SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended Commission file number 1-8517
February 29, 1996
THE QUICK & REILLY GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3082841
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
230 South County Road, Palm Beach, Florida 33480
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (407) 655-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, par value $.10 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
(Title of class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
The aggregate market value of voting stock held by non-affiliates of the
registrant is $488,837,988 at May 10, 1996.
25,177,715
(Number of shares of common stock outstanding at May 10, 1996)
Documents Incorporated by Reference Form 10-K
Annual Report to Shareholders for Parts II, IV
year ended February 29, 1996
Proxy Statement for Annual Meeting Part III
of Shareholders - June 25, 1996
<PAGE>
PART I
Item 1. Business
(a) General Development of Business
The Quick & Reilly Group, Inc. (the "Company")
was originally incorporated in New York on June 25, 1981. The Company was
reincorporated in Delaware in 1987. It is a holding company owning all of the
capital stock of its primary subsidiaries: Quick & Reilly, Inc., U.S. Clearing
Corp., and JJC Specialist Corp.
Quick & Reilly, Inc. ("Q&R") was incorporated in
New York on March 1, 1974. Q&R became a member organization of the New
York Stock Exchange, Inc. ("NYSE") on May 2, 1974, and became the first
member organization to offer substantially discounted commission
rates to individual investors following the elimination of fixed commission
rates by the Securities and Exchange Commission ("SEC") on May 1, 1975.
U.S. Clearing Corp. ("USCC") was incorporated in
New York on December 22, 1978, as a subsidiary of the Company and began
clearing customer securities transactions in March 1979. JJC Specialist Corp.
("JJC Specialist") was incorporated in New York as a subsidiary of the
Company on September 10, 1982, and conducts specialist operations on the floor
of the NYSE.
Q&R, USCC, and JJC Specialist (the "primary subsidiaries") are
member organizations of the NYSE and are registered as broker-dealers with the
SEC. Q&R and USCC are members of the National Association of Securities
Dealers (the "NASD"). USCC is also a member of the American Stock
Exchange (the "AMEX"), Boston Stock Exchange, Philadelphia Stock Exchange,
Pacific Stock Exchange, Chicago Stock Exchange and Chicago Board of Options
Exchange. The primary subsidiaries are members of the Securities Investor
Protection Corporation which provides protection for customer
accounts up to $500,000 per customer, with a limitation of $100,000 on claims
for cash balances. USCC has arranged for an additional $49.5 million
worth of protection per customer on securities through the Aetna
Casualty & Surety Co.
(b) Financial Information about Industry Segments
The Company operates in a single industry
segment and has no foreign operations. No material part of the Company's
consolidated revenues is received from a single customer or group of customers.
(c) Narrative Description of Business
The following table sets forth consolidated revenues of the
Company, the number of branch offices of Q&R, and the number of USCC
correspondents at year-end, on a comparative basis for each of the last three
fiscal years:
<TABLE>
Fiscal Year Ended the Last Day of February
1996 1995 1994
<CAPTION>
AMOUNT % AMOUNT % AMOUNT %
<S> <C> <C> <C>
<C> <C>
Commissions (Net of
clearance fees) (1) $165,259,000 36.0 $117,834,000 37.4 $119,021,000 44.9
Clearance Income 41,303,000 9.0 27,815,000 8.8 38,040,000 14.3
Interest 187,605,000 40.9 128,988,000 40.9 68,337,000 25.8
Trading (1) 52,648,000 11.5 32,584,000 10.3 31,068,000 11.7
Other (1) 11,831,000 2.6 7,950,000 2.6 8,730,000 3.3
TOTAL REVENUES $458,646,000 100% $315,171,000 100% $265,196,000 100%
Number of Q&R
Offices 112 103 97
Number of USCC
Correspondents 270 233 179
<F1>
(1) Amounts for the fiscal years ended February 28, 1995 and 1994 have been
restated to conform with the presentation for the fiscal year ended
February 29, 1996.
</TABLE>
<PAGE>
Discount Brokerage Services
On May 1, 1975, the SEC eliminated fixed commission
rates on securities transactions. Although this resulted in an immediate and
substantial reduction in commission rates charged to institutional customers,
rates charged to individual retail customers by the full-service national
brokerage firms were not reduced. At that time, Q&R's management perceived
that an opportunity existed for firms willing to offer brokerage services at
commission rates substantially below the pre-"May Day" fixed rates, and Q&R
began offering such services.
Q&R offers discount brokerage services to
investors who make their own investment decisions. Q&R reaches the
self-directed investor through a combination of customer referrals and
national and local advertising. When an individual is referred or responds to
advertising, he receives a new account package that includes a description of
the services offered, a commission schedule and an application. An account
is established when the application is returned and an initial transaction
takes place.
An extensive branch office system has been
established by Q&R for investors who prefer to be close to their broker. The
branch office provides Q&R with a presence in the community and provides the
client with the opportunity to visit an office or contact a branch office
by phone.
From a single office in New York in 1974,
Q&R has grown to a total of 112 offices nationwide. Nine new offices were
opened during the fiscal year ended February 29, 1996. These offices are
located in downtown New York City, New York; Roswell, Georgia; Vestal, New York;
Princeton, New Jersey; Palm Beach Gardens, Florida; Rockville, Maryland;
North Houston, Texas; Islandia, New York; and Bellevue, Washington.
Q&R has available various money market and
mutual funds that are provided by outside vendors, representing 114 mutual
fund families (of these, 20 are no-load fund families). Represented are
1,593 individual funds, including 432 no-load funds.
Q&R provides investment information
services to its clients to assist them in making investment decisions. A
list of these servies includes: Standard & Poor's Marketscope; Standard &
Poor's Research Reports; the Dow Jones News Service; Microsoft Money;
Morningstar's Principia Service; Wall Street by Fax; Quick & Reilly Top
Performers Report prepared by Standard & Poor's; and Quick & Reilly's
Dividend Study.
During fiscal 1996, Q&R completed the
development and rollout of its Quickway Plus system, a new Windows-based
on-line trading and portfolio management system. This software package,
a fully integrated research, trading account, information and portfolio
management tool, is designed to give Q&R's clients a state of the art product
previously available only to institutional investors.
Q&R completed the acquisition of the
customer accounts of three discount brokerage firms in fiscal 1996. On June 23,
1995, Q&R acquired the brokerage firm, Northeast Investment Securities, based in
Binghamton, NY. On August 18, 1995, Q&R acquired the brokerage firm, D&D
Discount Brokerage Services, based in Mechanicsburg, PA; the accounts were
transferred to the Q&R branch office in Harrisburg, PA. On September 18 1995,
Q&R acquired the brokerage firm, Cardy & Co., based in Rockville, MD.
The Company believes that Q&R's
advertising has played a role in expanding the firm's customer base.
Advertising expenses for the fiscal years ended in 1996, 1995, and 1994 were
approximately $7,474,000, $5,218,000, and $6,226,000 respectively.
Clearing Services
USCC, which became operational in 1979,
maintains accounts and clears securities transactions for correspondents.
Correspondents consist of Q&R, JJC, other specialist firms, banks, insurance
companies, broker-dealers and financial planners. When a correspondent opens an
account, the account is physically maintained by USCC as agent.
USCC clears all securities transactions
for Q&R's customer accounts and presently carries accounts and clears
transactions for 270 correspondents. There is continued competition to obtain
clearing agreements with correspondent broker dealers. USCC competes
in this respect with a number of large, highly visible, well-financed clearing
firms. Contacts between USCC and potential correspondent brokers are made
through attending and exhibiting at various trade and financial conferences,
advertising, direct mail campaigns, referrals and solicited calls. Price,
services, diversity of data processing programs and applications, and
reputation are the main basis of competition. Management believes that USCC's
services and systems are both competitive and state of the art.
During the fiscal year ended February 29, 1996, USCC
acquired the International Clearance Department of Republic New York
Securities, a subsidiary of Republic New York Corp. and added seven
correspondents in this area, establishing USCC's ability to directly self-clear
international equities.
Electronic data processing is an integral
part of the Company's entire brokerage operations, and particularly of
USCC's operations. The Company owns or leases the data processing hardware
necessary to input trades and back-office data. It relies on a data processing
service bureau for programming and main frame computer capabilities.
Management thus far has been satisfied with the service bureau's performance,
but there can be no assurance of satisfactory performance in the future.
The Company believes that USCC's internal
controls and safeguards against risk of securities theft are adequate.
USCC relies upon certificate counts, microfilming procedures, and video cameras
recording movements in high security areas as deterrents to securities theft.
In addition, as required by the NYSE and certain other regulatory
authorities, USCC carries a fidelity bond covering loss or theft. The
total coverage of $49,500,000 per customer (with a $250,000 deductible
provision per incident) is believed to be adequate.
Customer Financing
Customers of correspondent brokers may
effect transactions either on a cash or margin basis. In an account
authorized for margin trading, USCC may lend its customers an amount up to that
permitted by the Federal Reserve Board (Regulation T) . The amount of the loan
is also subject to NYSE margin requirements and the firm's internal policies,
which in some instances are more stringent than Regulation T and NYSE
requirements.
Short sales of securities represent sales
of borrowed securities and obligate the client to purchase the securities
at a later date. Clients may sell securities short in a margin account
subject to minimum equity, applicable margin requirements, and the
availability of such securities to be borrowed and delivered.
Interest is charged on the amount borrowed
by customers to finance their margin transactions. Interest charged on
customer accounts represented a major component of the Company's gross revenues
for the fiscal years ended the last day of February, 1996, 1995, and 1994.
USCC uses cash balances in customer
accounts, known as free credit balances, to finance customer margin account
balances. Secured borrowings and equity capital are also used to finance
customer margin account borrowings.
The amount of the Company's net interest
revenues from financing margin transactions and from free credit balances is
affected not only by the volume of business but also by fluctuations in
prevailing interest rates.
Specialist Business
JJC Specialist Corp. is one of the largest
specialist firms on the NYSE trading floor. The firm employs 39 specialists
who are members of the NYSE and make markets in 270 issues. Each specialist
firm is obligated by NYSE rules to maintain a fair and orderly market
in those stocks in which it is registered. One of the firm's primary roles is
to purchase or sell stock when there is a disparity between public supply and
public demand. This provides an opportunity for profits but also involves a
high degree of risk during market volatility.
At present, there are 36 specialist firms
that compete in the allocation process for new stocks. JJC Specialist was
awarded six securities during the fiscal year ended February 29, 1996.
On October 6, 1995, JJC Specialist
acquired the NYSE activities of MMS&N, LLC, a specialist on the floor of the
NYSE that made markets in 105 issues. MMS&N is the largest of the five
specialist firms that the Company has acquired since 1982.
The following table sets forth the
highest, lowest and average month-end long and short positions of the Company's
specialist business for the year ending February 29, 1996:
Average Month-End
Highest Position Lowest Position Position
Long Short Long Short Long Short
$41,428,127 $30,038,820 $9,320,571 $6,634,559 $22,604,858 $14,267,695
Competition
All aspects of the Company's business are
highly competitive. Competition within the securities industry is
principally based upon the price and quality of the products and services
offered, financial resources, and the Company's reputation within the investing
community. There is also competition to attract and retain personnel within the
securities industry. Competition for clients has increased from other
sources, such as commercial banks, savings institutions, mutual fund management
companies and investment advisory companies. It is likely that competition
from these institutions will intensify as they expand their brokerage,
clearance and specialist operations.
Regulation
The Company's primary subsidiaries are
subject to various federal and state laws which specifically regulate their
activities. The primary purpose of these requirements is to enhance the
protection of customer assets. Under certain circumstances, these rules may
limit the ability of the Company to make withdrawals of capital from the
primary subsidiaries. These laws and regulatory requirements
generally subject the primary subsidiaries to standards of solvency with
respect to capital requirements, financial reporting requirements, approval of
qualifications of personnel engaged in various aspects of their business, record
keeping and business practices, the handling of customer funds resulting
from securities transactions and the extension of credit to customers on
margin transactions. Infractions of these rules and regulations may result in
suspension of individual employees and/or their supervisors, termination of
employees, limitations on certain aspects of the subsidiary's business,
as well as censures and fines, or even proceedings of a civil or criminal
nature which could result in a temporary or permanent suspension of a part
or all of the primary subsidiaries' activities. Additional information
regarding regulation is set forth in Note 12 of the Notes to
Consolidated Financial Statements under the caption "Capital Requirements".
Such information is incorporated by reference.
Employees
As of February 29, 1996, the Company and
its subsidiaries had 1,109 employees, including full-time and part-time
employees. Of these, 456 acted as Account Executives for Q&R. The Company's
executive management group consists of six executive officers. The Company
believes its relations with its employees are good.
(d)Financial Information about Foreign and Domestic Operations and
Export Sales
Not applicable.
Item 2. Properties
The headquarters of the Company are
located at 230 South County Road, Palm Beach, Florida, 33480. The offices of
its primary subsidiaries are located at 26 Broadway, New York, New York
10004 under a lease expiring in 2005. Q&R's 112 branch offices are located
in 33 states and the District of Columbia. These offices are located in
premises covered by leases that expire on various dates through 2005.
Item 3. Legal Proceedings
In the ordinary course of their securities
business, certain of the Company's primary subsidiaries have been named as
defendants in a number of legal actions. In the opinion of management, based
on discussions with counsel, the resolution of such actions will not have a
material adverse effect on the consolidated financial condition of the Company
or on its results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's
security holders during the fiscal year ended February 29,1996.
<PAGE>
PART II
Market for the Registrant's Common
Item 5. Equity and Related Shareholder Matters
The information required herein is
reported on page 32 of the Company's Annual Report to Shareholders for the year
ended February 29, 1996, and is incorporated herein by reference.
Item 6. Selected Financial Highlights
The information required herein is
reported on page 1 of the Company's Annual Report to Shareholders for the year
ended February 29, 1996, and is incorporated herein by reference.
Management's Discussion and Analysis of
Item 7. Financial Condition and Results of
Operations
The information required herein is
reported on pages 19 and 20 of the Company's Annual Report to Shareholders for
the year ended February 29, 1996, and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The information required herein is reported
on pages 22 through 30 of the Company's Annual Report to Shareholders for
the year ended February 29, 1996, and is incorporated herein by reference.
Changes in and Disagreements with Accountants on
Item 9. Accounting and Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Registrant
The information required herein will be
reported in the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held June 25, 1996, which will be filed on or before June
25, 1996, and is incorporated herein by reference.
The Company's executive officers hold
office until their respective successors are duly elected and qualified, or
until their earlier resignation or removal. The executive officers devote
substantially all of their business efforts to the affairs of the Company. The
following table sets forth the name, age and position with the Company of the
executive officers.
Name Age
Position
Leslie C. Quick, Jr. 70 Chairman of the Board of
Directors, Chief Executive
Officer, Chief Financial
Officer and Director
Thomas C. Quick 41 Director, President, Chief
Operating Officer
Leslie C. Quick III 43 Director, Vice President
and Treasurer
Peter Quick 40 Director and Vice President
Christopher C. Quick 39 Director and Vice President
Pascal J. Mercurio 57 Director and Vice President
Leslie C. Quick, Jr. is the founder of the
Company and served as President from its organization in 1981 until June
1986 and as Chief Executive Officer and Director from its organization in 1981
until present. In April 1983, he was elected Chairman of the Board of
Directors of the Company. He served as President and Chief Executive Officer of
Q&R from its organization in 1974 until June 1986 and as a Director from
1974 until March 1993. He has served as President and Chief Executive Officer
of USCC from January 1979 to May 1981, and as a Director from January 1979
to May 1993. Mr. Quick has also served as Treasurer and a Director of JJC
Specialist from September 1982 until March 1990, and as President and Chief
Executive Officer from March 1983 until June 1986.
Thomas C. Quick, a son of Leslie C. Quick,
Jr., became a Director of the Company in July 1981 and was elected President
and Chief Operating Officer in March 1996. Mr. Quick has served as
Vice President and Assistant Treasurer and Director from July 1981 until his
election as President and Chief Operating Officer in March 1996. In addition,
Mr. Quick has served as Vice President and Director of USCC since May 1982.
Mr. Quick joined Q&R in 1977, became Vice President and a Director in May 1981.
He was elected President of that Corporation in June 1986 and served in that
position until his election as Vice President in March 1996. He serves as a
Director of JJC Specialist.
Leslie C. Quick III, a son of Leslie C.
Quick, Jr., has served as Vice President since March 1994, Treasurer since
February 1985 and as a Director since July 1981. Mr. Quick served as President
of the Company from June 1986 to March 1994, at which time he was elected
President of USCC and became Vice President of the Company. He also serves as
Vice President, Treasurer, Secretary and a Director of Q&R.
Peter Quick, a son of Leslie C. Quick,
Jr., has served as Director since November 1982 and as Vice President from June
1985. Mr. Quick served as President of the Company from March 1994 to March
1996 at which time he was elected President of Q&R and became Vice President
of the Company. He was named Vice President of USCC in May 1987. He served in
that capacity until May 1990 when he became President of USCC, which
position he held until March 1994 when he was elected President of the Company
and Vice President of USCC. He serves as Vice President, Treasurer, Secretary
and Director of JJC and as President and Director of Q&R.
Christopher C. Quick, a son of Leslie C. Quick, Jr.,
has served as Vice President of the Company since 1988 and as a Director
since November 1982. Mr. Quick has served as President of JJC Specialist
since June 1986 and as a Director since its organization in September 1982.
From September 1982 until June 1986, Mr. Quick served as Vice President -
Trading of JJC Specialist. He is a member of the NYSE and serves as a
registered specialist in the specialist book managed by JJC Specialist.
Pascal J. Mercurio has been a Director of
the Company since July 1981 and a Director of Q&R since March 1980. He joined
USCC as a Director and Executive Vice President upon its organization in
January 1979. Since that time he has served in various capacities and in May
1990, he became USCC's Chairman of the Board and Chief Executive
Officer.
Item 11. Executive Compensation
The information required herein will be reported
in the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held June 25, 1996, which will be filed on or before
June 25, 1996, and is incorporated herein by reference.
Security Ownership of Certain Beneficial
Item 12. Owners and Management
The information required herein will be reported in
the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held June 25, 1996, which will be filed on or before June
25, 1996, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required herein will be reported
in the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held June 25, 1996, which will be filed on or before
June 25, 1996, and is incorporated herein by reference.
<PAGE>
PART IV
Exhibits, Financial Statement Schedules
Item 14. and Reports on Form 8-K
(a)(1) The following report and consolidated
financial statements are incorporated by reference from the
Registrant's 1996 Annual Report to Shareholders and filed as
part of this Report:
Report of Independent Public Accountants
Consolidated Financial Statements:
Consolidated Statements of Financial Condition -
the last day of February, 1996 and 1995
Consolidated Statements of Income for the Fiscal Years
Ended the last day of February, 1996, 1995
and 1994
Consolidated Statements of Changes in
Shareholders' Equity for the Fiscal Years
Ended the last day of February, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Fiscal
Years Ended the last day of February, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(a)(2) The following is a list of financial statement schedules
filed as part of this report beginning on page 28:
Schedule I - Condensed Financial Information of Registrant
Report of Independent Public Accountants on Schedule
(a)(3) See accompanying Index to Exhibits
(b) No reports on Form 8-K were filed by the Registrant during
the last fiscal quarter of the fiscal year covered by this
Report.
(c) The following is a list of all Exhibits filed as part of
this Report:
Exhibit Description Page
3.1 Amended By-Laws previously filed as Exhibit 4.2 to the
Company's Registration Statement on Form S-8,
Registration No. 33-28345, and is hereby incorporated
by reference.
3.2 The Company's restated certificate of incorporation
was filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-8, Registration No. 33-28345, and
is hereby incorporated by reference.
4.1 Instruments defining the rights of security holders
were filed as Exhibits 4.1 and 4.2 to the Company's
Registration Statement on Form S-1, Registration
No. 2-83667, and Exhibit 4.3 to the Company's
Registration Statement on Form S-8, Registration
No. 33-28345, and are hereby incorporated by
reference.
10.1 Material contracts were filed as Exhibits 10.4 and
10.5 to the Company's Registration Statement on Form S-1,
Registration No. 2-83667, and are hereby incorporated
by reference.
10.2 Quick & Reilly Stock Option Plan was filed as Appendix
A to the Company's Notice of Annual Meeting of
Shareholders for the fiscal year ended February 28, 1991.
13.1 Annual Report to Shareholders for the year ended February 33
29, 1996 With the exception of the information
incorporated by reference into Items 5, 6, 7, and 8 of
this Form 10-K, the Annual Report to Shareholders for
the year ended February 29, 1996 is not deemed filed as
part of this report for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended.
21.1 A list of the Company's subsidiaries. 71
23.1 Consent of Independent Public Accountants 72
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Registrant has duly caused this
Annual report to be signed on its behalf by the undersigned, thereunto duly
authorized. THE QUICK & REILLY GROUP, INC.
BY THOMAS C. QUICK /s/ Dated: May 15, 1996
Thomas C. Quick, President
Pursuant to the requirement of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
LESLIE C. QUICK, JR. /s/ Dated: May 15, 1996
Leslie C. Quick, Jr.
Chairman of the Board of Directors
Chief Executive Officer, Chief
Financial Officer, and Director
THOMAS C. QUICK /s/ Dated: May 15, 1996
Thomas C. Quick, President, Chief
Operating Officer and Director
PETER QUICK /s/ Dated: May 15, 1996
Peter Quick
Vice President, Assistant Treasurer,
and Director
CHRISTOPHER C. QUICK /s/ Dated: May 15, 1996
Christopher C. Quick
Vice President and Director
LESLIE C. QUICK III /s/ Dated: May 15, 1996
Leslie C. Quick III
Vice President, Treasurer and Director
ALEXANDER BENISATTO /s/ Dated: May 15, 1996
Alexander Benisatto
Director
RICHARD G. BRODRICK /s/ Dated: May 15, 1996
Richard G. Brodrick
Director
THOMAS E. CHRISTMAN /s/ Dated: May 15, 1996
Thomas E. Christman
Director
ARLENE B. FRYER /s/ Dated: May 15, 1996
Arlene B. Fryer
Secretary and Director
HENRY P. KILROY /s/ Dated: May 15, 1996
Henry P. Kilroy
Director
CLIFFORD W. MAYS /s/ Dated: May 15, 1996
Clifford W. Mays
Director
PASCAL J. MERCURIO /s/ Dated: May 15, 1996
Pascal J. Mercurio
Vice President and Director
ROBERT J. RABINOFF /s/ Dated: May 15, 1996
Robert J. Rabinoff
Controller and Principal Accounting
Officer
<PAGE>
THE QUICK & REILLY GROUP, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Reference
Annual
Report to
Share-
Form holders
10-K (page)
Financial Statements
Consolidated Statements of Financial
Condition at the last day of February
1996 and 1995 21
For each of the three fiscal years in
the period ended the last day of
February 1996:
Consolidated Statements of Income 22
Consolidated Statements of Changes in
Shareholders' Equity 23
Consolidated Statements of Cash Flows 24
Notes to Consolidated Financial Statements 25
Report of Independent Public Accountants 30
Supplementary Information:
Quarterly Financial Data (unaudited) 31
Common Stock Data 32
Schedules
Report of Independent Public Accountants on
Schedules 30
I - Condensed Financial Information of
Registrant 25-29<PAGE>
THE QUICK AND REILLY GROUP, INC.
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
(Item 14(a))
Information presented in the schedule pertains only to
continuing operations unless otherwise stated.
All other schedules are omitted because
the required information is not present in amounts sufficient to require
submission of the schedule, or because the information required is included in
the consolidated financial statements and notes thereto.
The consolidated financial statements and
supplementary information listed in the above index, which are included in
the Annual Report to Shareholders of The Quick & Reilly Group, Inc. for
the fiscal year ended February 29, 1996, and hereby incorporated by
reference.
<TABLE>
<CAPTION> Schedule 1
(page 1)
Condensed Financial Information of Registrant
THE QUICK & REILLY GROUP, INC.
(Parent Company Only)
CONDENSED STATEMENTS OF FINANCIAL CONDITION
February 29, February 28,
1996 1995
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $3,982,600 $6,294,983
Securities Owned - At Market Value:
Municipal - 21,143,104
Other 22,884 22,884
Receivable From Subsidiaries 4,961,579 1,503,044
Investments in Subsidiaries, at Equity 322,088,228 210,511,736
Other Assets 5,303,218 4,331,504
TOTAL ASSETS $336,358,509 $243,807,255
LIABILITIES AND SHAREHOLDERS' EQUITY
Payable to Subsidiaries $2,846,755 $2,400,324
Accrued Expenses and Other Liabilities 30,877,341 4,539,199
TOTAL LIABILITIES 33,724,096 6,939,523
Put Options Issued on Company Stock 470,000 -
Shareholders' Equity
Preferred Stock, $.01 Par Value;
Authorized 1,000,000 Shares,
None Issued and Outstanding - -
Common Stock, $.10 Par Value;
Authorized 60,000,000 Shares,
Issued 25,283,860 shares 2,528,386 2,528,386
Paid-in Capital 74,462,250 72,774,714
Retained Earnings 226,425,262 165,837,020
303,415,898 241,140,120
Less: Common Stock in Treasury
at Cost - 106,145 in 1996
365,400 shares in 1995 (1,251,485) (4,272,388)
TOTAL SHAREHLDERS' EQUITY 302,164,413 236,867,732
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $336,358,509 $243,807,255
<F1>
See Notes to Condensed Financial Condition
</TABLE>
<TABLE>
Schedule 1
(Page 2)
<CAPTION>
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
THE QUICK & REILLY GROUP, INC.
(Parent Company Only)
CONDENSED STATEMENTS OF INCOME
Fiscal Year Ended the Last Day of February
1996 1995 1994
<S> <C> <C> <C>
REVENUES
Management fees from
Subsidiaries $9,308,000 $2,548,997 $1,942,003
Interest from
Subsidiaries 1,228,667 1,560,000 1,560,000
Other 1,590,614 1,021,505 1,203,652
12,127,281 5,130,502 4,705,655
EXPENSES
Employee Compensation
and Benefits 2,583,619 1,860,293 1,678,306
Interest 241 1,153 0
Rent and Other Occupancy 73,453 71,952 62,973
Professional Services 195,080 284,212 240,742
Other 591,489 562,573 696,910
3,443,882 2,780,183 2,678,931
INCOME BEFORE PROVISION
FOR INCOME TAXES AND
EQUITY IN EARNINGS OF
SUBSIDIARIES 8,683,399 2,350,319 2,026,724
Provision for Income Taxes 2,896,329 471,854 434,663
INCOME BEFORE EQUITY IN
EARNINGS OF SUBSIDIARIES 5,787,070 1,878,465 1,592,061
Equity in Earnings of
Subsidiaries 63,656,502 39,582,306 40,898,951
NET INCOME $69,443,572 $41,460,771 $42,491,012
<F1>
See Notes to Condensed Financial Information
</TABLE>
<TABLE>
Schedule 1
(Page 3)
<CAPTION>
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
THE QUICK & REILLY GROUP, INC.
(Parent Company Only)
CONDENSED STATEMENTS OF CASH FLOWS
Fiscal Year Ended the Last Day of February
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $69,443,572 $41,460,771 $42,491,012
Adjustments to
Reconcile Net Income to
Net Cash Provided By
(Used in) Operating
Activities:
Equity in Earnings
of Subsidiaries (63,656,502) (39,582,306) (40,898,951)
(Increase) Decrease in
Operating Assets:
Securities Owned 21,143,104 2,440,576 (3,827,698)
Receivable From
Subsidiaries (3,458,535) (206,194) 1,090,976
Other Assets (971,714) (80,901) (1,382,912)
Increase (Decrease) in
Operating Liabilities:
Payable to Subsidiaries 446,431 (874,225) (771,984)
Accrued Expenses and
Other Liabilities 26,338,142 458,800 636,201
NET CASH PROVIDED BY
(USED IN) OPERATING
ACTIVITIES 49,284,498 3,616,521 (2,663,356)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Dividends Paid on Common
Stock and Cash Paid in
Lieu of Shares (8,866,159) (7,208,638) (6,195,508)
Payments for Purchase of
Treasury Stock (51,875) (2,341,938) (1,784,600)
Proceeds from Sale of
Treasury Stock 5,185,176 - 1,121,185
Proceeds from Put Options
Written and Expired 55,967 - -
Purchase of Shares Held
in Escrow - - (82)
NET CASH USED IN
FINANCING ACTIVITIES (3,676,891) (9,550,576) (6,859,005)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Increase in Investment
in Subsidiaries (90,429,698) - (1,997,000)
Cash Dividends Received
from Subsidiaries 42,509,708 10,750,000 2,000.000
NET CASH PROVIDED BY
(USED IN) INVESTING
ACTIVITIES (47,919,990) 10,750,000 3,000
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (2,312,383) 4,815,945 (9,519,361)
CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE YEAR 6,294,983 1,479,038 10,998,399
CASH AND CASH
EQUIVALENTS AT THE
END OF THE YEAR $3,982,600 $6,294,983 $1,479,038
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Paid During the Year for:
Interest $241 $1,153 $ -
Income Taxes 598,292 351,077 609,750
Noncash Financing and Investing
Activities:
Issuance of Common Stock for
Noncash Net Assets and
Intangible Assets $1,000,000 $ - $ -
Five Percent Stock Dividends
Paid - - -
Issuance of Common Stock
Pursuant to Stokes, Hoyt & Co. - - 4,381
<F1>
See Notes to Condensed Financial Information
</TABLE>
Schedule 1
(Page 4)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
THE QUICK & REILLY GROUP, INC.
(Parent Company Only)
NOTES TO CONDENSED FINANCIAL INFORMATION
NOTE 1 - DIVIDENDS RECEIVED FROM SUBSIDIARIES
The Quick & Reilly Group, Inc. received from its consolidated
subsidiaries cash dividends of$42,510,000 for the fiscal year ended February 29,
1996 and $10,750,000 and $2,000,000 for each of the fiscal years ended
February 28, 1995 and 1994, respectively.
NOTE 2 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The condensed financial information of The Quick & Reilly, Group, Inc.
(Parent Company Only) should be read in conjunction with the consolidated
financial statements of The Quick & Reilly Group, Inc. and Subsidiaries and
the notes thereto incorporated by reference in this report.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Quick & Reilly Group, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in The Quick & Reilly Group, Inc.
and Subsidiaries' annual report to shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated April 17, 1996.
Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in the index on page 23 is
the responsibility of the Company's management and is presented for the
purpose of complying with the Securities and Exchange Commission's rules and
is not part of the basic financial statements. This schedule has been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
Arthur Andersen LLP
New York, New York
April 17, 1996
<TABLE>
<CAPTION>
<PAGE>
THE QUICK & REILLY, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
Fiscal Year Ended the Last Day of February
(In Thousands, Except Per Share Amounts)
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Revenues $458,646 $315,171 $265,196 $195,934 $154,019
Net Revenues 324,600 231,416 226,405 171,696 140,238
Income Before Provision
for Income Taxes 122,215 80,402 79,897 52,196 42,036
Net Income 69,443 41,461 42,491 28,695 22,684
Earnings Per Share (1) 2.78 1.66 1.68 1.17 0.99
Cash Dividends Per
Share (1) 0.35 0.29 0.25 0.19 0.16
Total Assets 3,522,903 2,581,880 2,476,855 1,376,965 1,029,611
Total Liabilities 3,220,269 2,345,012 2,271,897 1,207,639 891,190
Total Shareholders'
Equity 302,164 236,868 204,958 169,326 138,422
Book Value Per Share (1) 12.00 9.51 8.16 6.75 5.65
<F1>
(1) All per share data have been restated to reflect the two three-
for-two stock splits declared during the fiscal year ended February
29, 1996, and the two five percent stock dividends declared during the
fiscal year ended February 28, 1994.
</TABLE>
Description of Business
The Quick & Reilly Group, Inc. (the "Company") is a holding company
owning all the capital stock of its primary operating subsidiaries:
Quick & Reilly, Inc., U.S. Clearing Corp. and JJC Specialist Corp.
Quick & Reilly, Inc. ("Q&R") was incorporated in New York on March 1,
1974. Q&R became a member organization of the New York Stock Exchange,
Inc. ("NYSE") on May 2, 1974, and became the first member organization
to offer substantially discounted commission rates to individual
investors following the elimination of fixed commission rates by the
Securities and Exchange Commission ("SEC") on May 1, 1975.
U.S. Clearing Corp. ("U.S. Clearing") was incorporated in New York on
December 22, 1978, and began clearing customer trades in March 1979.
In 1992, U.S. Clearing established its institutional sales operation.
JJC Specialist Corp. ("JJC Specialist") was incorporated in New York
on September 10, 1982, and conducts specialist operations on the floor
of the NYSE. In October 1995, JJC Specialist acquired the specialist
operations of MMS&N, LLC ("MMS&N").
Q&R Capital Corp. was incorporated in New York on November 6, 1995 to
consolidate the investment functions of the Company and its
subsidiaries.
Q&R, U.S. Clearing and JJC Specialist are member organizations of the
NYSE and are registered as broker-dealers with the SEC. Q&R and U.S.
Clearing are members of the National Association of Securities
Dealers. U.S. Clearing is also a member of the American Stock
Exchange, Boston Stock Exchange, Pacific Stock Exchange, Philadelphia
Stock Exchange, Chicago Stock Exchange and Chicago Board Options
Exchange. Q&R, U.S. Clearing and JJC Specialist are members of the
Securities Investors Protection Corporation, which provides protection
for customer accounts up to $500,000 per customer, with a limitation
of $100,000 on claims for cash balances. U.S. Clearing has also
arranged for an additional $49.5 million protection per customer on
securities through the Aetna Casualty & Surety Co.
Results of Operations
Comparison of 1996 and 1995 Results
Fiscal 1996 Revenues of the Company increased 46% compared with fiscal
1995, while Net Revenues increased 40%. Commissions and Clearance
Income increased 42% compared with 1995, due to increased volume in
the securities markets and the October 1995 acquisition of the
specialist operations of MMS&N by JJC Specialist. Interest Income
increased 45%, primarily due to increased customer margin debits and
stock borrowing activities. Interest Expense increased 60%, primarily
due to stock lending activities. Trading Income increased 62%,
primarily due to the acquisition of the specialist operations of MMS&N
by JJC Specialist, and increased trading revenue by U.S. Clearing.
Other Revenues increased 49%, primarily due to increased fee income.
Total Non-Interest Expenses increased 34% for fiscal 1996 compared
with fiscal 1995. Employee Compensation and Benefits increased 28%,
primarily due to increases in incentive bonuses and the increase in
personnel at JJC Specialist due to the acquisition of MMS&N in October
1995. Data Processing and Equipment Rental increased 41%, primarily
due to the increased trading volume, as did Brokerage, Exchange and
Clearance Fees increasing by 36%. Printing, Postage, Stationery and
Office Supplies increased 32%, due to the increase in trading volume
as well as the increase in postal rates. Advertising increased 43%,
primarily due to the increased commitments of the Q&R advertising
campaigns. Rent and Other Occupancy increased 25%, primarily
due to the opening of new branch offices in Q&R and the expansion of
JJC Specialist's office and operational space. Communication costs
increased 45% primarily due to the establishment of the Easy Trade and
Twenty four hour brokerage operations at Q&R and the increased volume.
Amortization of Intangible Assets increased 53%, due to the three
broker-dealer acquisitions during the fiscal year. Other expenses
increased 66%, primarily due to the increased volume and management's
commitment to expand the various subsidiaries' businesses.
Comparison of 1995 and 1994 Results
Fiscal 1995 Revenues of the Company increased 19% compared with fiscal
1994, while Net Revenues increased 2%. Commission and Clearance Income
decreased 7% compared with 1994, due to decreased volume in the
securities markets. Interest Income increased 89%, primarily due to
rising interest rates, increased customer margin debits and stock
borrowing activities. Interest Expense increased 116%, primarily due
to rising interest rates and increased stock lending activities.
Trading Income increased 5%, due to a favorable securities market
environment in market-making activities. Other Revenues decreased 9%,
primarily due to a decrease in fee income in U.S. Clearing.
Total Non-Interest Expenses increased 3% for fiscal 1995 compared with
fiscal 1994. Employee Compensation and Benefits increased 4% for
fiscal 1995 compared with fiscal 1994, primarily due to increases in
incentive bonuses in the clearing and specialist subsidiaries. Data
Processing and Equipment Rental increased 8%, primarily due to
increased equipment charges related to the Q&R branch network system
and additional equipment charges for the subsidiaries' new disaster
recovery site. Printing, Postage, Stationery and Office Supplies
decreased 7%, due to the decreased trading volume. Rent and
Other Occupancy increased 8%, primarily due to the opening of new
branch offices and the moving of existing branches in Q&R.
Professional Services
increased 30%, primarily due to increased consulting, legal and
accounting fees. Amortization of Intangible Assets decreased 18%, due
to the fully amortized goodwill relating to the Conklin, Cahill & Co.
acquisition at the end of February 1994. Other Expenses increased 5%,
primarily due to the expansion of the Q&R branch network and the
increase in institutional operations at U.S. Clearing.
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. The Company utilizes bank
borrowings, securities lending activities, customers' free credit
balances and other payables, as well as the Company's equity capital
to finance receivables from customers. The secured financings are
collateralized primarily by customer securities pledged. Customer
receivables are secured by customer securities held as collateral. The
Company can demand payment of outstanding balances at
any time. Receivables and payables with other broker-dealers represent
either current open transactions that usually settle within a few days
or securities lending and borrowing activities that are collateralized
and normally can be closed out within a few days.
The Company's primary subsidiaries are subject to regulatory net
capital requirements which are designed to measure the general
financial integrity and liquidity of broker-dealers. Under the SEC's
net capital requirements, Q&R, U.S. Clearing and JJC Specialist may
not (a) pay or permit the payment or withdrawal of any subordinated
debt, if payment would cause net capital to fall below certain
specified levels; (b) permit equity capital to be removed
if, after giving effect to such payment, withdrawal or removal, either
the aggregate indebtedness of Q&R would exceed 10 times its net
capital or the net capital of Q&R would fail to equal 1.2 times its
minimum required net capital or for U.S. Clearing would be less than
5% of its aggregate debit balances arising from customer transactions
or net capital of U.S. Clearing would fail to equal 1.2 times its
minimum required net capital; or (c) permit equity withdrawals,
unsecured loans or advances, to certain related parties
without prior approval of the SEC or its designated examining
authority if the withdrawal would cause net capital to fall below
certain specified levels. Additionally, JJC Specialist must comply
with the net liquid asset requirements of the NYSE. These restrictions
have not had, and are not expected to have, any impact on the ability
of the Company to meet its obligations. As of the last day of February
1996 and 1995, the Company's principal subsidiaries had aggregate net
capital of $196,501,000 and $176,176,000, respectively, which exceeded
their aggregate minimum net capital requirements by $139,726,000 and
$145,850,000, respectively.
Effects of Inflation
The Company's assets are not significantly affected by inflation
because they are primarily monetary and liquid. In addition, large
investments in fixed assets are not required because the nature of the
Company's business is to provide services. Management believes that
the replacement costs of furniture, equipment and leasehold
improvements in the Company's principal and branch offices would not
materially affect operations. However, the rate of inflation affects
the Company's expenses such as employee compensation, rent,
communications and other expenses, which may not be readily
recoverable in the prices of services offered by the Company. To the
extent inflation results in rising interest rates and has other
adverse effects upon the securities markets, it may adversely affect
the Company's financial position and results of operations.
<TABLE>
<PAGE>
<CAPTION>
The Quick & Reilly Group Inc. and Subsiaries
Consolidated Statements of Financial Condition
(In thousands, Except Share Amounts)
February 29, February 28,
1996 1995
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 133,287 $ 40,863
Receivable From Brokers,
Dealers and Clearing
Organizations 1,926,583 1,606,210
Receivable From Customers-
Net of Allowance for Doubtful
Accounts of $6,087 in 1996
and $4,571 in 1995 1,223,184 800,884
Securities Owned- At Market Value
U.S. Governments 1,995 8,382
Municipals 93,841 83,120
Equities and Other 59,637 14,914
Exchange Memberships- At Cost
(Market Value $14,692 in 1996
and $10,362 in 1995) 3,908 3,908
Furniture, Equipment and
Leasehold Improvements-
At Cost Less Accumulated
Depreciation and
Amortization of $9,462 in 1996
and $7,155 in 1995 15,307 6,340
Other Assets 65,161 17,259
TOTAL ASSETS $3,522,903 $2,581,880
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Money Borrowed from Banks $1,000 $7,797
Drafts Payable 81,331 34,522
Payable to Brokers, Dealers
and Clearing Organizations 2,340,739 1,821,151
Payable to Customers 680,790 409,560
Securities Sold, But Not
Yet Purchased- At Market Value 14,847 12,918
Income Taxes Payable 6,608 3,643
Accrued Expenses and
Other Liabilities 94,954 55,241
TOTAL LIABILITIES $3,220,269 $2,345,012
Commitments and Contingencies
Put Options Issued on
Company Stock 470 -
Shareholders' Equity
Preferred Stock, $.01 par value;
authorized 1,000,000 shares, none
issued and outstanding - -
Common Stock, $.10 par value;
authorized 60,000,000 shares,
issued and outstanding
25,283,860 shares 2,528 2,528
Paid-in Capital 74,462 72,775
Retained Earnings 226,425 165,837
303,415 241,140
Less: Common Stock in Treasury,
at Cost - 106,145 shares in 1996
and 365,400 shares in 1995 (1,251) (4,272)
TOTAL SHAREHOLDERS' EQUITY 302,164 236,868
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $3,522,903 $2,581,880
<F1>
The accompanying notes are an integarl part of these statements
</TABLE>
<TABLE>
<CAPTION>
The Quick & Reilly Group, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, Except Per Share Amounts)
Fiscal Year Ended the Last Day of February
1996 1995 1994
<S> <C> <C> <C>
REVENUES
Commissions and Clearance
Income $206,562 $145,649 $157,061
Interest 187,605 128,988 68,337
Trading 52,648 32,584 31,068
Other 11,831 7,950 8,730
Total Revenues 458,646 315,171 265,196
Interest Expense 134,046 83,755 38,791
Net Revenues 324,600 231,416 226,405
NON-INTEREST EXPENSES
Employee Compensation
and Benefits 105,739 82,785 79,546
Data Processing and
Equipment Rental 24,947 17,736 16,467
Brokerage, Exchange
and Clearance Fees 17,455 12,821 12,793
Printing, Postage,
Stationery and
Office Supplies 8,203 6,208 6,686
Advertising 7,474 5,218 6,226
Rent and Other Occupancy 7,307 5,838 5,381
Communication 4,424 3,043 2,826
Amortization of Intangibles 3,189 2,081 2,545
Professional Services 3,040 2,881 2,220
Other 20,607 12,403 11,818
Total Non-Interest Expenses 202,385 151,014 146,508
Income Before Provisions
for Income Taxes 122,215 80,402 79,897
Provision for Income Taxes 52,772 38,941 37,406
NET INCOME $69,443 $41,461 $42,491
Earnings Per Share $ 2.78 $ 1.66 $ 1.68
<F1>
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
<CAPTION>
The Quick & Reilly Group, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands, Except Share Amounts)
Common Stock Paid-in Retained Treasury
Total Shares Amount Capital Earnings Stock
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDERS'
EQUITY-
FEBRUARY 28,
1993 $169,326 10,176,937 $1,018 $41,576 $127,899 ($1,167)
Effect of Two,
Three-For Two
Stock Splits
Paid During the
Fiscal Year Ended
February 29,1996 0 12,720,714 1,272 (1,272) - -
SHAREHOLDERS'
EQUITY-
FEBRUARY 28, 1993
RETROACTIVELY
RESTATED $169,326 22,897,651 2,290 40,304 127,899 (1,167)
Five Percent
Common Stock
Dividends
Declared in
April and
December 1993 0 2,342,409 234 32,375 (32,609) -
Reclassification of
Common Stock
Issued Pursuant
to Stokes, Hoyt
& Co. Acquisition 0 43,800 4 (4) - -
Cash Dividends on
Common Stock (6,196) - - - (6,196) -
Purchase of
Treasury Stock (1,785) - - - - (1,785)
Sale of Treasury
Stock Under
Stock Option Plan
and Related
Tax Benefits 1,122 - - 100 - 1,022
Net Income 42,491 - - - 42,491 -
SHAREHOLDERS'
EQUITY-
FEBRUARY 28,
1994 204,958 25,283,860 2,528 72,775 131,585 (1,930)
Cash Dividends on
Common Stock (7,209) - - - (7,209) -
Purchase of
Treasury Stock (2,342) - - - - (2,342)
Net Income 41,461 - - - 41,461 -
SHAREHOLDERS'
EQUITY-
FEBRUARY 28,
1995 $236,868 25,283,860 $2,528 $72,775 $165,837 ($4,272)
Cash Dividends on
Common Stock (8,855) - - - (8,855) -
Cash Paid in Lieu
of Shares Issued
On Account of Two,
Three-For-Two
Stock Splits (11) - - (11) - -
Purchase of
Treasury Stock (52) - - - - (52)
Sale of
Treasury Stock 5,185 - - 2,112 - 3,073
Proceeds From
Put Options Written,
and Expired 56 - - 56 - -
Put Options Issued
on Company Stock (470) - - (470) - -
Net Income 69,443 - - - 69,443 -
SHAREHOLDER'S
EQUITY -
February 29,
1996 $302,164 $25,283,860 $2,528 $74,462 $226,425 ($1,251)
<F1>
The accompanying notes are an integral part of these statements.<PAGE>
</TABLE>
<TABLE>
<CAPTION>
The Quick & Reilly Group, Inc.,
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Fiscal Year Ended the Last Day of February
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $ 69,443 $ 41,461 $ 42,491
Adjustments to Reconcile
Net Income to Net Cash
Provided By Operating
Activities: Depreciation
and Amortization 5,668 3,503 3,971
Decreases (Increases)
in Operating Assets:
Receivable From Brokers,
Dealers and
Clearing Organizations (320,373) 4,485 (907,325)
Receivable From Customers (422,300) (69,531) (189,532)
Securities Owned (49,057) (41,630) (8,952)
Other Assets (4,614) (980) 2,867
Increase (Decrease)
in Operating Liabilities:
Money Borrowed From Banks (6,797) (30,206) 9,953
Drafts Payable 46,809 (12,030) 254
Payable to Brokers, Dealers
and Clearing Organizations 519,588 62,413 952,570
Payable to Customers 271,230 32,991 97,626
Securities Sold, But Not
Yet Purchased 1,929 4,859 (3,841)
Income Taxes Payable 2,965 1,941 (5,287)
Accrued Expenses and
Other Liabilities 39,533 13,147 12,983
NET CASH PROVIDED BY
OPERATING ACTIVITIES 154,024 10,423 7,778
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash Dividends Paid on
Common Stock and Cash Paid
in Lieu of Shares (8,866) (7,209) (6,196)
Purchase of Treasury Stock (52) (2,342) (1,785)
Proceeds From Sale of
Treasury Stock 5,185 - 1,122
Proceeds from Put Options
Written and Expired 56 - -
NET CASH USED IN
FINANCING ACTIVITIES (3,677) (9,551) (6,859)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payment for Purchase of
Exchange Membership - - (575)
Payments for Purchase
of Furniture, Equipment
and Leasehold Improvements (11,398) (1,833) (1,251)
Payments for Acquisitions (46,525) - (3,500)
NET CASH USED IN
INVESTING ACTIVITIES (57,923) (1,833) (5,326)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 92,424 (961) (4,407)
CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE YEAR 40,863 41,824 46,231
CASH AND CASH EQUIVALENTS AT THE
END OF THE YEAR $133,287 $40,863 $41,824
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash Paid During the Year for-
Interest $132,631 $74,602 $38,273
Income Taxes 48,120 29,569 34,181
Noncash Financing and
Investing Activities-
Issuance of Common Stock
for Noncash Net Assets
and Intangible Assets $1,000 - -
Five Percent Stock Dividends
Paid - - 32,609
Issuance of Common Stock
Pursuant to Stokes,
Hoyt & Co. Acquisition - - 4
<F1>
The accompanying notes are an integral part of these statements.
</TABLE>
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of The Quick &
Reilly Group, Inc. (the "Company") and its wholly owned subsidiaries which
include Quick & Reilly, Inc. ("Q&R"), a broker-dealer providing discount
brokerage services; U.S. Clearing Corp. ("U.S. Clearing"), a broker-dealer
providing securities clearance for Q&R and JJC Specialist Corp. ("JJC
Specialist"), as well as for other correspondent broker-dealers; and JJC
Specialist, a broker-dealer that is a specialist on the floor of the New York
Stock Exchange, Inc. (the "primary subsidiaries"). All material intercompany
transactions have been eliminated.
Customer transactions are recorded on a settlement date basis. Proprietary
transactions, commission and clearance revenues and related expenses are
recorded on a trade date basis. Securities owned and securities sold, but not
yet purchased, are valued at market and the resulting unrealized gains and
losses are reflected in the Consolidated Statements of Income.
Intangible assets are being amortized on a straight-line basis over three to
fifteen years. Office furniture and equipment are depreciated on a straight-line
basis over three to eight years. Leasehold improvements are amortized over the
remaining lives of the related leases.
The Company considers short-term, highly liquid investments to be cash
equivalents.
Certain amounts have been restated for the fiscal years ended
February 28, 1995 and 1994, to conform with the February 29, 1996 presentation.
These include establishing a new financial statement caption for trading
income and reclassifying JJC Specialist's floor brokerage income to
commission income.
The preparation of the financial statements requires management to make
certain estimates and assumptions that affect the reported amounts in the
accompanying financial statements. Management does not believe that actual
results will differ materially from these estimates.
During the fiscal year ended February 29, 1996, the Company effected two
three-for-two stock splits. All per share amounts for earnings and cash
dividends for the fiscal years ended February 28, 1995 and 1994 have been
adjusted to give effect to these transactions. In addition, the number of
Common Stock shares outstanding, and related dollar amounts of Common Stock
and Paid-in Capital as shown on the Consolidated Statements of Financial
Condition for the fiscal year ended February 28, 1995 and the Consolidated
Statements of Changes in Shareholders' Equity for the fiscal years ended
February 28, 1994 and 1993 have been retroactively restated to give effect to
these transactions. The number of Common Stock shares outstanding, and
related dollar amounts of Common Stock, Paid-in Capital and Retained
Earnings, as shown on the Consolidated Statements of Changes in Shareholders'
Equity for the fiscal year ended February 28, 1993 have not been retroactively
restated to reflect the two five percent stock dividends paid during the fiscal
year ended February 28, 1994.
NOTE 2 - ACQUISITIONS
During the fiscal year ended February 29, 1996, Quick & Reilly, Inc. acquired
the assets of three retail broker dealers and JJC Specialist Corp. acquired the
operations of a specialist firm, for cash or shares of the Company's common
stock. The major portion of the purchase prices have been allocated to various
intangible assets, including customer lists, goodwill and covenants not to
compete, which are reflected in Other Assets in the amount of $45,218,000,
net of accumulated amortization of $1,305,000, at February 29, 1996. In
connection with these acquisitions, a non-interest bearing note of
$22,500,000, due to be paid on October 5, 1996, is included in Accrued
Expenses and Other Liabilities at February 29, 1996.
During the fiscal year ended February 28, 1994, Q&R acquired the assets of a
broker-dealer for cash. The major portion of the purchase price has been
allocated to customer lists, goodwill, and covenants not to compete
("Intangible Assets") which are reflected in Other Assets at $2,775,000 and
$3,002,000 net of accumulated amortization of $625,000 and $398,000 at
February 29, 1996, and February 28, 1995, respectively.
During the fiscal year ended February 28, 1993, JJC Specialist acquired
through merger the specialist firm of Stokes, Hoyt & Co., and renamed it
JJC Specialist Partners. The Company issued shares of its common stock to
the sellers valued as of the closing date of the transaction in December
1992. The major portion of the purchase price has been allocated to goodwill
and covenants not to compete. Goodwill and covenants not to compete are
reflected in Other Assets in the amounts of $2,193,000 and $0, net of
accumulated amortization of $3,788,000 and $1,500,000, respectively, at
February 29, 1996, and $3,389,000 and $417,000, net of accumulated amortization
of $2,592,000 and $1,083,000, respectively, at February 28, 1995.
The acquisitions were accounted for under the purchase method of accounting and
the consolidated financial statements include the results of operations of the
businesses acquired from the date of acquisition.
<TABLE>
NOTE 3 - RECEIVABLE FROM AND PAYABLE TO
BROKERS, DEALERS AND CLEARING ORGANIZATIONS
<CAPTION>
Amounts receivable from and payable to brokers, dealers and clearing
organizations include (in thousands):
February 29, February 28,
1996 1995
<S> <C> <C>
Receivable:
Securities Borrowed $1,837,018 $1,554,300
Securities Failed to Deliver 23,575 12,539
Clearing Organizations and Other 65,990 39,371
$1,926,583 $1,606,210
Payable:
Securities Loaned $2,065,112 $1,807,747
Securities Failed to Receive 10,970 6,972
Clearing Organizations and Other 264,657 6,432
$2,340,739 $1,821,151
<F1>
As these amounts are short-term in nature, their carrying amount is a
reasonable estimate of fair market value.
</TABLE>
NOTE 4 - RECEIVABLE FROM AND PAYABLE
TO CUSTOMERS
The amounts shown represent the dollar balances receivable from and payable to
customers in connection with securities, cash and margin transactions.
Customer receivables are collateralized by securities, the value of which is not
reflected in the consolidated financial statements. As these amounts are
short-term in nature, their carrying amounts are reasonable estimates of fair
market value.
NOTE 5 - MONEY BORROWED FROM BANKS
Money borrowed from banks in the amount of $1,000,000 and $7,797,000, at
February 29, 1996, and February 28, 1995, respectively, is fully
collateralized by securities owned by customers and noncustomers. These
borrowings are payable on demand and generally bear interest at the brokers'
call rate. The weighted average borrowings during fiscal 1996 and 1995 were
$8,078,000 and $10,572,000, respectively. The weighted average interest rates
during fiscal 1996 and 1995 were 5.86% and 5.18%, respectively.
As these borrowings are short-term in nature and bear market rates of
interest, their carrying amounts are reasonable estimates of fair market value.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company and its primary subsidiaries occupy office premises under
noncancellable leases expiring at various dates through April 2005. Future
minimum aggregate rentals, excluding escalations, under the leases are
$3,986,000; $3,643,000; $2,915,000; $2,635,000 and $2,506,000 for each of the
fiscal years ending the last day of February 1997 through 2001, and
$3,949,000 thereafter. The leases contain provisions for rent escalations
based on increases in costs incurred by the lessor. Rental expense under
the leases was $4,755,000, $3,780,000 and $3,412,000 for the fiscal years
ended the last day of February 1996, 1995 and 1994, respectively.
Margin requirements of $62,900,000 with a clearing corporation at
February 29, 1996, have been satisfied by obtaining letters of credit with
face amounts totaling $68,300,000. These letters of credit are secured by
customers' margin securities.
In the ordinary course of their securities business, certain of the
Company's primary subsidiaries have been named as defendants in a number of
legal actions. In the opinion of management, based on discussions with counsel,
the resolution of such actions will not have a material adverse effect on the
consolidated financial condition of the Company or on its results of
operations.
NOTE 7 - SECURED DEMAND NOTES
The notes, which have a face value of $410,000 and are included in Other Assets,
have been contributed pursuant to secured demand note collateral agreements and
are subordinated to the claims of general creditors of U.S. Clearing. The notes
bear interest at rates of 7% to 8% per annum, and mature on March 31, 1997. The
loans are fully collateralized by marketable securities of approximately
$611,000 that are available to the Company to utilize in its securities
financing activities. The loans have automatic renewal options unless
written notice is given by either party prior to seven months preceding the
stated maturity dates.
The loans are available to U.S. Clearing in computing its net capital
pursuant to Rule 15c3-1 of the SEC. The notes can be repaid only if, after
giving effect to such repayment, U.S. Clearing meets the SEC's net capital
regulations governing the withdrawal of subordinated debt.
NOTE 8 - EARNINGS PER SHARE
Earnings per share have been calculated by dividing net income by the
weighted average number of shares outstanding for the fiscal year. Stock options
issued pursuant to The Quick & Reilly Stock Option Plan are common stock
equivalents. For the fiscal years ended on the last day of February 1996,
1995 and 1994, earnings per share have not been adjusted for the effect of any
outstanding stock options as the impact is immaterial; however, they have been
retroactively adjusted to reflect the two three-for-two stock splits
declared during the fiscal year ended February 29, 1996 and the two five
percent stock dividends declared during the fiscal year ended February 28,
1994. The weighted average shares outstanding were 24,985,177; 24,988,790 and
25,217,354, for the fiscal years ended the last day of February 1996, 1995 and
1994, respectively.
NOTE 9 - INTEREST
<TABLE>
Interest Income is comprised of the following (in thousands):
<CAPTION>
Fiscal Year Ended February
1996 1995 1994
<S> <C> <C> <C>
Interest on Securities Borrowed $108,680 $70,212 $30,097
Interest on Customer
Margin Balances 70,590 54,273 35,548
Other Interest Income 8,335 4,503 2,692
$187,605 $128,988 $68,337
Interest Expense is comprised of the following (in thousands):
Fiscal Year Ended February
1996 1995 1994
Interest on Securities Loaned $118,288 $73,853 $33,717
Interest on Customer
Credit Balances 14,877 9,158 4,562
Money Borrowed from Banks 849 714 398
Other Interest Expense 32 30 114
$134,046 $83,755 $38,791
NOTE 10 - PENSION AND PROFIT SHARING PLANS
The Company and its primary subsidiaries have adopted defined contribution
pension and profit sharing plans covering all full-time employees who have
completed one year of service. The pension plans provide for the employer to
contribute an amount based on a percentage of compensation as defined in the
plan agreements. The profit sharing plans provide for the employer to
contribute an amount out of its current profits, as defined in the plan
agreements, or accumulated earned surplus as determined by its Board of
Directors. Voluntary contributions from the participants may not exceed ten
percent of compensation paid to them during the plan year. For the fiscal
years ended the last day of February 1996, 1995 and 1994, the Company and
its primary subsidiaries contributed, in the aggregate $3,768,000,
$3,365,000 and $2,982,000, respectively, to the plans. The Company and its
primary subsidiaries also have noncontributory 401(k) plans covering all
full-time employees.
The Company and its primary subsidiaries participate in The Quick & Reilly
Group, Inc. Employee Benefit Plan (the "Benefit Plan"). The Benefit Plan,
established on September 1, 1992, provides health benefits to eligible employees
and their families. The Benefit Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974. For the fiscal years ended
the last day of February, 1996, 1995 and 1994, the Company and its primary
subsidiaries contributed, in the aggregate, $10,000; $2,276,000 and
$1,825,000, respectively, to the Benefit Plan.
NOTE 11 - INCOME TAXES
The Company and its subsidiaries file a consolidated federal tax return. Each
subsidiary is charged or credited with an amount equal to its separate tax
liability or benefit as if it were filing on an individual company basis.
In 1994, the Company adopted the provisions of the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), which
requires that an asset and liability approach be applied in accounting for
income taxes and that deferred tax assets and liabilities be adjusted
currently using tax rates expected to be in effect when taxes are estimated
to be paid or recovered. The implementation of SFAS 109 did not have a material
impact on the financial condition of the Company or on its results of
operations. The effective tax rates differ from the federal statutory rate
applied to income before income taxes for the following reasons:
</TABLE>
<TABLE>
Fiscal Year Ended February
1996 1995 1994
<S> <C> <C> <C>
Federal Statutory Income
Tax Rate 35% 35% 35%
State and Local Taxes,
Net of Federal Tax Benefits 11% 14% 14%
Other (3%) (1%) (2%)
Effective Income Tax Rate 43% 48% 47%
Income taxes consist of the following (in thousands):
Fiscal Year Ended February
1996 1995 1994
Federal $33,159 $23,681 $24,096
State and Local 19,613 15,260 13,310
$52,772 $38,941 $37,406
The deferred income tax provision (benefit) consists of the following
(in thousands):
Fiscal Year Ended February
1996 1995 1994
Valuation of securities owned $671 $(264) $(150)
Reserves not currently deductible (817) (46) (956)
$(146) $(310) $(1,106)
The following deferred tax assets are reflected in Other Assets (in
thousands):
February 29, February 28,
1996 1995
Deferred Tax Assets:
Valuation of securities owned $ - $ 383
Reserves not currently deductible 2,139 1,322
Total Deferred Tax Assets $2,139 $1,705
The following deferred tax liabilities are reflected in Accrued Expenses and
Other Liabilities (in thousands):
February 29, February 28,
1996 1995
Deferred Tax Liability:
Valuation of securities owned $288 $ -
Total Deferred Tax Liability $288 $ -
</TABLE>
NOTE 12 - CAPITAL REQUIREMENTS
As registered broker-dealers and member firms of the NYSE, the primary
subsidiaries are subject to certain capital rules of both the SEC and the NYSE.
These rules require registrants to maintain minimum levels of net capital, as
defined, and may require a member to reduce its business or prohibit a member
from expanding its business and declaring dividends as its net capital
approaches specified levels. As of February 29, 1996, and February 28, 1995,
the primary subsidiaries had net capital, in the aggregate, of $196,501,000
and $176,176,000, respectively, which exceeded aggregate minimum net capital
requirements by $139,726,000 and $145,850,000, respectively. While the primary
subsidiaries' aggregate equity capital is includable in net capital,
$99,460,000 is not available for payment of cash dividends and advances to the
Company. As of February 29, 1996, this limitation does not restrict the
Company from declaring its regular dividends to its shareholders.
NOTE 13 - STOCK OPTION PLAN
On June 25, 1991, the Company amended the JJC Stock Option Plan to (a)
change its name to The Quick & Reilly Stock Option Plan (the "Plan"), (b) expand
the Plan participants to cover directors, officers and employees of the Company
and each of its wholly owned subsidiaries and (c) increase the number of
shares of common stock to 1,500,000. Pursuant to the Plan, all options are
granted at not less than fair market value on the date of grant and for not
more than a five-year time period. All options outstanding on the last day of
February 1996, 1995 and 1994 are exercisable. The number of shares of common
stock authorized under the Plan has been increased to 3,720,937, to reflect
the two three-for-two stock splits declared during the year ended February 29,
1996, and the two five percent dividends declared during the year ended February
28, 1994. On March 15, 1996, six officers of the Company were granted options at
fair market value to purchase 50,000 shares each of the Company's common
stock and a member of the Board of Directors was granted options at fair market
value to purchase 25,000 shares of the Company's stock.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123") was issued. SFAS 123
encourages companies to adopt a fair value based method of accounting for stock-
based compensation plans in place of the intrinsic value based method provided
for by Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees" ("APB 25"). Companies which continue to apply the
provisions of APB 25 must make pro forma disclosures in the notes to their
financial statements of net income and earnings per share as if the fair
value based method of accounting as defined in SFAS 123 had been applied. The
Company plans to adopt SFAS 123 in fiscal year ending 1997 on a pro forma
disclosure basis.
<TABLE>
STOCK OPTION
Number of Market Price
Shares Per Share Total
<S> <C> <C> <C>
Outstanding at
February 28, 1993 421,705 $10.48 $4,420,000
Cancelled at $12.46 per share (24,806) $10.40 258,000
Cancelled at $12.74 per share (24,806) $10.40 258,000
Granted at $14.84 per share 124,031 $13.55 1,680,000
Less:
Exercised at $5.53 per share (82,687) $ 11.49 950,000
Exercised at $5.53 per share (41,343) $13.98 578,000
Outstanding at
February 28, 1994 372,094 $12.61 $4,693,000
Granted at $12.11 per share 124,031 $11.61 1,440,000
Granted at $14.64 per share 67,500 $12.28 829,000
Outstanding at
February 28, 1995 583,625 $15.56 $8,768,000
Granted at $14.64 per share 33,750 $25.75 869,000
Exercised at $14.64 per share (33,750) $23.83 804,000
Exercised at $14.64 per share (67,500) $29.84 2,014,000
Exercised at $9.15 per share (124,031) $23.62 2,930,000
Outstanding at
February 29, 1996 372,094 $26.25 $9,767,000
Available for grant at
February 29, 1996 1,327,591
<F1>
The quantity of stock options granted as well as the related exercise prices
have been retroactively adjusted to reflect the two three-for-two stock
splits declared during the fiscal year ended February 29, 1996, and the
two five percent stock dividends declared during the fiscal year ended
February 28, 1994.
</TABLE>
Note 14 - Put Options on Common Stock
During the fiscal year ended February 29, 1996, the Company sold listed put
options on 49,000 shares of its common stock. The put options give the holders
the right to require the Company to repurchase shares of its common stock at
specified prices. Proceeds of $56,000 from the sale of put options were
credited to Paid-in Capital. The amount that the Company would be obligated
to pay to repurchase shares of its common stock if all outstanding put
options at February 29, 1996 were exercised is recorded in a temporary
equity account.
Options on 24,500 shares expired unexercised during the fiscal year ended
February 29, 1996, as the price of the Company's stock was in excess of the
strike price at maturity. Options on 2,500 shares were exercised in
January 1996. The remaining options on 22,000 shares expire in March,
April and July of 1996 at strike prices ranging from $20.00 to
$22.50 per share.
NOTE 15 - SEGMENT REPORTING
The Company, through its primary subsidiaries, operates predominantly in the
securities industry. Operations in the securities industry include agency and
principal transactions, as well as other securities-related financial services.
NOTE 16 - FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK AND CONCENTRATIONS
OF CREDIT RISK
In the normal course of business, the primary subsidiaries' securities
activities involve execution, settlement and financing of various securities
transactions for a nationwide customer and noncustomer client base, as well as
specialist trading activities with counterparties. These activities may
expose the primary subsidiaries to risk in the event customers, other
broker-dealers, banks, depositories or clearing organizations are unable to
fulfill contractual obligations.
The primary subsidiaries conduct business with broker-dealers, clearing
organizations and depositories. Banking activities are conducted mainly with
commercial banks throughout the country primarily to support customer
securities activities. For transactions in which the primary subsidiaries
extend credit to customers and noncustomers, the primary subsidiaries seek to
control the risks associated with these activities by requiring the
maintenance of margin collateral in compliance with various regulatory and
internal guidelines. The primary subsidiaries monitor required margin levels
daily and, pursuant to such guidelines, request the deposit of additional
collateral, or reduce securities positions when necessary. In addition, the
primary subsidiaries' correspondent broker-dealers may be required to maintain
deposits relating to security clearance activities.
The primary subsidiaries record clearance of securities transactions on a
settlement date basis, which is generally three business days after trade date.
They are therefore exposed to off-balance-sheet risk of loss on unsettled
transactions in the event customers and other counterparties are unable to
fulfill contractual obligations. The Company's primary subsidiaries are also
exposed to off-balance-sheet risk of loss should the value of securities
sold, but not yet purchased, rise.
The Company's financing and securities lending activities require the
Company to pledge securities as collateral for various secured financing sources
such as bank loans, securities loaned and letters of credit. In the event the
counterparty is unable to meet its contractual obligations, the Company may be
exposed to off-balance- sheet risk of acquiring securities at prevailing market
prices. The Company monitors the credit standing of counterparties with whom it
conducts business. Risk is further controlled by monitoring the market value
of securities pledged on a daily basis and by requiring adjustments of
collateral level in the event of excess market exposure or by instituting
securities buy-in procedures when required.
<TABLE>
<CAPTION>
The Quick & Reilly Group, Inc. and Subsidiaries
QUARTERLY FINANCIAL DATA
(In Thousands, Except Per share Amounts)
For the Fiscal Year Ended February 29, 1996
(Unaudited)
Quarter
First Second Third Fourth
<S> <C> <C> <C> <C>
Revenues $102,708 $107,746 $113,739 $134,453
Interest Expense 35,243 31,304 34,652 32,847
Net Revenues 67,465 76,442 79,087 101,606
Total Non-Interest
Expenses 42,490 47,697 50,629 61,569
Income Before Provisions
for Income Taxes 24,975 28,745 28,458 40,037
Net Income 13,567 15,347 15,132 25,397
Earnings Per Share(1) $ 0.55 $ .061 $ 0.61 $ 1.01
For the Fiscal Year Ended February 28, 1995
(Unaudited)
Quarter
First Second Third Fourth
Revenues $ 75,437 $ 73,063 $ 80,003 $ 86,668
Interest Expense 16,030 19,784 22,806 25,135
Net Revenues 59,407 53,279 57,197 61,533
Total Non-Interest
Expenses 39,479 36,200 37,484 37,851
Income Before Provisions
for Income Taxes 19,928 17,079 19,713 23,682
Net Income 10,320 8,519 10,141 12,481
Earnings Per Share(1) $ 0.41 $ 0.34 $ 0.41 $ 0.50
<F1>
(1) See Note 8 to Consolidated Financial Statements for the method of calculating earnings
per share.
</TABLE>
Exhibit 22.1
The Subsidiaries of The Quick & Reilly Group, Inc.
Quick & Reilly, Inc.
U.S. Clearing Corp.
JJC Specialist Corp.
Q&R Charter, Inc.
Quick & Reilly Ltd.
Q&R Capital Corp.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated April 17, 1996 on the consolidated financial statements
(and schedule) of The Quick & Reilly Group, Inc. and subsidiaries incorporated
by reference (included) in this Form 10-K, into the Company's previously filed
Registration Statements on Form S-3 (Nos. 33-63950 and 33-64053)
and Registration Statement on Form S-8 (No. 33-28345).
Arthur Andersen LLP
New York, NY
May 28, 1996<PAGE>
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> FEB-29-1996
<CASH> 133,287
<RECEIVABLES> 1,312,749
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 1,837,018
<INSTRUMENTS-OWNED> 155,473
<PP&E> 15,307
<TOTAL-ASSETS> 3,522,903
<SHORT-TERM> 82,331
<PAYABLES> 1,058,449
<REPOS-SOLD> 0
<SECURITIES-LOANED> 2,065,112
<INSTRUMENTS-SOLD> 14,847
<LONG-TERM> 0
0
0
<COMMON> 2,528
<OTHER-SE> 299,636
<TOTAL-LIABILITY-AND-EQUITY> 3,522,903
<TRADING-REVENUE> 52,648
<INTEREST-DIVIDENDS> 187,605
<COMMISSIONS> 206,562
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 10,178
<INTEREST-EXPENSE> 134,046
<COMPENSATION> 105,739
<INCOME-PRETAX> 122,215
<INCOME-PRE-EXTRAORDINARY> 122,215
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,443
<EPS-PRIMARY> 1.66
<EPS-DILUTED> 1.66
</TABLE>
