UNITED STATES 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 30, 1995
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 1-8952
INTERSTATE/JOHNSON LANE, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
56-1470946
(I.R.S. Employer Identification No.)
Interstate Tower, P.O. Box 1012, Charlotte, North Carolina 28201-1012
(Address of principal executive offices, zip code)
(704) 379-9000
(Registrant's telephone number, including area code)
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 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.
Class Outstanding at July 31, 1995
(Common stock, $.20 par value) 6,190,084
PAGE 1 OF 14
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
Index
Page Number
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of
Financial Condition--June 30, 1995 and
September 30, 1994 3
Condensed Consolidated Statements of
Operations--Nine Months Ended
June 30, 1995 and 1994 4
Condensed Consolidated Statements of
Cash Flows--Nine Months Ended
June 30, 1995 and 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Page 2
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
(All dollars in thousands)
June 30, September 30,
1995 1994
<S> <C> <C>
Assets
Cash and cash equivalents $ 23,572 $ 30,193
Cash and securities segregated for
regulatory purposes 102,611 83,983
Loans under matched securities resale agreements 284,505 339,189
Receivables:
Financing resale agreements 28,731 20,989
Customers 180,760 170,060
Brokers, dealers and clearing agencies 14,212 15,573
Other 5,457 9,418
Securities owned 59,255 57,023
Land, buildings, and improvements, net 7,935 9,135
Office facilities and equipment, net 8,138 6,406
Goodwill and intangible assets 13,829 14,285
Other assets 16,658 11,579
$ 745,663 $ 767,833
Liabilities and Shareholders' Equity
Short-term borrowings:
Checks payable $ 16,868 $ 18,179
Bank loans --- 4,997
Financing repurchase agreements 21,188 11,935
Borrowings under matched securities repurchase agreements 287,166 339,777
Payables:
Customers 252,672 227,431
Brokers and dealers 4,672 6,388
Income taxes 1,026 297
Other 6,493 8,327
Accrued compensation and benefits 11,060 13,010
Securities sold but not yet purchased 30,120 23,258
Notes payable 7,447 8,143
Other liabilities and accrued expenses 15,841 16,922
654,553 678,664
Minority interest 200 200
Subordinated debt 20,999 20,999
Shareholders' equity:
Common stock 1,377 1,377
Additional paid-in-capital 31,380 31,589
Retained earnings 43,193 39,871
75,950 72,837
Less: treasury stock, at cost (6,039) (4,867)
Total shareholders' equity 69,911 67,970
$ 745,663 $ 767,833
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Page 3
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Commissions and sales credits $ 82,209 $ 86,892 $ 30,528 $ 25,160
Trading gains, net 5,049 4,114 1,572 598
Investment banking and underwriting 2,931 5,001 1,107 1,457
Asset management and advisory 5,270 4,502 1,753 1,575
Interest 33,199 19,930 11,771 7,529
Other 4,829 5,732 1,510 1,704
Total revenues 133,487 126,171 48,241 38,023
Interest expense 25,577 12,877 9,217 4,917
Net revenues 107,910 113,294 39,024 33,106
Expenses:
Compensation and benefits 68,783 70,128 25,085 21,446
Occupancy 6,286 6,121 2,109 2,095
Technology & telephone 11,163 10,006 4,237 3,460
Execution, clearance and depository 2,841 2,884 955 959
Promotion and development 4,181 4,120 1,401 1,454
Professional services 2,533 2,893 1,005 868
Printing, postage and supplies 2,587 2,457 968 831
Other operating expenses 3,154 4,427 1,025 770
Total expenses 101,528 103,036 36,785 31,883
Income before income taxes
and cumulative effect of a change
in accounting principle 6,382 10,258 2,239 1,223
Income tax expense 2,488 4,141 879 489
Income before cumulative effect of a
change in accounting principle 3,894 6,117 1,360 734
Cumulative effect of a change in
accounting principle --- 3,059 --- ---
Net Income $ 3,894 $ 9,176 $ 1,360 $ 734
Primary earnings per share:
Income before cumulative effect of a
change in accounting principle $ 0.61 $ 0.93 $ 0.22 $ 0.11
Cumulative effect of a change in
accounting principle --- 0.47 --- ---
Net income $ 0.61 $ 1.40 $ 0.22 $ 0.11
Fully diluted earnings per share:
Income before cumulative effect of a
change in accounting principle $ 0.61 $ 0.87 $ 0.21 $ 0.11
Cumulative effect of a change in
accounting principle --- 0.39 --- ---
Net income $ 0.61 $ 1.26 $ 0.21 $ 0.11
Weighted average shares:
Primary 6,363,871 6,576,172 6,281,891 6,492,165
Fully diluted 7,642,047 7,885,971 7,560,067 7,780,523
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Page 4
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
(All dollars in thousands)
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,894 $ 9,176
Adjustments to reconcile net income to cash provided
(used) by operating activities:
Depreciation and amortization 2,674 2,187
Provision for real estate charges 750 440
Other non-cash items (198) 1,300
3,226 3,927
Cash and securities segregated for
regulatory purposes (18,627) 10,834
Loans under matched securities resale and repurchase agreements, net 2,074 1,337
Net payables to customers 14,541 (19,852)
Net receivables from brokers, dealers and clearing agencies (356) (656)
Other receivables 3,961 474
Securities owned, net 4,629 (11,416)
Other assets (5,113) (2,358)
Income taxes payable 729 (2,494)
Accrued compensation and benefits (1,950) (4,140)
Other liabilities and accrued expenses (2,620) (665)
(2,732) (28,936)
Cash (used) by operating activities 4,388 (25,009)
Cash flows from financing activities:
Proceeds from (repayment of):
Short-term bank borrowings (6,307) (5,491)
Notes payable (696) (856)
Secured demand note --- (1,000)
Loans under financing repurchase and resale agreements, net 1,511 29,503
Proceeds from stock discount program 736 ---
Proceeds from stock options exercised 164 227
Purchase of stock for treasury (2,575) (2,622)
Dividends paid (572) (393)
Cash (used) provided by financing activities (7,739) 19,368
Cash flows from investing activities:
Capital expenditures (3,270) (1,554)
Cash used by investing activities (3,270) (1,554)
Net decrease (increase) in cash and cash equivalents (6,621) 1,981
Cash and cash equivalents at beginning of period 30,193 20,393
Cash and cash equivalents at end of period $ 23,572 $ 22,374
Cash paid during the quarter for:
Interest $ 9,029 $ 4,727
Income taxes $ 593 $ 1,936
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Page 5
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Basis of Presentation:
The interim financial statements are unaudited; however,
such information reflects all normal recurring adjustments
which, in the opinion of management, are necessary for a
fair presentation of the results for the period. The
nature of the Company's business is such that the results
of any interim period are not necessarily indicative of
results for a full fiscal year.
2.Net Capital Requirements:
As a registered broker-dealer and member of the New York
Stock Exchange, Interstate/Johnson Lane Corporation
("IJL"), the principal operating subsidiary of the
Company, is subject to the Securities and Exchange
Commission's uniform net capital rule. IJL has elected to
operate under the alternative method of the rule, which
prohibits a broker-dealer from engaging in any
transactions when its "net capital" is less than 2% of its
"aggregate debit balances" arising from customer
transactions, as these terms are defined in the rule. The
Exchange may also impose business restrictions on a member
firm if its net capital falls below 5% of its aggregate
debit balances. IJL is also subject to the Commodity
Futures Trading Commission minimum net capital
requirement.
At June 30, 1995, IJL's net capital was 21% of its
aggregate debit balances and approximately $35.2 million
in excess of its minimum regulatory requirements.
3.Commitments and Contingencies:
Leases for office space and equipment are accounted for as
operating leases. Approximate minimum rental commitments
under noncancelable leases, some of which contain
escalation clauses and renewal options, are as follows:
Millions
For the three months ended September 30, 1995 $2.7
For the fiscal year ended September 30,
1996 7.8
1997 5.6
1998 4.8
1999 3.2
Thereafter .7
$ 24.8
Page 6
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3.Commitments and Contingencies, continued:
In connection with its involvement as a general partner
and/or placement agent of various real estate limited
partnerships, the Company has guaranteed certain
obligations of limited partners and, with others, has
jointly or severally guaranteed mortgage loan obligations
of some of the partnerships. At June 30, 1995, contingent
liabilities under these obligations amounted to
approximately $500,000 in the aggregate.
Of a $20 million irrevocable letter of credit available,
the amount outstanding at June 30, 1995 under this
facility was $2.3 million.
4.Legal Proceedings:
IJL is a defendant, or otherwise has possible exposure, in
various legal actions arising out of its activities as a
broker-dealer, underwriter, or employer. Several of these
actions, including some class actions, claim substantial
or unspecified damages which could be material. While
predicting the outcome of litigation is inherently very
difficult, and the ultimate resolution, range of loss, and
impact on operating results cannot reliably be estimated,
management is of the opinion, based upon its understanding
of the facts and the advice of legal counsel, that
resolution of these actions will not have a material
adverse effect on the Company's consolidated financial
condition.
During the quarter, the Company settled, subject to final
court approval, a class action suit involving common stock
offerings of Del-Val Financial Corporation. Previously
established reserves fully covered the settlement and
accordingly there was no material impact on the Company's
consolidated financial condition.
5.Financial Instruments with Off-Balance-Sheet Risk:
IJL's business activities involve the execution,
settlement and financing of securities transactions
generating accounts receivable, and thus may expose IJL to
financial risk in the event a customer or other
counterparty is unable to fulfill its contractual
obligations. IJL controls the risk associated with
collateralized loans by revaluing collateral at current
prices, monitoring compliance with applicable credit
limits and industry regulations, and requiring the posting
of additional collateral when appropriate.
Obligations arising from financial instruments sold short
in connection with its normal trading activities expose
IJL to risk in the event market prices increase, since it
may be obligated to repurchase those positions at a
greater price. IJL's short selling primarily involves
debt securities, which are typically less volatile than
equities or options.
Page 7
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5.Financial Instruments with Off-Balance-Sheet Risk,
continued:
Forward and futures contracts provide for the seller
agreeing to make delivery of securities or other
instruments at a specified future date and price. Risk
arises from the potential inability of counterparties to
honor contract terms, and from changes in values of the
underlying instruments. At June 30, 1995, IJL's
commitments included forward purchase and sale contracts
involving mortgage-backed securities with long market
values of approximately $55.2 million and short market
values of approximately $58.2 million and futures sale
contracts with short values of $10.1 million.
IJL enters into resale agreements, whereby it lends money
by purchasing U.S. government/agency or mortgage-backed
securities from customers or dealers with an agreement to
resell them to the same customers or dealers at a later
date. Such loans are collateralized by the underlying
securities, which are held in custody by IJL and may be
converted into cash at IJL's option. In addition, IJL
monitors the market value of the collateral, and issues
margin calls as necessary according to the
creditworthiness of the borrower. Approximately 90% of
all loans under securities resale agreements at June 30,
1995 were made to three counterparties.
IJL incurs risk in underwriting public securities
offerings to the extent that prospective buyers fail to
purchase the securities. The Company attempts to mitigate
this risk through due diligence carried out prior to
undertaking the contractual obligation.
Page 8
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General Business Environment
The Company's principal activities -- securities brokerage
for individual (retail) and institutional investors, market-
making in equity and fixed-income securities, investment
banking and underwriting, and investment management and
advisory services -- are highly competitive. Strategic
alliances between investment firms and commercial banks,
insurance companies, and other financial services entities
have intensified this competition. Many of the Company's
revenue sources are sensitive to marketplace trading volumes
and to interest rate conditions which can be volatile.
During the past four years, the Company has undertaken a
major commitment to build its retail sales force by
recruiting and training individuals without securities
industry experience. As a result, approximately 27% of the
Company's retail financial consultants are individuals with
less than three years' experience. While this condition may
bode well for the future, a protracted slowdown in individual
investor activity may negatively impact the revenue
production of a less seasoned sales force. Securities and
Exchange Commission rulings and proposals in 1994 on broker-
dealer practices related to order flow, and on disclosure
requirements for institutions using "soft dollars" to pay for
research services, the latter a significant source of the
Company's profits, could also have a dampening effect on
operating results.
The Company's trading inventories may include, from time to
time, positions in taxable and non-taxable debt securities
which have greater risks than positions in investment grade
securities. While these positions are required to be valued
at "market", there is a thinly traded market for such
securities; quotes are generally available from a limited
number of dealers, and may not represent firm bids or offers.
The average inventory of these securities during the nine
months ended June 30, 1995, was $7.1 million. As of that
same date, such holdings represented $600,000 or 1%, of all
securities owned by the Company.
Liquidity and Capital Resources
The Company's net cash position decreased $6.6 million for
the nine months ended June 30, 1995. Operating activities
consumed $2.7 million of cash, offset by $7.1 million of net
income adjusted for depreciation and other non-cash charges.
Financing activities consumed an additional $7.7 million of
cash while capital expenditures totaled $3.3 million.
Page 9
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued
Liquidity and Capital Resources, continued
The Company's permanent capital consists of its shareholders'
equity and subordinated debt. Day-to-day financing
requirements are primarily influenced by the level of
securities inventories, net receivables from customers and
broker-dealers, and net receivables under resale agreements.
Significant cash requirements could occur in connection with
payments under deferred compensation plans, repurchase of the
Company's common stock and/or convertible debentures, payment
of dividends, and litigation settlements arising from normal
business operations. Beginning in fiscal 1995, the Company
anticipates capital expenditures in the $7 to $10 million
range over several years in connection with a major program
of technology improvements.
At June 30, 1995, the Company had $115 million of unused call
loan financing available. In addition, the Company maintains
significant credit lines for repurchase agreements with other
financial institutions and has financed its customer
receivables with customer payables for many years.
Management believes that these resources, together with the
Company's permanent capital base and funds provided by
operations, will satisfy normal financing needs for the
foreseeable future. The Company's broker-dealer subsidiary,
Interstate/Johnson Lane Corporation ("IJL"), is subject to
liquidity and capital requirements of the Securities and
Exchange Commission, Commodity Futures Trading Commission,
and The New York Stock Exchange, and has consistently
operated well in excess of the minimum requirements. At June
30, 1995, IJL had net capital of $38.9 million, "excess net
capital" of approximately $35.2 million, and a net capital
ratio of 21%.
Results of Operations
For the nine months ended June 30, 1995, net revenues
decreased $5.4 million, or 5%, from the previous year, while
expenses, other than interest, decreased $1.5 million, or 2%.
Net income of $3.9 million was down $5.3 million from the
results of the period of a year ago which were augmented by a
$3.1 million credit from the cumulative effect of adopting
Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes."
Net revenues increased $5.9 million, or 18% for the three
months ended June 30, 1995, while total expenses increased
$4.9 million, or 15%. Net income for the period was $1.4
million or $.22 per share compared with $700,000 or $.11 per
share for the same quarter of a year ago.
Overall, commissions and sales credits decreased by about
$4.7 million, or 5% from the same nine-month period of a
year ago, representing a gain of 1% in the retail sector and
a decline of 16% in the institutional sector. Substantially
fewer equity and debt underwritings, combined with decreases
in secondary government securities business, contributed to
the decline in the institutional sector. For the three-month
period ended June 30, 1995, commissions and sales credits
increased $5.4 million, or 21%, representing a gain of 28% in
the retail sector while the institutional sector remained
flat. Increases in secondary market transactions in both
exchange listed and OTC equities contributed to the increase
in the retail sector.
Page 10
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued
Results of Operations, continued
Net trading gains increased $900,000, or 23%, and $1 million,
or 163%, from the same nine and three month periods of a
year ago. Profits from trading in tax exempt securities and
corporate fixed income securities were up $4.6 million ($1.8
million for the quarter) for the nine months ended June 30,
1995. These increases were offset by trading declines in OTC
stocks of $1.3 million and government and mortgage backed
securities of $3.6 million ($900,000 for the quarter).
Investment banking fees and underwriting profits decreased $2
million, or 41%, and $350,000, or 24%, for the nine and three
month periods due to a generally sluggish new issues market,
coupled with a low level of originations in the quarter.
Asset management and advisory fees were up $800,000 and
$200,000 for the nine and three month periods, respectively,
due to the continued growth of "wrap fees" paid by retail
clients in lieu of transaction-based commissions.
Interest revenues were up about $13.3 million for the nine
months ended June 30, 1995 ($4.2 million for the quarter)
while expenses increased $12.7 million and $4.3 million for
the corresponding periods. Net interest income is
essentially flat for the quarter as compared with the prior
year, while the nine month period is up about $600,000. The
latter increase is due primarily to higher rates earned on
increased segregated customer funds. Roughly half of the
increase in both revenues and expenses is attributable to
significantly higher levels of matched resale and repurchase
agreements; the remaining increase is attributable to higher
interest earned on increased customer debit balances and paid
on increased customer payables.
Compensation and benefits costs decreased $1.3 million, or 2%
for the nine month period ended June 30, 1995 due primarily
to a decline in transaction-based commissions and other
profit-driven incentives. However, these costs increased
$3.6 million, or 17%, for the quarter due to the accompanying
increase in revenue experienced during the quarter as
compared with the prior year. Technology and telephone
expense increased $1.2 million, or 12%, for the nine month
period and $800,000 for the quarter, primarily due to
expenses related to the Company's ongoing program of
technology improvements. Professional services decreased
$400,000, or 13%, for the nine month period due to a decrease
in legal fees. Other operating expenses decreased $1.3
million, or 28%, for the year largely as a result of smaller
provisions for legal and related matters. For the quarter,
other operating expenses increased $250,000 due to an
increase in consulting services related to the aforementioned
technology improvements.
Page 11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
IJL is a defendant, or otherwise has possible exposure, in
various legal actions arising out of its activities as a
broker-dealer, underwriter, or employer. Several of these
actions, including some class actions, claim substantial or
unspecified damages which could be material. While
predicting the outcome of litigation is inherently very
difficult, and the ultimate resolution, range of loss, and
impact on operating results cannot reliably be estimated,
management is of the opinion, based upon its understanding
of the facts and the advice of legal counsel, that
resolution of these actions will not have a material
adverse effect on the Company's consolidated financial
condition.
During the quarter, the Company settled, subject to final
court approval, a class action suit involving common stock
offerings of Del-Val Financial Corporation. Previously
established reserves fully covered the settlement and
accordingly there was no material impact on the Company's
consolidated financial condition.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Designation of Exhibit Sequential
in this Report Description Page Number
11 Statement Regarding
Computation of Per
Share Earnings 14
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
three months ended June 30, 1995.
Page 12
<PAGE>
INTERSTATE/JOHNSON LANE, INC.
AND CONSOLIDATED SUBSIDIARIES
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.
INTERSTATE/JOHNSON LANE, INC.
Registrant
Signature Title Date
_________________________ Vice President - Finance
Edward C. Ruff and Treasurer (Principal
Financial Officer) August 15, 1995
_________________________ Assistant Vice President
C. Fred Wagstaff, III (Principal Accounting
Officer) August 15, 1995
Page 13
<PAGE>
Exhibit 11
<TABLE>
<CAPTION>
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Nine Months Ended Three Months Ended
June 30, June 30,
Net income per share was computed as follows: 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary:
1) Income before cumulative effect of a
change in accounting principle $ 3,893,565 $ 6,116,770 $ 1,359,805 $ 734,213
Cumulative effect of a change in accounting principle --- 3,059,000 --- ---
Net income $ 3,893,565 $ 9,175,770 $ 1,359,805 $ 734,213
2) Weighted average shares outstanding 6,363,871 6,576,172 6,281,891 6,492,165
3) Incremental shares under stock options
computed under the treasury stock method
using the average market price of
issuer's stock during the periods 79,233 126,757 94,546 105,316
4) Weighted average shares and common
equivalent shares outstanding 6,443,104 6,702,929 6,376,437 6,597,481
5) Weighted average shares outstanding
which were used for calculation 6,363,871 (A) 6,576,172 (A) 6,281,891 (A) 6,492,165(A)
6) Income per share before (item 1 divided by
item 5) cumulative effect of a
change in accounting principle $ 0.61 $ 0.93 $ 0.22 $ 0.11
Cumulative effect of a change in accounting principle
per share --- 0.47 --- ---
Net income per share $ 0.61 $ 1.40 $ 0.22 $ 0.11
Fully Diluted:
1) Unadjusted income before cumulative effect
of a change in accounting principle $ 3,893,565 $ 6,116,770 $ 1,359,805 $ 734,213
2) Interest on convertible subordinated
debentures, net of tax effect 738,443 738,443 246,148 246,148
3) Adjusted income before cumulative effect
of a change in accounting principle $ 4,632,008 $ 6,855,213 $ 1,605,953 $ 980,361
Cumulative effect of a change in accounting principle --- 3,059,000 --- ---
Adjusted net income $ 4,632,008 $ 9,914,213 $ 1,605,953 $ 980,361
4) Weighted average shares outstanding 6,363,871 6,576,172 6,281,891 6,492,165
5) Incremental shares under stock options
computed under the treasury stock method
using the higher of the average or ending
market price of issuer's stock at the end
of the periods 95,134 126,757 95,134 105,316
6) Incremental shares relating to
convertible subordinated debentures 1,183,042 1,183,042 1,183,042 1,183,042
7) Weighted average shares and common
equivalent shares outstanding 7,642,047 7,885,971 7,560,067 7,780,523
8) Income per share before (item 3 divided by
item 7) cumulative effect of a change
in accounting principle $ 0.61 $ 0.87 $ 0.21 $ 0.11
Cumulative effect of change in accounting principle --- 0.39 --- ---
Net income per share $ 0.61 $ 1.26 $ 0.21 $ 0.11
</TABLE>
(A) Dilutive effect of common equivalent shares not included since dilution
is less than 3%.
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1995
<PERIOD-START> APR-01-1995 OCT-01-1994
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 23,572 23,572
<RECEIVABLES> 192,874 192,874
<SECURITIES-RESALE> 313,236 313,236
<SECURITIES-BORROWED> 7,555 7,555
<INSTRUMENTS-OWNED> 59,255 59,255
<PP&E> 16,073 16,073
<TOTAL-ASSETS> 745,663 745,663
<SHORT-TERM> 16,868 16,868
<PAYABLES> 264,863 264,863
<REPOS-SOLD> 308,354 308,354
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 30,120 30,120
<LONG-TERM> 28,446 28,446
<COMMON> 1,377 1,377
0 0
0 0
<OTHER-SE> 68,534 68,534
<TOTAL-LIABILITY-AND-EQUITY> 745,663 745,663
<TRADING-REVENUE> 1,572 5,049
<INTEREST-DIVIDENDS> 11,771 33,199
<COMMISSIONS> 30,528 82,209
<INVESTMENT-BANKING-REVENUES> 1,107 2,931
<FEE-REVENUE> 1,753 5,270
<INTEREST-EXPENSE> 9,217 25,577
<COMPENSATION> 25,085 68,783
<INCOME-PRETAX> 2,239 6,382
<INCOME-PRE-EXTRAORDINARY> 1,360 3,894
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,360 3,894
<EPS-PRIMARY> 0.22 0.61
<EPS-DILUTED> 0.21 0.61
</TABLE>
