SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 24, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 1-9305
STIFEL FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1273600
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
500 N. Broadway, St. Louis, Missouri 63102-2188
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-342-2000
(Former name, former address, and former fiscal year,
if changed since last report)
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 / /
Shares of common stock outstanding at June 24, 1994: 3,989,406 par value $.15.
Exhibit Index is on page 16.
<PAGE>
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition --
June 24, 1994 and December 31, 1993 3-4
Consolidated Statements of Operations --
Three Months Ended June 24, 1994 and June 25, 1993 5
Consolidated Statements of Operations --
Six Months Ended June 24, 1994 and June 25, 1993 6
Consolidated Statements of Cash Flows--
Six Months Ended June 24, 1994 and June 25, 1993 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
<TABLE>
PART 1. FINANCIAL CONDITION
Item 1. Financial Statements
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 24, 1994 December 31, 1993
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 6,744,546 $ 6,542,052
Cash and U.S. Government securities segregated
for the exclusive benefit of customers 1,263,472 1,261,480
Receivable from brokers and dealers 17,053,577 16,462,295
Receivable from customers (less allowance for
doubtful accounts of $1,536,096 at June 24,
1994 and $1,435,058 at December 31, 1993) 136,367,657 153,373,372
Securities owned, at market value 27,657,460 86,510,135
Membership in exchanges, at cost (approximate
market value: $1,770,500 at June 24, 1994
and $1,514,000 at December 31, 1993) 513,015 513,015
Office equipment, leasehold improvements, and
building, at cost (less allowances for de-
preciation and amortization of $13,901,083
at June 24, 1994 and $12,973,124 at December
31, 1993, respectively) 4,678,226 4,760,453
Non-securities receivable from employees 4,700,110 2,754,086
Goodwill and other intangible assets 4,428,143 4,590,998
Miscellaneous other assets 9,562,370 11,435,070
------------ ------------
$212,968,576 $288,202,956
============ ============
</TABLE>
NOTE: The Consolidated Statement of Financial Condition at December 31, 1993
has been derived from the audited financial statements at that date.
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (CONTINUED)
<CAPTION>
June 24, 1994 December 31, 1993
(Unaudited) (Note)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings from banks $ 54,250,000 $136,950,000
Payable to brokers and dealers 51,496,031 24,522,655
Payable to customers 24,814,049 36,323,885
Market value of securities sold,
but not yet purchased 1,962,309 3,906,547
Drafts payable 11,342,934 14,376,402
Employee compensation 8,207,929 8,987,033
Obligation under capital leases 596,117 931,274
Accounts payable and accrued expenses 9,331,061 10,835,943
Long-term debt 10,760,000 10,760,000
------------ ------------
Total Liabilities 172,760,430 247,593,739
Stockholders' equity
Common stock 617,886 617,886
Additional paid-in capital 17,332,836 17,268,905
Retained earnings 23,490,088 24,161,663
------------ ------------
41,440,810 42,048,454
Less:
Cost of stock in treasury 1,102,540 1,240,452
Unamortized expense of restricted stock
awards 130,124 198,785
------------ ------------
Total Stockholders' Equity 40,208,146 40,609,217
------------ ------------
$212,968,576 $288,202,956
============ ============
</TABLE>
NOTE:The Consolidated Statement of Financial Condition at December 31, 1993
has been derived from the audited financial statements at that date.
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended
June 24, 1994 June 25, 1993
<S> <C> <C>
REVENUES
Commissions $ 6,311,971 $ 7,202,547
Principal transactions 5,666,571 5,633,083
Investment banking 2,248,680 8,789,698
Interest 2,695,122 2,024,737
Sale of investment company shares 2,341,641 2,898,510
Sale of insurance products 566,167 477,553
Sale of unit investment trusts 353,883 812,576
Other 2,561,739 1,635,458
----------- -----------
22,745,774 29,474,162
EXPENSES
Employee compensation & benefits 14,743,984 18,386,420
Commissions & floor brokerage 541,225 649,632
Communication & office supplies 1,697,206 1,652,378
Occupancy & equipment rental 2,215,681 1,875,525
Promotional 718,345 799,111
Interest 1,489,311 1,144,107
Other operating expenses 2,564,461 1,723,936
----------- -----------
23,970,213 26,231,109
----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (1,224,439) 3,243,053
(Benefit) Provision for income taxes (493,357) 1,212,156
----------- -----------
NET (LOSS) INCOME $ (731,082) $ 2,030,897
=========== ===========
Net (loss) income per share:
Primary $ (0.18) $ 0.50
Fully diluted $ (0.18) $ 0.42
Dividends declared per share $ 0.03 $ 0.025
Average common equivalent shares used in
calculation:
Primary 4,097,000 4,057,000
Fully diluted 5,322,000 5,283,000
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 24, 1994 June 25, 1993
<S> <C> <C>
REVENUES
Commissions $13,332,201 $14,107,637
Principal transactions 10,159,509 11,480,034
Investment banking 7,187,403 14,901,003
Interest 5,129,673 4,246,319
Sale of investment company shares 5,618,346 5,861,947
Sale of insurance products 1,183,833 965,425
Sale of unit investment trusts 1,338,514 1,713,275
Other 4,623,260 2,969,109
----------- -----------
48,572,739 56,244,749
EXPENSES
Employee compensation & benefits 31,423,341 35,316,015
Commissions & floor brokerage 1,026,098 1,260,423
Communication & office supplies 3,677,514 3,383,598
Occupancy & equipment rental 4,370,224 3,726,040
Promotional 1,531,344 1,526,229
Interest 2,778,458 2,494,044
Other operating expenses 4,700,816 3,195,616
----------- -----------
49,507,795 50,901,965
----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (935,056) 5,342,784
(Benefit) Provision for income taxes (383,357) 1,915,206
----------- -----------
NET (LOSS) INCOME $ (551,699) $ 3,427,578
=========== ===========
Net (loss) income per share:
Primary $ (0.13) $ 0.85
Fully diluted $ (0.13) $ 0.72
Dividends declared per share $ 0.03 $ 0.05
Average common equivalent shares used in
calculation:
Primary 4,117,000 4,040,000
Fully diluted 5,342,000 5,277,000
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 24, 1994 June 25, 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (551,699) $ 3,427,578
Non-cash items included in earnings:
Depreciation and amortization 1,233,684 1,033,238
Bonus notes amortization 164,209 321,195
Deferred compensation 207,296 103,181
Provision for litigation and bad debt 541,928 896,824
Unrealized losses on investments 15,000 372,823
Amortization of restricted stock awards 68,661 92,399
----------- -----------
1,679,079 6,247,238
Decrease (increase) in operating receivables:
Customers 17,005,715 2,299,900
Brokers and dealers (591,282) 1,196,214
(Decrease) increase in operating payables:
Customers (11,509,836) (7,831,074)
Brokers and dealers 26,973,376 (1,819,856)
(Increase) decrease in other receivables
and assets:
Cash & U.S. Government securities
segregated for the exclusive benefit
of customers (1,992) 3,697,757
Securities owned 58,852,675 (50,416,189)
Other assets 326,104 (1,371,785)
(Decrease) increase in liabilities:
Securities sold not yet purchased (1,944,238) 1,315,264
Securities sold under repurchase agreement - - (36,906,900)
Drafts payable, accrued expenses, and
employee compensation (5,530,865) (5,475,190)
------------ ------------
Cash Provided By (Used For) Operating
Activities $ 85,258,736 $(89,064,621)
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<CAPTION>
Six Months Ended
June 24, 1994 June 25, 1993
<S> <C> <C>
Cash Provided By (Used For) Operating
Activities - from previous page $ 85,258,736 $(89,064,621)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments for) proceeds from short-term
borrowings from banks (82,700,000) 83,110,000
Proceeds from:
Employee stock purchase plan 611,688 - -
Exercised stock options 58,444 166,751
Payments for:
Purchase of treasury stock (559,267) (291,790)
Restricted stock awards - - (40,722)
Principal payments under capital leases (335,157) (299,638)
Cash dividends (119,876) (186,360)
------------ ------------
Cash (Used For) Provided By Financing
Activities (83,044,168) 82,458,241
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale of investments 7,048 14,633
Sale of office equipment and leasehold
improvements 1,930 6,724
Payments for:
Acquisition of office equipment, leasehold
improvements and building (985,457) (633,855)
Acquisition of investments (42,660) (4,037)
Bonus notes (992,935) (582,529)
------------ ------------
Cash Used For Investing Activities (2,012,074) (1,199,064)
Increase (decrease) in cash and cash
equivalents 202,494 (7,805,444)
Cash and cash equivalents-beginning of period 6,542,052 12,436,988
------------ ------------
Cash and Cash Equivalents-end of period $ 6,744,546 $ 4,631,544
============ ============
Supplemental disclosure of cash flow
information:
Income tax payments $ 117,360 $ 2,572,760
Interest payments $ 2,836,260 $ 2,536,603
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Stifel
Financial Corp. and its wholly owned subsidiaries (collectively referred to
as the "Company"). The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six months ended June 24, 1994 are not
necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 1994. For further information, refer to the
financial statements and notes thereto included in the Company's report on
Form 10-K for the five-month transition period ended December 31, 1993.
NOTE B - NET CAPITAL REQUIREMENT
As a registered broker-dealer and member of the New York Stock
Exchange, the Company's brokerage subsidiary, Stifel, Nicolaus &
Company, Incorporated ("SN & Co."), is subject to the Securities
and Exchange Commission's ("SEC") uniform net capital rules. SN
& Co. has elected to operate under the alternative method of the
rule, which prohibits a broker-dealer from engaging in any
securities transactions when its net capital is less than 2% of
its aggregate debit balances, as defined, arising from customer
transactions. The SEC may also require a member firm to reduce
its business and restrict withdrawal of subordinated capital if
its net capital is less than 4% of aggregate debit balances, and
may prohibit a member firm from expanding its business and
declaring cash dividends if its net capital is less than 5% of
aggregate debit balances. At June 24, 1994, SN & Co. had net
capital of $24,331,038 which was 16% of its aggregate debit
balances and $21,313,848 in excess of the net capital
requirement.
NOTE C - INCOME TAXES
Effective August 1, 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." This statement requires, among other provisions,
that deferred taxes be adjusted to reflect current rates. The
adoption of SFAS No. 109 did not have a material effect on the
Company's financial condition or results of operations.
NOTE D - SUBSEQUENT EVENT
On July 19, 1994, the board of directors declared the regular
quarterly dividend of $0.03 per share, payable on August 16, 1994
to stockholders of record August 2, 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
(all dollars in thousands, except per share amounts)
Results of Operations
In 1993, the Company changed its fiscal year-end from the last
Friday in July to a calendar year-end. The five-month transition
period ended December 31, 1993 has been presented in the
transition period From 10-K. As a result of this fiscal year-end
change, 1993 has been recast for comparative purposes.
Three months ended June 1994 and June 1993
The Company recorded a net loss of $731 for the three months
ended June 24, 1994, compared to net income of $2,031, for the
three months ended June 25, 1993, a decrease of $2,762. The
primary loss per share was $0.18 compared to the previous year's
primary earnings per share of $0.50, a decrease of $0.68. The
decline was primarily attributable to sharply reduced investment
banking fee income and a decrease in commissionable revenues.
Total revenues, for the three months ended June 24, 1994,
decreased $6,728 (22.8%) to $22,746 from $29,474, from the year
earlier quarter. Investment banking revenues decreased $6,541
(74.4%), from the same period one year earlier, principally due
to decreased municipal bond refundings. Municipal refunding
activity had been unusually robust during the past two years as
interest rates were declining. During the first half of 1994, as
rates began to rise, refunding activity has slowed considerably
causing the sharp comparative declines. Commission revenues
declined $1,817 (16.0%), principally because of the retail
investor's uncertainty of the current market conditions. Agency
commission, sale of investment company shares, and sale of unit
investment trusts decreased $890 (12.4%), $556 (19.2%), and $459
(56.5%), respectively. The declines were partially offset by the
$88 (18.4%) increase in the sale of insurance products. Other
revenues increased $927 (56.7%), mostly because of increased
investment advisory fees resulting from the late 1993 acquisition
of Todd Investment Advisors, Inc. ("Todd").
Net interest income increased $324 (36.8%) to $1,205 from $881,
of the prior year. The increase resulted from an increase in
margin interest revenues of $660, coming from increased borrowing
by customers coupled with higher interest rates.
Total expenses for the quarter decreased $2,261 (8.6%),
primarily due to reduced compensation and other expenses which
vary directly with revenue production. Compensation & benefits
and commission & floor brokerage decreased $3,642 (19.8%) and
$109 (16.8%), respectively. The majority of the compensation
decrease was in the incentive compensation area which decreased,
as expected, with the revenue and profit decreases.
<PAGE>
Occupancy, equipment, communication and supplies expenses increased, $385
a result of management's commitment to expand the retail branch system and
the addition of Todd. Retail office locations increased by 7 (10.1%) to a
total of 76. These increases were partially offset by a decrease in promotional
expenses of $81 (10.1%). Other operating expenses increased a total of
$840 (48.7%), mostly due to professional fees and the provision for doubtful
accounts which increased $608 and $223, respectively.
Six months ended June 1994 and June 1993
The Company incurred a net loss, for the six months ended June 24, 1994 of
$552. This compares to net income of $3,428 for the six months ended June
25, 1993. Per share amount decreased $0.98 to a loss of $0.13 per primary
share from earnings per primary share of $0.85 in 1993. The diminished
results were primarily attributable to lower commission activity, a
substantial decline in investment banking activity, and losses in the
municipal bond inventories.
Total revenues decreased $7,671 (13.6%) to $48,573 from $56,244
from the prior year's six-month period, as a result of decreased
investment banking revenues, which decreased $7,714 (51.8%) to
$7,187 from $14,901, from the year earlier period. This decline
was principally due to sharply decreased municipal bond refunding
activity caused by higher market interest rates. Principal
transactions decreased $1,320 (11.5%) to $10,160 from the $11,480
recorded in the prior year, due to losses incurred on municipal
bond inventories and decreased availability of municipal bond
product. Commission revenues decreased $1,175 (5.2%) comprised
of agency commission, sale of investment company shares, and sale
of unit investment trusts which decreased $776 (5.5%), $244
(4.2%), and $374 (21.8%), respectively. These decreases were
partially offset by the sale of insurance products of $219
(22.7%).
Other revenues increased $1,654 (55.7%) resulting from gains in
investments of $331, compared to unrealized losses of $350, in
the year earlier period. Investment advisory fees climbed to
$1,323 over last year's $475, an increase of $848 (178.4%), of
which Todd attributed $868 of the increase.
Net interest income increased $599 (34.2%) to $2,351 from
$1,752 of the prior year. The increase resulted from an increase
in margin interest revenues of $995, due to increased borrowing
by customers coupled with higher interest rates.
Total expenses, for the six months ended, decreased $1,393
(2.7%) to $49,508 compared to $50,901 for the prior year's
comparable period, primarily due to reduced compensation and
other expenses which vary with revenue production. Employee
compensation & benefits and commission & floor brokerage
decreased $3,893 (11.0%) and $234 (18.6%), respectively.
Incentive compensation, Investment Executive compensation, and
other variable compensation decreased $5,866 (23.8%), primarily
because of decreases in commissionable revenues, investment
banking revenues, and overall company profitability. The
remaining employee compensation and benefits increased $1,973
(18.4%) due to increased staffing required for the newly opened
offices, normal cost of living increases, and increased cost of
health care benefits.
<PAGE>
Occupancy, equipment, communication, and supplies expenses
increased $939 for the same reason explained in the three months
results of operations ended June 1994. Other operating expenses
increased $1,505 (47.1%), largely due to increased professional
fees of $1,121 (128.2%) resulting from an ongoing SEC
investigation and increased employment and recruitment fees due
to management's commitment to seek alternative sources of revenue
production. Provision for doubtful accounts increased $212,
which resulted from uncertain collectibility of employment notes
receivable.
Liquidity and Capital Resources
The Company's assets are highly liquid, consisting mainly of
cash or assets readily convertible into cash. These assets are
financed primarily by the Company's equity capital, customer
credit balances, short-term bank loans, proceeds from securities
lending, long-term senior convertible notes, and other payables.
Changes in securities market volumes, related customer borrowing
demands, and levels of securities inventory affect the amount of
the Company's financing requirements.
For the six months ended June 24, 1994, cash and cash
equivalents increased $203 (3.1%) to $6,745 from $ 6,542 at
December 31, 1993. Cash provided by the decrease in securities
owned of $58,853, which resulted principally from lower municipal
bond inventories, cash provided by the decrease in operating
receivables of $16,414, and cash provided by the increase in
operating payables of $15,464 were used primarily for repayment
of short-term bank borrowings which decreased $82,700.
SN & Co. is subject to requirements of the Securities and
Exchange Commission with regard to liquidity and capital
requirements (see Note B of the Notes to Consolidated Financial
Statements). At June 24, 1994, SN & Co. had net capital of
$24,331 which exceeded the minimum net capital requirements by
$21,314.
Management believes that funds from operations and available
unused informal short-term credit arrangements of $151,750, at
June 24, 1994, will provide sufficient resources to meet the
present and anticipated financial needs.
In addition, SN & Co. has obtained a revolving subordinated
loan from a financial institution. The subordinated loan will
enhance the Company's ability to obtain temporary capital for
underwriting and other commitments, if the need arises.
Recent market conditions and the low backlog for municipal underwritings
have caused commissions, investment banking revenues and related principal
transaction revenues to vary significantly downward from prior periods.
Correspondingly, variable compensation expense related to the production of
these revenues also varied downward. Management does not anticipate
that municipal underwriting activity, particularly in the Southwest
region, will increase in the near term. Consequently, management is
considering the potential for restructuring of certain departments, has taken
steps to eliminate fixed costs associated with revenue production, is
continuing its effort to grow the number of Investment Executives to
increase retail revenue production, and is currently evaluating
<PAGE>
day-to-day operations for increased efficiencies and cost reduction
opportunities. As a result, the Company's future financial
condition is expected to remain strong.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There were no material changes, during the six months ended
June 24, 1994, in the legal proceedings previously reported in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1993. Such information is hereby incorporated by
reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. (Reference to Sequential
Item 601(b) of Regulation S-K) Description Page Number
------------------------------ ------------------- -----------
11 Computation of 16
Earnings Per Share
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended June 24,
1994.
<PAGE>
SIGNATURES
Pursuant to the requirement of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STIFEL FINANCIAL CORP.
(Registrant)
Date: August 5, 1994 By /s/ Gregory F. Taylor
Gregory F. Taylor
(Chief Executive Officer)
Date: August 5, 1994 By /s/ Mark D. Knott
Mark D. Knott
(Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
- - ------- ------------------------------------------- -----------
11 Computation of Earnings Per Share 17
<TABLE>
EXHIBIT 11
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended
June 24, 1994 June 25, 1993
------------- -------------
Fully Fully
Primary Diluted Primary Diluted
<S> <C> <C> <C> <C>
Net (loss) income $ (731) $ (731) $2,031 $2,031
After-tax interest savings assuming
conversion of Senior Convertible Notes (1) - - 168 - - 174
------ ------ ------ ------
Net income adjusted for after tax interest
savings $ (731) $ (563) $2,031 $2,205
====== ====== ====== ======
Average number of common shares outstanding
during the period 3,998 3,998 3,918 3,918
Additional shares assuming exercise of stock
options (2) 99 99 139 140
Additional Shares assuming conversion of
Senior Convertible Notes (3) - - 1,225 - - 1,225
------ ------ ------ ------
Average number of common shares used to
calculate earnings per share 4,097 5,322 4,057 5,283
====== ====== ====== ======
Net earnings per share $(0.18) $(0.18)(4) $ 0.50 $ 0.42
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 24, 1994 June 25, 1993
------------- -------------
Fully Fully
Primary Diluted Primary Diluted
<S> <C> <C> <C> <C>
Net (loss) income $ (552) $ (552) $3,428 $3,428
After-tax interest savings assumings
conversion of Senior Convertible Notes (1) - - 332 - - 349
------ ------ ------ ------
Net income adjusted for after tax interest
savings $ (552) $ (220) $3,428 $3,777
====== ====== ====== ======
Average number of common shares outstanding
during the period 3,996 3,996 3,912 3,912
Additional shares assuming exercise of stock
options (2) 121 121 128 140
Additional Shares assuming conversion of
Senior Convertible Notes (3) - - 1,225 - - 1,225
------ ------ ------ ------
Average number of common shares used to
calculate earnings per share 4,117 5,342 4,040 5,277
====== ====== ====== ======
Net earnings per share $(0.13) $(0.13)(4) $ 0.85 $ 0.72
(1)Represents the after-tax interest savings resulting from assumed
conversion of $10,000,000 aggregate principal 11.25%Senior Convertible Notes.
(2)Represents the number of shares of common stock issuable on the exercise
of dilutive employee stock options less the number of shares of common
stock which could have been purchased with the proceeds from the exercise of
such options. For primary earnings per share computations, these
purchases were assumed to have been made at the average market price of
the common stock during the period or that part of the period for which
the option was outstanding. For fully diluted earnings per share
computations, these purchases were assumed to have been made at the greater
of the market price of the common stock at the end of the period or
average market price of the common stock during the period or that part of the period for which the option was
outstanding.
(3)Represents the number of shares of common stock issuable upon conversion
of $10,000,000 aggregate principal 11.25% Senior Convertible Notes at a
conversion price of $8.164 per share.
(4)Net fully diluted earnings per share computes to $(0.11) and $(0.04) for
three months and six months ended June 24, 1994, respectively. Since this is
anti-dilutive, fully diluted earnings per share share.
</TABLE>
