UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT #1 TO 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, 1996
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, 1996
----- -----------------------------
(Common stock, $.20 par value) 5,948,827
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, 1996 and
September 30, 1995 3
Condensed Consolidated Statements of
Operations--Nine Months Ended
June 30, 1996 and 1995 4
Condensed Consolidated Statements of
Cash Flows--Nine Months Ended
June 30, 1996 and 1995 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>
<TABLE>
<CAPTION>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(All dollars in thousands)
June 30, September 30,
1996 1995
------------- ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 6,241 $ 26,537
Cash and securities segregated for
regulatory purposes 97,599 117,616
Loans under matched securities resale agreements 58,269 129,623
Receivables:
Financing resale agreements 79,421 23,848
Customers 226,505 175,328
Brokers, dealers and clearing agencies 18,856 18,048
Other 4,962 4,722
Trading securities owned 103,202 75,749
Land, buildings, and improvements, net 5,968 7,285
Office facilities and equipment, net 9,248 8,865
Goodwill and intangible assets 13,226 13,678
Other assets 20,520 15,213
------------- ------------
$ 644,017 $ 616,512
============= ============
Liabilities and Shareholders' Equity
Short-term borrowings:
Checks payable $ 15,292 $ 11,872
Financing repurchase agreements 52,644 38,561
Borrowings under matched securities repurchase agreements 58,685 130,453
Payables:
Customers 288,079 267,714
Brokers and dealers 1,544 6,619
Other 6,881 7,322
Accrued compensation and benefits 17,810 14,460
Securities sold but not yet purchased 83,154 25,305
Notes payable 6,463 7,772
Other liabilities and accrued expenses 16,918 15,864
------------- ------------
547,470 525,942
------------- ------------
Minority interest 200 200
------------- ------------
Long-term subordinated debt 20,999 20,999
------------- ------------
Shareholders' equity:
Common stock 1,377 1,377
Additional paid-in-capital 31,141 31,510
Retained earnings 51,664 45,043
------------- ------------
84,182 77,930
Less: treasury stock, at cost (8,834) (8,559)
------------- ------------
Total shareholders' equity 75,348 69,371
------------- ------------
$ 644,017 $ 616,512
============= ============
The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Nine Months For the Three Months
Ended June 30, Ended June 30,
(All dollars in thousands) (All dollars in thousands)
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Commissions and sales credits $ 111,219 $ 82,209 $ 37,176 $ 30,528
Trading gains, net 5,709 5,049 1,800 1,572
Investment banking and underwriting 3,718 2,931 782 1,107
Asset management and advisory 6,823 5,270 2,433 1,753
Interest 25,162 33,199 8,353 11,771
Other 5,948 4,829 2,038 1,510
------------- ------------- ------------- -------------
Total revenues 158,579 133,487 52,582 48,241
Interest expense 16,067 25,577 5,305 9,217
------------- ------------- ------------- -------------
Net Revenues 142,512 107,910 47,277 39,024
------------- ------------- ------------- -------------
Expenses:
Compensation and benefits 92,738 68,524 31,038 24,987
Technology and telephone 13,166 11,163 4,524 4,237
Occupancy 6,454 6,286 2,205 2,109
Execution, clearance and depository 3,017 2,841 956 955
Promotion and development 4,909 4,440 1,742 1,499
Professional services 2,315 2,533 802 1,005
Printing, postage and supplies 2,702 2,587 911 968
Other operating expenses 5,191 3,154 1,343 1,025
------------- ------------- ------------- -------------
Total expenses 130,492 101,528 43,521 36,785
------------- ------------- ------------- -------------
Income before income taxes 12,020 6,382 3,756 2,239
Income tax expense 4,850 2,488 1,463 879
------------- ------------- ------------- -------------
Net Income $ 7,170 $ 3,894 $ 2,293 $ 1,360
============= ============= ============= =============
Earnings per share:
Primary $ 1.18 $ 0.61 $ 0.38 $ 0.22
============= ============= ============= =============
Fully diluted $ 1.04 $ 0.61 $ 0.34 $ 0.21
============= ============= ============= =============
Weighted average shares:
Primary 6,076,846 6,363,871 6,005,992 6,281,891
============= ============= ============= =============
Fully diluted 7,600,951 7,642,047 7,530,097 7,560,067
============= ============= ============= =============
The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For
the nine months ended June 30,
(Unaudited)
(All dollars in thousands)
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
- - -----------------------------------------
Net income $ 7,170 $ 3,894
------------- ------------
Adjustments to reconcile net income to cash provided
(used) by operating activities:
Depreciation and amortization 3,653 2,674
Deferred income taxes (410) -
Provision for real estate charges 850 750
Other non-cash items 1,091 (198)
------------- ------------
5,184 3,226
------------- ------------
Changes in operating assets and liabilities:
Cash and securities segregated for
regulatory purposes 20,018 (18,627)
Loans under matched securities resale and repurchase agreements, net (414) 2,074
Net payables to customers (30,811) 14,541
Net receivables from brokers, dealers and clearing agencies (5,884) (356)
Other receivables (241) 3,961
Trading securities owned, net 30,397 4,629
Other assets (4,976) (5,113)
Accrued compensation and benefits 3,349 (1,950)
Other liabilities and accrued expenses 1,293 (1,155)
------------- ------------
12,731 (1,996)
------------- ------------
Cash provided (used) by operating activities 25,085 5,124
------------- ------------
Cash flows from financing activities:
- - -----------------------------------------
Proceeds from (repayment of ):
Short-term bank borrowings 3,420 (6,307)
Borrowings under financing repurchase and resale agreements, net (41,490) 1,511
Notes payable (1,309) (696)
Proceeds from stock options exercised 126 164
Purchase of stock for treasury (2,765) (2,575)
Dividends paid (549) (572)
------------- ------------
Cash used by financing activities (42,567) (8,475)
------------- ------------
Cash flows from investing activities:
- - -----------------------------------------
Capital expenditures (2,814) (3,270)
------------- ------------
Cash used by investing activities (2,814) (3,270)
------------- ------------
Net decrease in cash and cash equivalents (20,296) (6,621)
Cash and cash equivalents at beginning of period 26,537 30,193
------------- ------------
Cash and cash equivalents at end of period $ 6,241 $ 23,572
============= ============
Cash paid during the quarter for:
Interest $ 5,060 $ 9,029
Income taxes $ 3,674 $ 593
The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
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, 1996, IJL's net capital was 17% of its aggregate debit balances
and approximately $36.0 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, 1996 $2.7
For the fiscal year ended September 30,
1997 7.7
1998 5.4
1999 3.5
2000 1.4
Thereafter 5.0
--------
$ 25.7
========
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, 1996, contingent liabilities under these
obligations amounted to approximately $2.1 million in the aggregate.
Of a $20 million irrevocable letter of credit available, the amount
outstanding at June 30, 1996 under this facility was $4.5 million.
4. Legal Proceedings:
The Company is involved in certain litigation arising in the ordinary
course of business. Management believes, based upon discussion with
counsel, that the outcome of this litigation will not have a material
effect on the Company's financial position. The materiality of legal
matters on the Company's future operating results depends on the level of
future results of operations as well as the timing and ultimate outcome of
such legal matters.
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, 1996, IJL's commitments included forward purchase and sale
contracts involving mortgage-backed securities with long market values of
approximately $26.0 million and short market values of approximately $26.4
million and futures sale contracts with short market values of $15.9
million used primarily to hedge municipal bonds. While IJL may from time to
time participate in the trading of some derivative securities for its
customers, this is not a significant portion of IJL's business.
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 93% of all loans under
securities resale agreements at June 30, 1996 were made to five
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.
6. Long-Term Incentive Compensation Plan:
The Company's Board of Directors approved a three-year incentive
compensation plan ("the Plan") for selected executive officers at its July
1996 meeting. The Plan was approved retroactively to the beginning of the
Company's 1996 fiscal year; accordingly, quarterly financial information
has been restated to reflect adoption of the Plan. Compensation expense
recognized under the Plan totaled $255,000 and $919,000, respectively, for
the quarter and nine months ended June 30, 1996 and is reflected in the
accompanying restated financial statements. Maximum imputed shares issuable
under the Plan as of June 30, 1996 totaled 300,000, and are included as
common stock equivalents in the computation of fully diluted earnings per
share.
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. As a result, revenues and earnings may
vary significantly from quarter to quarter.
In recent years, the Company's retail sales force has grown in large part due to
the recruitment and training of individuals without securities industry
experience. At June 30, 1996, approximately 20% of the Company's retail
financial consultants had fewer than three years' industry experience. While
this strategy may be rewarding in the future, near-term slowdowns in individual
investor activity could negatively impact the revenue production of a less
seasoned sales force. Implementation of prospective Securities and Exchange
Commission disclosure requirements for broker-dealers regarding payment for
order flow, and for money managers regarding "soft dollar" arrangements with
broker-dealers, could also indirectly stifle certain revenue streams in the
future.
Liquidity and Capital Resources
The Company's net cash position decreased $20.3 million for the nine months
ended June 30, 1996. Changes in net operating assets provided $12.7 million of
cash, augmented by $12.4 million of net income adjusted for depreciation and
other non-cash charges. Financing activities consumed $42.6 million of cash
while capital expenditures totaled $2.8 million.
The Company's asset base consists primarily of cash, cash equivalents, and other
assets which can be converted to cash within one year; at June 30, 1996, these
assets comprised approximately 92% of the balance sheet. Day-to-day financing
requirements generally are influenced by the level of securities inventories,
net receivables from customers and broker-dealers, and net receivables under
resale agreements. Significant incremental cash requirements also may occur from
time to time 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. In addition, the Company anticipates capital spending of up to $3
million over the next several years in conjunction with a planned program of
technology improvements.
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
At June 30, 1996, the Company had $155 million of unused call loan financing
available. In addition, the Company maintains credit lines of several hundred
million dollars for collateralized repurchase agreements with other financial
institutions, and has financed its customer receivables with customer payables
for many years. Management believes that these resources, funds provided by
operations, and permanent capital of shareholders' equity and long-term
subordinated debt, 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 consistently has operated well in excess of the minimum
requirements. At June 30, 1996, IJL had net capital of $40.7 million, "excess
net capital" of approximately $36.0 million, and a net capital ratio of 17%.
Results of Operations
For the nine months ended June 30, 1996, net revenues increased $34.6 million,
or 32%, from the previous year, while expenses, other than interest, increased
$29.0 million, or 29%. Net income of $7.2 million was up $3.3 million from the
results of the period of a year ago. Net revenues increased $8.3 million, or
21%, for the three months ended June 30, 1996, while non-interest expenses
increased $6.7 million, or 18%. Net income for the period was $2.3 million or
$.38 per share, compared with $1.4 million or $.22 per share for the same
quarter of a year ago.
Overall, commissions and sales credits increased by about $29.0 million, or 35%,
from the same nine-month period of a year ago, representing gains of 35% in the
retail sector and 37% in the institutional sector. For the three-month period
ended June 30, 1996, commissions and sales credits increased about $6.6 million
from the same period of a year ago. Increases in secondary market transactions
in both exchange listed and OTC equities, and increased equity underwritings
contributed to the increase in both the retail and institutional sectors for the
nine and three month periods. Increased sales of mutual fund shares and annuity
products also contributed to the increase in the retail sector, while improved
new issue markets and increased activity in mortgage-backed securities had a
positive impact on the institutional sector for both periods presented.
Increased profits of $1.3 million in OTC trading were offset by a $650,000
decrease in fixed income trading to produce an overall increase in trading gains
of $650,000, or 13% for the nine months ended June 30, 1996. An increase of
$550,000 in OTC trading for the quarter was offset by a decrease of $300,000 in
fixed income trading, producing a net increase of $250,000 or 15% in trading
gains.
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
Investment banking fees and underwriting profits increased $800,000, or 27% from
the same nine month period of a year ago due to an improved equity
capital-raising environment, coupled with an increased level of managed
underwritings. However, a decrease in revenue from participation in underwriting
syndicates contributed to the $300,000 decrease in this sector for the quarter.
Asset management and advisory fees were up $1.6 million and $700,000 for the
nine and three month periods, respectively, due to the continued growth of
asset-based fees charged retail clients in lieu of transaction-based
commissions. Other income was up $1.1 million and $500,000 for the nine and
three month periods, respectively, largely attributable to an increase in money
fund service fees.
Interest revenues were down about $8.0 million for the nine months ($3.4 million
for the quarter) ended June 30, 1996 while interest expenses decreased $9.5
million and $3.9 million for the corresponding periods. The resultant increases
of $1.5 million and $500,000 in net interest income for the nine and three month
periods, respectively, is due primarily to an increase in interest earned on
segregated customer funds offset slightly by increased levels of net unmatched
repurchase agreements and reduced rate spreads earned on customer balances. The
majority of the decrease in both revenues and expenses is attributable to
significantly lower levels of matched resale and repurchase agreements.
Compensation and benefits costs increased $24.2 million, or 35% ($6.1 million
for the quarter), due primarily to an increase in transaction-based commissions
and other profit-driven incentives including the new management LTIP described
in Note 6 to the Condensed Consolidated Financial Statements. Technology and
telephone expense increased $2.0 million, or 18%, for the nine month period and
$300,000 for the quarter primarily due to expenses related to the Company's
ongoing program of technology improvements. Professional services decreased
$200,000 for both the nine and three month periods of a year ago due to a
decrease in legal fees paid. Other operating expenses increased $2.0 million, or
65% ($300,000 for the quarter) largely as a result of increased provisions for
legal and related matters.
Page 11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in certain litigation arising in the ordinary
course of business. Management believes, based upon discussion with
counsel, that the outcome of this litigation will not have a material
effect on the Company's financial position. The materiality of legal
matters on the Company's future operating results depends on the level of
future results of operations as well as the timing and ultimate outcome of
such legal matters.
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
27 Financial Data Schedule 15
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months
ended June 30, 1996.
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
_________________________ President and Chief
James H. Morgan Executive Officer October 21, 1996
_________________________ Vice President - Finance
Edward C. Ruff and Treasurer (Principal
Financial Officer) October 21, 1996
_________________________ Assistant Vice President
C. Fred Wagstaff, III (Principal Accounting
Officer) October 21, 1996
Page 13
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Nine Months Ended Three Months Ended
June 30, June 30,
--------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Net income per share was computed as follows: 1996 1995 1996 1995
-------------- -------------- -------------- -------------
Primary:
Net income $ 7,169,909 $ 3,893,565 $ 2,292,712 $ 1,359,805
============== ============== ============== =============
1) Weighted average shares outstanding 6,076,846 6,363,871 6,005,992 6,281,891
2) Incremental shares under stock options
computed under the treasury stock method
using the average market price of
issuer's stock during the periods 34,465 79,233 37,459 94,546
-------------- -------------- -------------- -------------
3) Weighted average shares and common
equivalent shares outstanding 6,111,311 6,443,104 6,043,451 6,376,437
============== ============== ============== =============
4) Weighted average shares outstanding
which were used for calculation (A) 6,076,846 (A) 6,363,871 (A) 6,005,992 (A) 6,281,891
============== ============== ============== =============
Net income per share $ 1.18 $ 0.61 $ 0.38 $ 0.22
============== ============== ============== =============
Fully Diluted:
1) Unadjusted income $ 7,169,909 $ 3,893,565 $ 2,292,712 $ 1,359,805
2) Interest on convertible subordinated 720,134 738,443 240,045 246,148
-------------- -------------- -------------- -------------
Adjusted net income $ 7,890,043 $ 4,632,008 $ 2,532,757 $ 1,605,953
============== ============== ============== =============
3) Weighted average shares outstanding 6,076,846 6,363,871 6,005,992 6,281,891
4) 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 41,063 95,134 41,063 95,134
5) Incremental shares relating to
convertible subordinated debentures 1,183,042 1,183,042 1,183,042 1,183,042
6) Incremental shares related to long-term
incentive compensation plan. (See Note 6) 300,000 300,000
-------------- -------------- -------------- -------------
7) Weighted average shares and common
equivalent shares outstanding 7,600,951 7,642,047 7,530,097 7,560,067
============== ============== ============== =============
Net income per share $ 1.04 $ 0.61 $ 0.34 $ 0.21
============== ============== ============== =============
(A) Dilutive effect of common equivalent shares not included since dilution is less than 3%.
</TABLE>
Page 14
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1996 SEP-30-1996
<PERIOD-START> APR-01-1996 OCT-01-1995 OCT-01-1995
<PERIOD-END> JUN-30-1996 MAR-31-1996 JUN-30-1996
<CASH> 6,241 6,241 6,241
<RECEIVABLES> 240,122 240,122 240,122
<SECURITIES-RESALE> 137,690 137,690 137,690
<SECURITIES-BORROWED> 10,201 10,201 10,201
<INSTRUMENTS-OWNED> 103,202 103,202 103,202
<PP&E> 15,216 15,216 15,216
<TOTAL-ASSETS> 644,017 644,017 644,017
<SHORT-TERM> 15,292 15,292 15,292
<PAYABLES> 296,504 296,504 296,504
<REPOS-SOLD> 111,329 111,329 111,329
<SECURITIES-LOANED> 0 0 0
<INSTRUMENTS-SOLD> 83,154 83,154 83,154
<LONG-TERM> 27,462 27,462 27,462
0 0 0
0 0 0
<COMMON> 1,377 1,377 1,377
<OTHER-SE> 73,971 73,971 73,971
<TOTAL-LIABILITY-AND-EQUITY> 644,017 644,017 644,017
<TRADING-REVENUE> 1,800 3,909 5,709
<INTEREST-DIVIDENDS> 8,353 16,809 25,162
<COMMISSIONS> 37,176 74,043 111,219
<INVESTMENT-BANKING-REVENUES> 782 2,936 3,718
<FEE-REVENUE> 2,433 4,390 6,823
<INTEREST-EXPENSE> 5,305 10,762 16,067
<COMPENSATION> 31,038 61,700 92,738
<INCOME-PRETAX> 3,756 8,264 12,020
<INCOME-PRE-EXTRAORDINARY> 3,756 8,264 12,020
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 2,293 4,877 7,170
<EPS-PRIMARY> 0.38 0.80 1.18
<EPS-DILUTED> 0.34 0.70 1.04
</TABLE>
