1,012)
-------------------------------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 5,362 1,778
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR 41,824 46,231
-------------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF
THE QUARTER $47,186 $48,009
=====================================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Paid During the Period For:
Interest $55,673 $27,923
Income Taxes 24,589 28,484
Noncash Financing and Investing Activities:
Five 5% Stock Dividend Paid - $13,236
Issuance of Common Stock Pursuant to
Stokes, Hoyt & Co. Acquisiton - 1,947
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 $37,358,000 with a clearing
corporation at November 25, 1994 have been satisfied by
obtaining letters of credit of $43,000,000 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 November 25,
1993, the weighted average number of shares outstanding have
been adjusted to give effect for the two five percent
stock dividends declared during the fiscal year ended February 28,
1994.
4. Income Taxes
For the three months ended November 25, 1994 and
November 26, 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 November 25, 1994, the
subsidiaries had net capital, in the aggregate, of
$175,549,000 which exceeded aggregate minimum net capital
requirements by $146,051,000.
6. Dividends Declared
On September 16, 1994, the Board of Directors declared a
cash dividend of $0.12 per share payable on January 3, 1995
to holders of record on December 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 $376,646,000 or 15% for November 25, 1994 versus
February 28, 1994. Receivable From Brokers, Dealers and
Clearing Organizations increased $347,458,000 or 22%
primarily due to increases in stock borrowed activity.
Investments in Municipal securities owned increased
$32,590,000 or 74% in order to take advantage of higher,
short-term interest rates. Other Assets decreased $2,528,000
or 14% primarily due to the amortization of intangible
assets.
Total Liabilities of the Quick & Reilly Group, Inc.
increased $354,004,000 or 16% for November 25, 1994 versus
February 28, 1994. Money Borrowed From Banks decreased
$37,003,000 or 97% due to the increase in stock loan
activities. Drafts Payable decreased $21,409,000 or 46%
primarily due to the increase in customer credits.
Payable to Brokers, Dealers and Clearing Organizations
increased $330,922,000 or 19% primarily due to the increase
in stock loan activities. Payable to Customers increased
$80,225,000 or 21% due to increased customer sales. Income
Taxes Payable increased $1,236,000 or 72% due to lower
estimated tax payments for the current year.
Total Revenues increased $11,304,000 or 16% for the
quarter ended November 25, 1994 versus the quarter ended
November 26, 1993. Total Revenues increased $38,341,000 or
20% for the nine month period ended November 25, 1994 versus
the nine month period ended November 26, 1993. Net Revenues
increased $6,533,000 or 4% for the nine month period ended
November 25, 1994 versus November 26, 1993. Commission and
Clearance Income decreased $4,695,000 or 12% for the
quarterly comparison and $9,503,000 or 8% for the nine month
comparison due to decreased trading volume in the securities
markets. Interest Income increased $16,328,000 or 87% for
the quarterly comparison and $43,391,000 or 91% for the nine
month comparison due to increased margin debits and stock
borrowed activities. Interest Expense increased $11,667,000
or 105% for the quarterly comparison and $31,808,000 or 119%
for the nine month comparison primarily due to increased
stock loan activities and higher interest rates. Specialist
Trading and Commissions increased $330,000 or 4% for the
quarterly comparison and $4,266,000 or 17% for the nine month
comparison. Other Revenues decreased $659,000 or 45% for the
quarterly comparison primarily due to unrealized losses in
fixed income investments.
Total Non-Interest Expenses for the nine month period
ended November 25, 1994 versus the nine month period ended
November 26, 1993 increased $6,296,000 or 6%. Employee
Compensation and Benefits increased $5,648,000 or 10% for the
nine month comparison primarily due to an increase in the
number of employees and increases in incentive bonuses.
Data Processing and Equipment Rental increased $373,000 or 3%
for the nine month comparison primarily due to the increased
costs of maintaining and expanding the capabilities of the
computer systems of the various subsidiaries. Communication
expense increased $147,000 or 26% for the three month
comparison and $183,000 or 9% for the nine month comparison
primarily due to the expansion of the Quick & Reilly Inc.'s
branch network. Printing, Postage, Stationery and Office
Supplies decreased $54,000 or 4% for the quarterly comparison
and $618,000 or 12% for the nine month comparison primarily
due to the decrease in trading volume. Advertising
expenditures decreased $514,000 or 31% for the three month
comparison and $807,000 or 17% for the nine month comparison
due to reduced advertising expenditures for Quick & Reilly,
Inc.. Rent and Other Occupancy increased $46,000 or 3% for
the quarterly comparison and $405,000 or 9% for the nine
month comparison primarily due to the expansion of the branch
network in Quick & Reilly, Inc. Other Expenses increased
$353,000 or 13% for the quarterly comparison and $886,000 or
11% for the nine 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.
---------
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-3
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> NOV-25-1994
<CASH> 47,186
<RECEIVABLES> 808,398
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 1,871,292
<INSTRUMENTS-OWNED> 101,509
<PP&E> 5,370
<TOTAL-ASSETS> 2,853,501
<SHORT-TERM> 26,143
<PAYABLES> 524,470
<REPOS-SOLD> 0
<SECURITIES-LOANED> 2,021,984
<INSTRUMENTS-SOLD> 2,602
<LONG-TERM> 0
<COMMON> 1,124
0
0
<OTHER-SE> 226,476
<TOTAL-LIABILITY-AND-EQUITY> 2,853,501
<TRADING-REVENUE> 7,437
<INTEREST-DIVIDENDS> 35,013
<COMMISSIONS> 37,456
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 276
<INTEREST-EXPENSE> 22,806
<COMPENSATION> 20,951
<INCOME-PRETAX> 19,713
<INCOME-PRE-EXTRAORDINARY> 19,713
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,141
<EPS-PRIMARY> .913
<EPS-DILUTED> .913
</TABLE>
