SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For Quarter Ended May 26, 1995
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 26, 1995
INDEX
Page Number
Part I.
Item 1. Financial Statements
Consolidated Statements of
Financial Condition - May 26, 1995
(Unaudited) and February 28, 1995 1
Consolidated Statements of Income
(Unaudited) - Three Months Ended
May 26, 1995 and May 27, 1994 2
Consolidated Statements of Cash
Flows (Unaudited) - Three Months Ended
May 26, 1995 and and May 27, 1994 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, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
<CAPTION>
May 26, February 28,
(In thousands except share amounts) 1995 1995
----------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $50,318 $40,863
Receivable from Brokers, Dealers and
Clearing Organizations 1,070,225 783,777
Receivable From Customers 758,977 800,884
Securities Owned at Market Value -
U.S. Government 8,455 8,382
Municipal 114,323 83,120
Equities and Other 19,395 14,914
Exchange Memberships- At Cost
(Market Value $9,656 and $10,362) 3,908 3,908
Furniture, Equipment and Leasehold
Improvements- At Cost Less Accumulated
Depreciation and Amortization of
$7,578 and $7,155 7,816 6,340
Other Assets 18,075 17,259
--------------------------------
TOTAL ASSETS $2,051,492 $1,759,447
================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Money Borrowed From Banks $31,988 $7,797
Drafts Payable 39,745 34,522
Payable to Brokers, Dealers and
Clearing Organizations 1,240,324 998,718
Payable to Customers 417,597 409,560
Securities Sold, But Not Yet
Purchased- At Market Value 8,284 12,918
Income Taxes Payable 8,501 3,643
Accrued Expenses and Other
Liabilities 56,279 55,421
----------------------------------
TOTAL LIABILITIES 1,802,718 1,522,579
----------------------------------
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 16,856,212 shares 1,686 1,686
Paid-In Capital 73,617 73,617
Retained Earnings 177,743 165,837
----------------------------------
253,046 241,140
Less: Common Stock in Treasury, at
Cost - 243,600 shares (4,272) (4,272)
----------------------------------
TOTAL SHAREHOLDERS' EQUITY 248,774 236,868
----------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,051,492 $1,759,447
=================================
<F1>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
The Quick & Reilly Group, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts) Three Months Ended
------------------------------------
May 26, May 27,
1995 1994
------------------------------------
<S> <C> <C>
REVENUES
Commissions and Clearance Income $41,838 $39,285
Interest 47,882 25,394
Trading 10,260 8,948
Other 2,728 1,810
------------------------------------
Total Revenues 102,708 75,437
Interest Expense 35,243 16,030
------------------------------------
Net Revenues 67,465 59,407
------------------------------------
NON-INTEREST EXPENSES
Employee Compensation and Benefits 23,068 21,958
Brokerage, Exchange and Clearance Fees 4,147 3,422
Data Processing and Equipment Rental 5,101 4,586
Communication 812 825
Printing, Postage, Stationery and
Office Supplies 1,846 1,557
Advertising 1,147 1,448
Rent and Other Occupancy 1,673 1,558
Professional Services 672 636
Amortization of Intangibles 493 523
Other 3,531 2,966
------------------------------------
Total Non-Interest Expenses 42,490 39,479
------------------------------------
Income Before Provision for Income Taxes 24,975 19,928
Provision for Income Taxes 11,408 9,608
------------------------------------
NET INCOME $13,567 $10,320
====================================
Earnings Per Share $0.817 $0.618
Weighted Average Number Of Shares
Outstanding During the Period 16,613 16,700
Cash Dividends Declared Per Share $0.10 $0.08
<F1>
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>
Three Months Ended
-------------------------------------
(In Thousands) May 26, May 27,
1995 1994
-------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $13,567 $10,320
Adjustments to Reconcile Net Income to
Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization 998 1,004
Decreases (Increases) in Operating Assets:
Receivable from Brokers, Dealers, and
Clearing Organizations (286,448) (111,482)
Receivable from Customers 41,907 7,178
Securities Owned (35,757) (1,218)
Other Assets (1,311) (1,165)
Increases (Decreases) in Operating Liabilities:
Money Borrowed From Banks 24,191 (37,003)
Drafts Payable 5,223 (23,413)
Payable to Brokers, Dealers, and
Clearing Organizations 241,606 245,720
Payable to Customers 8,037 (33,116)
Securities Sold, But Not Yet Purchased (4,634) (3,483)
Income Taxes Payable 4,858 6,030
Accrued Expenses and Other Liabilities 858 (7,491)
-----------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 13,095 51,881
-------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid on Common Stock (1,661) (1,335)
Purchase of Treasury Stock - (1,246)
-------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (1,661) (2,581)
-------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Purchase of Funiture, Equipment
and Leasehold Improvements (1,979) (352)
-------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,979) (352)
-------------------------------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 9,455 48,948
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR 40,863 41,824
-------------------------------------
CASH AND CASH EQUIVALENTS AT THE END
OF THE QUARTER $50,318 $90,772
=====================================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Paid During the Period For:
Interest $32,316 $14,203
Income Taxes 6,511 4,863
<F1>
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. Stock borrow
and loan transactions with the same counterparty are netted
where a right of setoff exists. It is recommended that these
financial statements be read in conjunction with the
Company's Financial Statements and Notes thereto included in
the 1995 Annual Report which is incorporated by reference on
Form 10-K.
2. Commitments and Contingencies
Margin requirements of $46,840,000 with a clearing
corporation at May 26, 1995 have been satisfied by obtaining
letters of credit of $56,500,000 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. Shareholders' Equity and Earnings Per Share
On March 1, 1995, the Company's Board of Directors
approved a three-for-two stock split, to be effected in the
form of a 50% stock dividend, on the Company's Common Stock.
The split became effective on June 7, 1995, for shareholders
of record as of May 15, 1995.
All amounts for shares issued and held in treasury along
with the related total par value for common stock issued and
paid-in capital, as well as earnings per share and dividends
per share prior to March 1, 1995 have been retroactively
adjusted to give effect to this transaction. Earnings per
share have been calculated by dividing net income by the
weighted average number of shares outstanding for the fiscal
quarter.
4. Income Taxes
For the three months ended May 26, 1995 and May 27,
1994, 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 26, 1995, the
subsidiaries had net capital, in the aggregate, of
$185,104,000 which exceeded aggregate minimum net capital
requirements by $155,019,000.
6. Dividends Declared
On May 4, 1995, the Board of Directors declared a cash
dividend of $0.10 per share payable on July 3, 1995 to
holders of record on June 14, 1995.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Total Assets of the Quick & Reilly Group, Inc.
increased $292,045,000 or 17% for May 26, 1995 versus
February 28, 1995. Receivable From Brokers, Dealers and
Clearing Organizations increased $286,448,000 or 37%
primarily due to increases in stock borrowed activity.
Receivable From Customers decreased $41,907,000 or 5% due
to a decrease in margin debits on May 26, 1995.
Investments in Municipal Bonds increased $31,203,000 or
38% due to more favorable investment opportunities in the
municipal bond markets.
Total Liabilities of the Quick & Reilly Group, Inc.
increased $280,139,000 or 18% for May 26, 1995 versus
February 28, 1995. Money Borrowed From Banks increased
$24,191,000 or 310% due to unavailable funds for
securities settlement on May 26, 1995, as did Drafts
Payable, increasing $5,223,000 or 15%. Payable to
Brokers, Dealers and Clearing Organizations increased
$241,606,000 or 24% primarily due to the increase in
stock loan activities. Income Taxes Payable increased
$4,858,000 or 133% primarily due to an increased first
quarter tax liability paid in June, 1995.
Total Revenues increased $27,271,000 or 36% for the
quarter ended May 26, 1995 versus the quarter ended May
27, 1994. Net Revenues increased $8,058,000 or 14%.
Commission and Clearance Income increased $2,553,000 or
6% reflecting an increase in trading volume. Interest
Income increased $22,488,000 or 89%, due to increased
margin debits and stock borrowed activities. Interest
Expense increased $19,213,000 or 120% primarily due to
increased stock loan activities. Trading increased
$1,312,000 or 15% due to favorable market conditions.
Other Revenues increased $918,000 or 51% primarily due to
increased unrealized gains on investments and increased
fee income.
Total Non-Interest Expenses for the quarter ended
May 26, 1995 increased $3,011,000 or 8% versus the
quarter ended May 27, 1994. Employee Compensation and
Benefits increased $1,110,000 or 5% primarily due to an
increase in the number of employees and increases in
incentive compensation. Brokerage, Exchange and Clearance
Fees increased $725,000 or 21% primarily due to the
increased number of trades processed by U.S. Clearing
Corp. Data Processing and Equipment Rental increased
$515,000 or 11% 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 increased
$289,000 or 19% primarily due to increased printing and
stationery expenditures in the quarter ended May 26,
1995. Rent and Other Occupancy increased $115,000 or 7%
primarily due to the expansion of the branch network in
Quick & Reilly, Inc. Other Expenses increased $565,000
or 19% 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
<PAGE>
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> MAY-26-1995
<CASH> 50,318
<RECEIVABLES> 968,666
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 860,536
<INSTRUMENTS-OWNED> 142,673
<PP&E> 7,816
<TOTAL-ASSETS> 2,051,492
<SHORT-TERM> 71,733
<PAYABLES> 511,066
<REPOS-SOLD> 0
<SECURITIES-LOANED> 1,146,855
<INSTRUMENTS-SOLD> 8,284
<LONG-TERM> 0
<COMMON> 1,686
0
0
<OTHER-SE> 247,088
<TOTAL-LIABILITY-AND-EQUITY> 2,051,492
<TRADING-REVENUE> 10,260
<INTEREST-DIVIDENDS> 47,882
<COMMISSIONS> 41,838
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 484
<INTEREST-EXPENSE> 35,243
<COMPENSATION> 23,068
<INCOME-PRETAX> 24,975
<INCOME-PRE-EXTRAORDINARY> 24,975
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,567
<EPS-PRIMARY> .817
<EPS-DILUTED> .817
</TABLE>
