<PAGE> 1
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 September 30, 1994
------------------------------------------------
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ---
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-8526
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McDonald & Company Investments, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 34-1391950
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
800 Superior Ave., Suite 2100, Cleveland, Ohio 44114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area
code (216) 443-2300
---------------------------------------------------------------------------
Not Applicable
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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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
9,198,961 shares of Common Stock, par value $1.00 per share, were outstanding
on November 7, 1994.
(1)
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<TABLE>
McDONALD & COMPANY INVESTMENTS, INC.
INDEX
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
- - ------------------------------
Item 1. Financial Statements -
Consolidated statements of financial condition (unaudited)-
September 30, 1994 and March 25, 1994 3
Consolidated statements of income (unaudited)-
Fiscal three and six months ended September 30, 1994
and September 24, 1993 4
Consolidated statements of cash flows (unaudited)-
Fiscal six months ended September 30, 1994 and
September 24, 1993 5
Notes to condensed consolidated financial statements (unaudited)-
September 30, 1994 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - OTHER INFORMATION
- - ---------------------------
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
</TABLE>
(2)
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
McDONALD & COMPANY INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
<CAPTION>
Sept. 30, March 25,
1994 1994
------------ -----------
(In thousands)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 5,599 $ 6,765
Receivable from customers 114,459 124,294
Receivable from brokers and dealers 20,183 30,915
Securities purchased under agreements
to resell 288,433 216,263
Other receivables 10,207 12,087
Securities owned 103,182 152,690
Furniture, equipment and leasehold
improvements, at cost, less accumulated
depreciation and amortization 9,496 9,987
Other assets 30,977 37,577
-------- --------
$582,536 $590,578
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Short-term borrowings $ 59,888 $ 90,731
Payable to customers 30,236 28,220
Payable to brokers and dealers 17,803 23,527
Securities sold under agreements to
repurchase 250,448 198,730
Securities sold but not yet purchased 52,477 64,644
Accrued compensation 14,021 24,586
Accounts payable, accrued expenses
and other liabilities 22,622 27,735
Long-term borrowings 25,000 25,000
-------- --------
$472,495 $483,173
-------- --------
Stockholders' equity
Preferred Stock, without par value;
authorized 200,000 shares;
none issued
Common Stock, par value $1.00 per
share; 15,000,000 shares
authorized; (11,359,045 and 11,176,129
shares issued, respectively) 11,359 11,176
Additional paid-in capital 47,182 44,916
Retained earnings 68,768 66,239
Less treasury stock, at cost
(2,071,524 and 1,915,138 shares, (17,268) (14,926)
respectively) -------- --------
110,041 107,405
-------- --------
$582,536 $590,578
======== ========
<FN>
See Notes to condensed consolidated financial statements (unaudited).
</TABLE>
(3)
<PAGE> 4
<TABLE>
McDONALD & COMPANY INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
Fiscal Three Months Ended Fiscal Six Months Ended
------------------------------------ -------------------------------------
Sept. 30, 1994 Sept. 24, 1993 Sept. 30, 1994 Sept. 24, 1993
(14 weeks) (13 weeks) (27 weeks) (26 weeks)
-------------- -------------- -------------- --------------
(In thousands, except for share and per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Underwriting and
investment banking $ 7,423 $ 10,722 $ 16,729 $ 23,759
Principal transactions 12,326 15,852 23,198 30,815
Commissions 12,167 12,396 24,675 24,606
Investment management fees 4,001 3,529 8,001 6,790
Interest and dividends 3,407 3,990 6,535 7,599
Other 957 1,531 1,958 2,168
---------- --------- ---------- ---------
$ 40,281 $ 48,020 $ 81,096 $ 95,737
---------- --------- ---------- ---------
Expenses:
Employee compensation
and benefits $ 23,626 $ 27,071 $ 48,178 $ 54,081
Interest 1,372 2,529 2,887 4,855
Communications 3,089 2,565 6,151 5,175
Occupancy and equipment 3,164 2,696 6,210 5,306
Promotion and development 2,089 1,824 3,761 3,454
Floor brokerage and
clearance 622 726 1,270 1,475
Taxes, other than income
taxes 1,373 1,321 2,996 2,638
Other operating expenses 1,537 1,456 3,042 2,810
---------- --------- ---------- ---------
$ 36,872 $ 40,188 $ 74,495 $ 79,794
---------- --------- ---------- ---------
Income before income taxes $ 3,409 $ 7,832 $ 6,601 $ 15,943
Provision for income taxes 1,380 3,000 2,630 6,000
---------- --------- ---------- ---------
Net income $ 2,029 $ 4,832 $ 3,971 $ 9,943
========== ========= ========== =========
Net income per share
Primary $ .22 $ .56 $ .42 $ 1.15
========== ========= ========== =========
Fully diluted $ .22 $ .52 $ .42 $ 1.06
========== ========= ========== =========
Dividends per share $ .08 $ .0750 $ .155 $ .1375
========== ========= ========== =========
Average number of shares
and share equivalents
outstanding 9,479,000 8,627,000 9,470,000 8,614,000
========== ========= ========= =========
<FN>
See Notes to condensed consolidated financial statements (unaudited).
</TABLE>
(4)
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<TABLE>
McDONALD & COMPANY INVESTMENTS, INC.
------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<CAPTION>
Fiscal Six Months Ended
--------------------------------------------
Sept. 30, 1994 Sept. 24, 1993
---------------- ----------------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
- - --------------------
Net Income $ 3,971 $ 9,943
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,264 1,935
Deferred compensation 376 122
Deferred income taxes 289 (246)
Decrease (increase) in receivable from customers 9,835 (8,912)
Decrease in receivable from brokers and dealers 10,732 5,065
Decrease (increase) in securities owned 49,508 (73,428)
Decrease in other receivables 1,880 394
Increase in payable to customers 2,016 13,315
Decrease in payable to brokers and dealers (5,724) (700)
(Decrease) increase in securities sold but not yet
purchased (12,167) 55,915
(Decrease) increase in accrued compensation (8,069) 2,841
(Decrease) increase in accounts payable, accrued
expenses and other (5,489) 3,232
---------- ---------
Net cash provided by operating activities $ 49,422 $ 9,476
========== =========
INVESTING ACTIVITIES:
- - --------------------
Purchase of furniture, equipment and leaseholds $ (1,477) $ (899)
Decrease in other assets 6,015 467
--------- ---------
Net cash provided by (used for) investing activities $ 4,538 $ (432)
========= =========
FINANCING ACTIVITIES:
- - --------------------
Decrease in securities purchased under
agreement to resell $ (72,170) $(133,009)
(Decrease) increase in short-term borrowings (30,843) 59,049
Increase in securities sold under
agreements to repurchase 51,718 65,532
Cash dividends (1,442) (1,146)
Purchase of treasury stock (2,755) (2,977)
Proceeds from issuance of treasury stock 366 537
--------- ---------
Net cash used for financing activities $ (55,126) $ (12,014)
--------- ---------
Decrease in cash and cash equivalents (1,166) (2,970)
Cash and cash equivalents at beginning of period 6,765 7,482
--------- ---------
Cash and cash equivalents at end of period $ 5,599 $ 4,512
========= =========
<FN>
See notes to condensed consolidated financial statements (unaudited).
</TABLE>
(5)
<PAGE> 6
McDONALD & COMPANY INVESTMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1994
NOTE A - BASIS OF PRESENTATION
- - ------ ---------------------
The condensed consolidated financial statements include the accounts of
McDonald & Company Investments, Inc. and its subsidiaries, collectively
referred to as the "Company". All significant intercompany accounts and
transactions are eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal and recurring
adjustments, considered necessary for a fair presentation of the financial
condition and results of operations for the periods presented have been
included.
NOTE B - LONG-TERM BORROWINGS
- - ------ --------------------
McDonald & Company Securities, Inc., ("McDonald Securities") has outstanding
$25,000,000 in aggregate principal amount of 8.24% Subordinated Notes due
January 15, 2002. McDonald Securities is required to prepay principal amounts
of $5,000,000 on January 15 in each year beginning in 1998. The notes are
subordinated in right of payment to all senior indebtedness of McDonald
Securities. The principal amount of the notes has been approved by the New
York Stock Exchange, Inc. for inclusion in the regulatory capital of McDonald
Securities.
NOTE C - NET INCOME PER SHARE
- - ------ --------------------
Primary net income per share is based on the average number of share and share
equivalents outstanding during the periods. Share equivalents represent the
effect of shares issuable under the Company's stock option plans. For the
fiscal three and six month periods ended September 24, 1993, fully diluted net
income per share includes, in addition to the above, the effect of the assumed
conversion of the Company's 8% convertible subordinated debentures.
On July 27, 1993, the Company declared a 20% stock dividend payable August 20,
1993 to stockholders of record August 10, 1993. Share and per share
information have been restated to reflect the effect of the stock dividend as
if it had occurred at the beginning of the fiscal 1994 periods.
On October 29, 1993 the Company redeemed $197,000 aggregate principal amount of
its 8% convertible subordinated debentures due March 1, 2011 at a price of
102.4% of the principal amount plus accrued interest to October 29, 1993, for a
total cash payment of $204,310. A total of $12,008,000 principal amount of
debentures were converted into 993,694 shares of the Company's Common Stock at
a conversion price of $12.08 per share.
NOTE D - CONTINGENCIES
- - ------ -------------
The Company is a defendant in various lawsuits incidental to its securities
business, and in the opinion of management, liability, if any, resulting from
such litigation, will not have a material adverse effect on the Company's
financial condition.
(6)
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
BUSINESS ENVIRONMENT
- - --------------------
McDonald & Company Investments, Inc. (the "Company") operates a full-service
regional investment banking, investment advisory and brokerage business through
its principal subsidiary, McDonald & Company Securities, Inc. ("McDonald
Securities"). The Company is involved in the origination, underwriting,
distribution, trading and brokerage of fixed income and equity securities, and
provides investment advisory services.
The profitability of the Company is sensitive to many factors, including the
level of securities trading volume and the volatility and general level of
market prices. Many of its activities have high operating costs which do not
decrease with reduced levels of activity. Sustained periods of reduced volume,
or loss of clients, could have adverse effects upon profitability.
The Company faces increasing competition from commercial banks and thrift
institutions as these institutions offer certain investment banking and
corporate and individual financial services traditionally provided only by
securities firms. The Company anticipates regulation of the securities
industry to increase and that compliance with regulations may become more
difficult. At present, the Company is unable to predict the extent of changes
that may be enacted, or the effect on the Company's business.
The Company has formulated a comprehensive strategic plan which is periodically
reviewed and revised as business conditions dictate. The plan emphasizes the
Company's historical roots as a regional brokerage and investment banking firm.
The Company has focused on the Ohio, Michigan and Indiana markets by increasing
the number of sales representatives covering individual investors, as well as
increasing investment banking activities in this region. The Company's
institutional equity and fixed income sales departments cover accounts
throughout the United States and internationally.
On October 4, 1991, Gradison & Company Incorporated ("Gradison"), merged with
McDonald Securities. In connection with the merger, stockholders of Gradison
received a combination of shares of Common Stock and cash having an aggregate
value of approximately $22,723,000. Additional cash consideration of
approximately $3,200,000 will be paid in the third quarter of fiscal 1995 since
certain performance criteria have been met. Gradison operated as a
full-service regional brokerage and investment advisory firm headquartered in
Cincinnati, Ohio with a primary market of southwestern Ohio and northern
Kentucky. Subsequent to the merger, Gradison operates as a division of
McDonald Securities.
The merger allowed the Company to increase the size of its retail sales force
and its customer base and gave the Company a strong presence in southwestern
Ohio, and also added significant additional asset management capabilities.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
The majority of the Company's assets are highly liquid and short-term in
nature. Cash and liquid assets, principally receivables from customers,
brokers and dealers, securities purchased under agreements to resell, and
securities owned approximate 93% of the Company's assets at September 30,
1994. These assets are financed by a number of sources, including the
Company's capital and short-term borrowings.
At September 30, 1994, McDonald Securities had outstanding $25,000,000
in aggregate principal amount of 8.24% Subordinated Notes due January 15, 2002.
McDonald Securities is required to pay principal amounts of $5,000,000 on
January 15 in each year beginning in 1998. The notes are subordinated in right
of payment to all senior indebtedness and general creditors of McDonald
Securities. In addition to providing long-term financing, the notes have been
approved by the New York Stock Exchange, Inc. for inclusion in McDonald
Securities' regulatory capital.
(7)
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (continued)
-------------------------------------
LIQUIDITY AND CAPITAL RESOURCES (cont.)
- - ---------------------------------------
Changes in the levels of securities owned and in customer and broker
receivables directly affect the Company's financing arrangements. The Company
has available lines of credit of $318,000,000, of which $261,150,000 was unused
at September 30, 1994. Management believes that funds from operations,
available lines of credit, and long-term borrowings provide sufficient
resources to meet present and anticipated financial needs.
Certain minimum amounts of capital must be maintained by the Company's
principal broker/dealer subsidiary, McDonald Securities, to satisfy the
regulatory requirements of the Securities and Exchange Commission and the New
York Stock Exchange. The regulatory requirements represent Uniform Net Capital
Rules designed to measure the general financial integrity and liquidity of
registered broker/dealers and provide minimum acceptable net capital levels to
meet continuing commitments to customers. Net capital, as defined, changes
from day to day. At September 30, 1994, McDonald Securities was in compliance
with the Uniform Net Capital Rules and had net capital of $66,352,000, which
was $64,092,000 in excess of the minimum required.
FISCAL THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 24,
- - -----------------------------------------------------------------------------
1993
- - ----
Total revenues for the fiscal quarter ended September 30, 1994 were
$40,281,000, a decrease of $7,739,000, or 16%, from revenues of $48,020,000 for
the fiscal quarter ended September 24, 1993.
For the fiscal six months ended September 30, 1994, total revenues were
$81,096,000 compared to $95,737,000 for the first six months of fiscal 1994, a
decrease of $14,641,000, or 15%.
Net income for the fiscal quarter ended September 30, 1994 was $2,029,000, or
$.22 per share, compared with net income of $4,832,000, or $.56 per share, for
the fiscal quarter ended September 24, 1993, which represents a decrease in net
income of 58%.
For the fiscal six months ended September 30, 1994, net income was $3,971,000
or $.42 per share, compared to $9,943,000 or $1.15 per share, for the fiscal
six months ended September 24, 1993, a decrease in net income of 60%.
The average number of shares and share equivalents outstanding were 9,479,000
and 9,470,000, respectively, for the fiscal three and six month periods ended
September 30, 1994 compared to 8,627,000 and 8,614,000, respectively, for the
fiscal three and six months ended September 24, 1993.
Revenues from underwriting and investment banking decreased $3,299,000, or 31%
for the quarter and $7,030,000, or 30%, for the six months ended September 30,
1994 when compared to the same periods in the prior fiscal year. Revenues from
corporate underwriting and investment banking decreased $2,230,000, or 28% for
the second quarter and $4,741,000, or 26% for the six month period due
primarily to lower revenues from participations in equity syndications, which
declined $1,182,000, or 42% for the quarter and $1,963,000, or 36%, for the six
months ended September 30, 1994 and lower revenues from participation in
corporate and government underwriting syndications, which declined $704,000, or
65% for the quarter and $1,006,000, or 50% for the six months ended September
30, 1994. Additionally, revenues from equity and debt public offerings and
private placements declined approximately $344,000, or 8% for the quarter and
$1,772,000, or 16% for the six months ended September 30, 1994. Revenues from
municipal finance decreased $1,069,000, or 39%, for the quarter and $2,289,000,
or 42%, for the six months ended September 30, 1994 when compared to the same
periods in fiscal 1993 due to a lower level of public finance offerings. In
the first six
(8)
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (continued)
-------------------------------------
FISCAL THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 24,
- - -----------------------------------------------------------------------------
1993 (cont.)
- - ------------
months of the prior fiscal year, declining interest rates resulted in a higher
level of public finance offerings and refinancings of existing public debt.
Revenues from underwriting and investment banking activities are highly
dependent on general market conditions for such business activities. Market
conditions for underwriting and investment banking services can be affected by
political and economic events both in the United States and abroad. To the
extent future events are unpredictable, uncertainty will be a factor in the
level of McDonald Securities business activity. Also, competitive pressure
from other investment bankers can and will have an effect on the success of
McDonald Securities in obtaining such business and on the prices which can be
charged for investment banking and underwriting services. The management of
McDonald Securities believes it can compete effectively in this segment of its
business activities.
Revenues from principal transactions decreased $3,526,000, or 22%, for the
second quarter of fiscal 1995 and $7,617,000, or 25% for the first six months
when compared to the same periods in the prior fiscal year. Revenues from
trading taxable fixed-income securities, including corporate bonds, United
States government bonds and mortgage-backed securities, decreased $3,816,000,
or 40%, for the second quarter and $7,775,000, or 42% for the first six months
of fiscal 1995. This decrease in revenues from principal transactions in
taxable fixed-income securities reflects the low level of activity in the
taxable fixed income markets due to uncertainties related to interest rates and
the economy. The decline in revenues from trading taxable fixed income
securities includes the impact of eliminating the Company's fixed income
arbitrage area effective as of the beginning of the current fiscal year. In
the quarter and the six months ended September 24, 1993, revenues from fixed
income arbitrage trading were $1,352,000, and $2,444,000 respectively,
representing 35% and 31% of the total decline in revenues from principal
transactions in taxable fixed income securities. Revenues from trading
municipal bonds increased $484,000, or 26%, for the second quarter and
$948,000, or 26% for the first six months due primarily to individual investor
interest in tax-exempt securities due to changes in federal income tax rates.
Revenues from principal transactions in equity securities decreased $194,000,
or 4%, for the second quarter and $790,000, or 9% for the first six months.
Commission revenues decreased $229,000, or 2%, in the current quarter and
increased $69,000, or less than 1% in the first six months when compared to the
same periods in fiscal 1994.
Revenues from investment management fees include advisory fees from the
Company's mutual funds and money market funds and investment management fees
earned related to individually managed accounts. Revenues from investment
management fees increased $472,000, or 13%, and $1,211,000, or 18%, for the
fiscal quarter and six month periods ended September 30, 1994 when compared to
the comparable fiscal 1994 periods. Of these amounts, increased revenues from
advisory fees related to individually managed accounts represented $371,000, or
79%, and $835,000, or 69%, respectively, of the total increase for the fiscal
three and six month periods.
Interest and dividend income decreased $583,000, or 15%, and $1,064,000, or
14%, for the fiscal three and six month periods ended September 30, 1994 when
compared to the same periods in the prior fiscal year. The decrease was due to
a lower level of securities owned in the current period when compared to the
same period in the prior fiscal year.
(9)
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (continued)
-------------------------------------
FISCAL THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 24,
- - -----------------------------------------------------------------------------
1993 (cont.)
- - ------------
Other income decreased $574,000, or 37%, for the current quarter and $210,000,
or 10%, for the current six month period due primarily to gains related to
certain venture capital investments of approximately $700,000 experienced in
the second quarter of the prior fiscal year. The decrease was partially offset
by higher transfer agency and other fees related to proprietary mutual funds.
Operating expenses (total expenses before interest) decreased $2,159,000, or
6%, for the second quarter and $3,331,000, or 4%, for the first six months of
fiscal 1995, when compared to the same periods in the prior fiscal year.
Employee compensation and benefits decreased $3,445,000, or 13%, for the second
quarter and $5,903,000, or 11% for the first six months. Commission and other
sales compensation expense decreased $1,822,000, or 13%, for the quarter and
$2,438,000, or 9% for the first six months, primarily because of decreased
revenues from principal transactions and other sales credits. Although
operating revenues decreased $7,156,000, or 16%, for the quarter and
$13,577,000, or 15% for the first six months, commissions and other sales
compensation declined only $1,822,000, or 13% for the first quarter and
$2,438,000, or 9% for the first six months. This was due to the change in the
mix of revenues during the periods. For the three and six months ended
September 30, 1994, trading profits related to fixed income and equity
principal transactions were $1,815,000 and $2,304,000, respectively, compared
to trading profits of $4,028,000 and $7,833,000, respectively, in the same
periods of the prior fiscal year, resulting in significantly higher sales
compensation in these areas. Additionally, management fees and other
non-commission revenues in finance areas declined $2,117,000, or 27% for the
current six months when compared to the first six months in fiscal 1994. This
resulted in higher sales compensation relative to finance revenues. Other
clerical and administrative expenses increased $897,000, or 12%, for the
quarter and $2,085,000, or 14% for the six month period. The increase in other
clerical and administrative expenses represents compensation and employee
benefit costs related to an increase in the professional and support staff in
the current periods when compared to the same periods in the prior fiscal year.
The remaining decrease in employee compensation and benefits of $2,520,000, for
the second quarter and $5,550,000 for the six months represents decreases in
incentive compensation and profit sharing accruals which are directly related
to the decline in profitability.
All other operating expenses increased $1,286,000, or 12%, for the current
quarter and $2,572,000, or 12% for the first six months of fiscal 1995. The
increase in all other operating costs represents communications, occupancy and
equipment, promotional and other costs related to the expansion of the
Company's business.
Interest expense decreased $1,157,000, or 46%, and $1,968,000, or 41%, for the
fiscal three and six month periods in the current fiscal year when compared to
the same period in fiscal 1994. This decrease reflects a lower level of
average short-term borrowings due to a decrease in the level of securities
owned.
Income before income taxes for the fiscal quarter and fiscal six months ended
September 30, 1994 was $3,409,000 and $6,601,000, resulting in a pre-tax return
on revenues of 8% in both periods. For the fiscal quarter and fiscal six
months ended September 24, 1993, income before income taxes was $7,832,000 and
$15,943,000, resulting in a pre-tax return on revenues of 16% in both periods.
(10)
<PAGE> 11
PART II. OTHER INFORMATION
Item 5. Other Information
-----------------
On July 27, 1993, the Company announced the continuation of an
open market repurchase program originally announced in July, 1987.
The current program, which expires July 31, 1996, allows the
Company to purchase up to 1,200,000 shares of its Common Stock at
an aggregate price not to exceed $20,000,000. Treasury shares may
be used to satisfy options exercised under the Company's stock
option plans and 1993 Stock Bonus Plan.
During the fiscal quarter ended September 30, 1994, the Company
purchased 104,606 shares of the Company's Common Stock at an
average price of $12.78 per share. During the fiscal quarter
ended September 30, 1994 the Company utilized 10,800 shares of the
Company's Common Stock held in treasury to satisfy options
exercised under the Stock Option Plan for employees.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
<TABLE>
<CAPTION>
(a.) The following exhibit is filed as part Sequential
of this report: Page Number
-----------
<S> <C> <C>
Exhibit 11 Statement re: Computation of
Per Share Earnings . . . . . . . . . . . . . 14
Exhibit 27 Financial Data Schedule BD . . . . . . . . . 15*
<FN>
* Exhibit 27 is Furnished for Securities and Exchange Commission Purposes Only.
</TABLE>
(11)
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C> <C>
McDonald & Company Investments, Inc.
------------------------------------
(Registrant)
Date: November 7, 1994 By: /s/ William B. Summers, Jr.
----------------------- ------------------------------------
William B. Summers, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 7, 1994 By: /s/ Robert T. Clutterbuck
------------------------ -----------------------------------
Robert T. Clutterbuck
Treasurer
(Principal Financial and Accounting
Officer)
</TABLE>
(12)
<PAGE> 13
McDonald & Company Investments, Inc.
Report on FORM 10-Q for the Fiscal Quarter ended September 30, 1994
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description Sequential Page
- - ----------- ----------- ---------------
<S> <C> <C>
11 Statement Re: Computation of
Per Share Earnings . . . . . . . . . . . . . . . 14
27 Financial Data Schedule BD . . . . . . . . . . . . 15*
<FN>
* Exhibit 27 is Furnished for Securities and Exchange Commission Purposes Only.
</TABLE>
(13)
<PAGE> 1
<TABLE>
Exhibit 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
- - -----------------------------------------------
<CAPTION>
Fiscal Three Months Ended Fiscal Six Months Ended
----------------------------------- ------------------------------------
Sept. 30, 1994 Sept. 24, 1993 Sept. 30, 1994 Sept. 24, 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
PRIMARY
- - -------
Average shares outstanding 9,319,000 8,393,000 9,300,000 8,383,000
Net effect of dilutive stock
options - based on the treasury
stock method using average
market price 160,000 234,000 170,000 231,000
---------- ---------- ---------- ------------
TOTAL 9,479,000 8,627,000 9,470,000 8,614,000
========== ========== ========== ============
Net income $2,029,000 $4,832,000 3,971,000 $ 9,943,000
========== ========== ========== ============
Net income per share $ .22 $ .56 .42 $ 1.15
========== ========== ========== ============
FULLY DILUTED
- - -------------
Average shares outstanding 9,319,000 8,393,000 9,300,000 8,383,000
Net effect of dilutive stock
options - based on the treasury
stock method using greater of
average or period - end market
price 160,000 244,000 170,000 236,000
Assumed conversion of 8%
convertible subordinated
debentures --- 1,010,000 --- 1,010,000
---------- ---------- ---------- -----------
TOTAL 9,479,000 9,647,000 9,470,000 9,629,000
========== ========== ========== ===========
Net income $2,029,000 $4,832,000 $3,971,000 $ 9,943,000
Add interest on 8% convertible
subordinated debentures, net of
federal tax effect --- 159,000 --- 317,000
---------- ---------- ---------- -----------
TOTAL $2,029,000 $4,991,000 $3,971,000 $10,260,000
========== ========== ========== ===========
Net income per share $ .22 $ .52 $ .42 $ 1.06
========== ========== ========== ===========
</TABLE>
(14)
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Statement of Financial Condition - Sep-30-1994 - Consolidated Statement of
Income - Six months Sep-30-1994 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1994
<CASH> 5,599
<RECEIVABLES> 134,642
<SECURITIES-RESALE> 288,433
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 103,182
<PP&E> 9,496
<TOTAL-ASSETS> 582,536
<SHORT-TERM> 59,888
<PAYABLES> 48,039
<REPOS-SOLD> 250,448
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 52,477
<LONG-TERM> 25,000
<COMMON> 11,359
0
0
<OTHER-SE> 115,950
<TOTAL-LIABILITY-AND-EQUITY> 582,536
<TRADING-REVENUE> 23,198
<INTEREST-DIVIDENDS> 6,535
<COMMISSIONS> 24,675
<INVESTMENT-BANKING-REVENUES> 16,729
<FEE-REVENUE> 8,001
<INTEREST-EXPENSE> 2,887
<COMPENSATION> 48,178
<INCOME-PRETAX> 6,601
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,971
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
