<PAGE>
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 March 31, 1997
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 April 30, 1997
(Common stock, $.20 par value) 6,236,918
PAGE 1 OF 14
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
Page Number
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of
Financial Condition--March 31, 1997 and
September 30, 1996 3
Condensed Consolidated Statements of
Operations--Six Months Ended
March 31, 1997 and 1996 4
Condensed Consolidated Statements of
Cash Flows--Six Months Ended
March 31, 1997 and 1996 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
</TABLE>
Page 2
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
(All dollars in thousands)
March 31, September 30,
1997 1996
------------- --------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 17,450 $ 37,285
Cash and securities segregated for
regulatory purposes 104,001 80,501
Loans under matched securities resale agreements 3,857 5,874
Receivables:
Securities resale agreements 27,013 63,801
Customers 257,736 234,779
Brokers, dealers and clearing agencies 20,068 31,406
Other 6,290 4,234
Trading securities owned 121,061 59,796
Land, buildings, and improvements, net 5,140 5,574
Office facilities and equipment, net 8,565 9,236
Goodwill and intangible assets 12,525 13,076
Other assets 26,507 22,779
------------- --------------
$ 610,213 $ 568,341
============= ==============
Liabilities and Shareholders' Equity
Short-term borrowings:
Checks payable $ 18,142 $ 16,561
Securities repurchase agreements 64,395 31,078
Borrowings under matched securities repurchase agreements 3,935 5,983
Payables:
Customers 326,513 292,450
Brokers and dealers 16,011 7,375
Other 6,315 7,262
Accrued compensation and benefits 20,040 20,939
Securities sold but not yet purchased 29,221 65,784
Notes payable 5,725 6,208
Other liabilities and accrued expenses 17,294 16,875
------------- --------------
507,591 470,515
------------- --------------
Minority interests 200 200
------------- --------------
Long-term subordinated debt 20,384 20,999
------------- --------------
Shareholders' equity:
Common stock 1,377 1,377
Additional paid-in-capital 31,472 31,231
Retained earnings 58,209 53,670
------------- --------------
91,058 86,278
Less: treasury stock, at cost (9,020) (9,651)
------------- --------------
Total shareholders' equity 82,038 76,627
------------- --------------
$ 610,213 $ 568,341
============= ==============
</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 Six Months For the Three Months
Ended March 31, Ended March 31,
(All dollars in thousands) (All dollars in thousands)
1997 1996 1997 1996
------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Commissions and sales credits $ 75,202 $ 74,043 $ 39,553 $ 39,726
Trading gains, net 4,529 3,910 2,553 1,871
Investment banking and underwriting 3,284 2,936 1,994 1,197
Asset management and advisory 5,779 4,390 2,981 2,245
Interest 16,634 16,808 8,521 8,346
Other 4,418 3,909 1,979 2,077
------------- --------------- -------------- ----------------
Total revenues 109,846 105,996 57,581 55,462
Interest expense 9,638 10,761 4,912 5,204
------------- --------------- -------------- ----------------
Net revenues 100,208 95,235 52,669 50,258
------------- --------------- -------------- ----------------
Expenses:
Compensation and benefits 65,547 61,700 35,428 33,234
Technology and telephone 8,754 8,642 4,281 4,493
Occupancy 4,662 4,249 2,352 2,156
Execution, clearance and depository 2,009 2,061 1,012 1,005
Promotion and development 3,858 3,167 1,846 1,588
Professional services 2,059 1,513 1,043 717
Printing, postage and supplies 1,998 1,790 1,037 934
Other operating expenses 3,096 3,849 1,555 1,375
------------- --------------- -------------- ----------------
Total expenses 91,983 86,971 48,554 45,502
------------- --------------- -------------- ----------------
Income before income taxes 8,225 8,264 4,115 4,756
Income tax expense 3,208 3,387 1,605 1,949
------------- --------------- -------------- ----------------
Net Income $ 5,017 $ 4,877 $ 2,510 $ 2,807
============= =============== ============== ================
Earnings per share:
Primary $ 0.82 $ 0.80 $ 0.40 $ 0.46
============= =============== ============== ================
Fully diluted $ 0.71 $ 0.70 $ 0.35 $ 0.40
============= =============== ============== ================
Weighted average shares:
Primary 6,145,340 6,112,079 6,205,309 6,113,568
============= =============== ============== ================
Fully diluted 7,785,649 7,679,665 7,774,997 7,681,154
============= =============== ============== ================
</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 six months ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
(All dollars in thousands)
1997 1996
------------ -------------
Cash flows from operating activities:
- - --------------------------------------------------
<S> <C> <C>
Net income $ 5,017 $ 4,877
------------ -------------
Adjustments to reconcile net income to cash provided (used) by operating
activities:
Depreciation and amortization 3,276 2,349
Deferred income taxes - (950)
Provision for real estate charges - 850
Other non-cash items 126 904
------------ -------------
3,402 3,153
------------ -------------
Changes in operating assets and liabilities:
Cash and securities segregated for
regulatory purposes (23,500) (15,368)
Loans under matched securities resale and repurchase agreements, net (31) (762)
Net payables to customers 11,105 2,237
Net receivables from brokers, dealers and clearing agencies 19,974 3,077
Other receivables (2,057) 583
Trading securities owned, net (97,828) 9,386
Other assets (3,786) (3,705)
Accrued compensation and benefits (899) 2,267
Other liabilities and accrued expenses 449 597
------------ -------------
(96,573) (1,688)
------------ -------------
Cash used by operating activities (88,154) 6,342
------------ -------------
Cash flows from financing activities:
- - --------------------------------------------------
Proceeds from (repayment of ):
Short-term bank borrowings 1,581 9,474
Borrowings under securities repurchase and resale agreements, net 70,105 (23,104)
Notes payable (483) (1,108)
Purchase of stock for treasury (1,102) (1,714)
Dividends paid (479) (369)
------------ -------------
Cash provided by financing activities 69,622 (16,821)
------------ -------------
Cash flows from investing activities:
- - --------------------------------------
Capital expenditures (1,303) (2,349)
------------ -------------
Cash used by investing activities (1,303) (2,349)
------------ -------------
Net (decrease) in cash and cash equivalents (19,835) (12,828)
Cash and cash equivalents at beginning of period 37,285 26,537
------------ -------------
Cash and cash equivalents at end of period $ 17,450 $ 13,709
============ =============
Cash paid during the quarter for:
Interest $ 16,783 $ 11,098
Income taxes $ 3,878 $ 4,128
</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 March 31, 1997, IJL's net capital was 15% of its aggregate debit
balances and approximately $34.6 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 six months ended September 30, 1997 $4.6
For the fiscal year ended September 30,
1998 6.2
1999 3.7
2000 1.6
2001 0.7
Thereafter 4.5
______
$21.3
======
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 March 31, 1997, contingent liabilities under these
obligations amounted to approximately $100,000 in the aggregate.
Of a $20 million irrevocable letter of credit available, the amount
outstanding at March 31, 1997 under this facility was $3.6 million.
4. Legal Proceedings:
The Company is involved in certain litigation arising in the ordinary
course of business. While some actions seek substantial damages, 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 these legal matters to the Company's future
operating results depends on the level of future results of operations as
well as the timing and ultimate resolution 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, in periods of stable interest rates,
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 March 31, 1997, IJL's commitments included forward purchase and sale
contracts involving mortgage-backed securities with long market values of
approximately $61.5 million and short market values of approximately $61.6
million and futures purchase and sale contracts with long market values of
$200,000 and short market values of $9.8 million used primarily to hedge
municipal bonds. While the Company may from time to time participate in the
trading of some derivative securities for its clients, this trading is not
a significant portion of the Company'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 86% of all loans under
securities resale agreements at March 31, 1997 were made to two
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. Subsequent Event:
During February 1997, the Company called for redemption all of its
outstanding 7.75% subordinated convertible debentures. Prior to the
redemption date of April 17, 1997, $5.0 million of the debentures were
converted into 282,742 shares of the Company's common stock. To fund the
redemption, the Company borrowed $16.0 million from a financial institution
to which it issued a senior secured note of like amount maturing April 15,
2007. The note provides for semi-annual interest payments at a stated rate
of 8.95% beginning October 15, 1997; principal is repayable over seven
years in equal annual installments beginning on April 15, 2001.
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, both of which can be cyclical and volatile. As a result,
revenues and earnings may vary significantly from quarter to quarter.
At March 31, 1997, approximately 21% of the Company's retail financial
consultants had fewer than three years' industry experience. Notwithstanding the
energized securities markets of recent years, a prolonged slowdown in individual
investor activity could more severely reduce the revenue production of a less
seasoned sales force. In addition, the continuing trend of increased regulation
of the securities industry could create significant incremental costs and
indirectly stifle certain revenue streams.
Liquidity and Capital Resources
The Company's net cash position decreased $19.8 million for the six months ended
March 31, 1997. Operating activities consumed $96.6 million of cash, partly
funded by $8.4 million of net income adjusted for depreciation and other
non-cash charges. Financing activities provided $69.6 million of cash while
capital expenditures totaled $1.3 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 March 31, 1997 these
assets comprised approximately 91% 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, initial
funding of new business unit activities, payment of dividends, and litigation
settlements arising from normal business operations. In addition, $870,000 of
capital spending in the first six months of fiscal 1997 reflects implementation
of the second phase of a planned $10 million program of technology improvements
over a multi-year period.
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 March 31, 1997, the Company had $155 million of unused call loan financing
available. In addition, the Company maintains credit lines of several hundred
million dollars for collateralizing 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 March 31, 1997, IJL had net capital of $39.9 million, "excess
net capital" of approximately $34.6 million, and a net capital ratio of 15%.
Results of Operations
For the six months ended March 31, 1997, net revenues increased $5.0 million, or
5%, from the previous year, while expenses, other than interest, increased $5.0
million, or 6%. Net income of $5.0 million was up $140,000 from the results of
the period of a year ago. Net revenues increased $2.4 million for the three
months ended March 31, 1997, while expenses, other than interest, increased $3.1
million. Net income of $2.5 million was down $300,000 from the results of the
quarter ended March 31, 1996.
Overall, commissions and sales credits increased by about $1.2 million, or 2%
from the same six-month period of a year ago. Increased sales of mutual funds
and annuity products contributed to the majority of the increase in the retail
sector for both the six and three-month periods. Lower levels of originations
had a negative impact on the institutional sector for the same time periods.
Trading gains increased $619,000 and $683,000 for the comparable six and three
month periods, respectively. The primary reasons for the increase for the six
month period were increases in OTC, government and mortgage backed
securities trading, while the three month period increase was mainly
attributable to a rise in government and mortgage backed securities trading.
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 $348,000, or 12%, and
$797,000, or 67%, for the same six and three month periods of a year ago due to
an improved capital raising environment coupled with an increased level of
managed underwritings. Asset management and advisory fees were up $1.4 million
and $736,000 for the comparable six and three month periods due to the continued
growth of asset-based fees charged retail clients in lieu of transaction-based
commissions. Other income increased $509,000, or 13%, for the same six month
period due to an increase in money fund service fees and an increase in income
recognized on investments held by the Company.
Interest revenues were down about $174,000, while expenses decreased $1.1
million, for the six months ended March 31, 1997 compared to the corresponding
period a year ago. For the quarter, interest revenues increased $175,000, while
expenses decreased $292,000. The resultant increases of $949,000 and $467,000,
respectively, in net interest income are due to an increase in net earnings on
higher levels of client margin loans, offset by a decrease in earnings on
segregated customer funds. The majority of the decrease in both revenues
and expenses is attributable to lower levels of matched resale and repurchase
agreements.
Compensation and benefits costs increased $3.8 million, or 6% ($2.2 million for
the quarter), for the six-months period ended March 31, 1997, due primarily to
an increase in transaction based commission expense and other profit-driven
incentives. Promotion and development costs increased $691,000 for the six month
period and $258,000 for the quarter due to the Company's continuing effort to
build revenue. Professional services increased $546,000 for the six-month period
and $326,000 for the quarter due to an increase in consulting services for
technology projects, various reengineering efforts and services related to the
formation of CapTrust Financial Advisors, LLC. Printing, postage and supplies
costs increased $208,000 for the six month period and $103,000 for the quarter
due primarily to increases in postage costs and non-capitalized office
equipment. Other operating expenses decreased $753,000 for the six month period
largely as a result of decreases in the adjustments to the carrying value of
certain assets. However, for the quarter, other operating expenses increased
$180,000 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. While some actions seek substantial damages, 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 these legal matters to the Company's future
operating results depends on the level of future results of operations as
well as the timing and ultimate resolution 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 14
Computation of Per
Share Earnings
27 Financial Data 15
Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the six months
ended March 31, 1997.
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 May 14, 1997
___________________ Vice President - Finance
Edward C. Ruff and Treasurer (Principal
Financial Officer) May 14, 1997
_______________________ Assistant Vice President
C. Fred Wagstaff, III (Principal Accounting
Officer) May 14, 1997
Page 13
<PAGE>
Exhibit 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
---------------------------------- ----------------------------------
Net income per share was computed as follows: 1997 1996 1997 1996
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Primary:
Net income $ 5,016,730 $ 4,877,197 $ 2,509,674 $ 2,806,998
============ ============ ============ =============
1) Weighted average shares outstanding 5,962,740 6,112,079 5,954,701 6,113,568
2) Incremental shares under stock options
computed under the treasury stock method
using the average market price of
issuer's stock during the periods 182,600 30,667 250,608 34,338
------------ ------------ ------------ -------------
3) Weighted average shares and common
equivalent shares outstanding 6,145,340 6,142,746 6,205,309 6,147,906
============ ============ ============ =============
4) Weighted average shares outstanding
which were used for calculation 6,145,340 (A) 6,112,079 6,205,309 (A) 6,113,568
============ ============ ============ =============
Net income per share $ 0.82 $ 0.80 $ 0.40 $ 0.46
============ ============ ============ =============
Fully Diluted:
1) Unadjusted income $ 5,016,730 $ 4,877,197 $ 2,509,674 $ 2,806,998
2) Interest on convertible subordinated debentures 481,828 480,089 233,645 240,045
------------ ------------ ------------ -------------
Adjusted net income $ 5,498,558 $ 5,357,286 $ 2,743,319 $ 3,047,043
============ ============ ============ =============
3) Weighted average shares outstanding 5,962,740 6,112,079 5,954,701 6,113,568
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 292,425 34,544 292,425 34,544
5) Incremental shares relating to
convertible subordinated debentures 1,180,484 1,183,042 1,177,871 1,183,042
6) Incremental shares related to long-term
incentive compensation plan. 350,000 350,000 350,000 350,000
------------ ------------ ------------ -------------
7) Weighted average shares and common
equivalent shares outstanding 7,785,649 7,679,665 7,774,997 7,681,154
============ ============ ============ =============
Net income per share $ 0.71 $ 0.70 $ 0.35 $ 0.40
============ ============ ============ =============
</TABLE>
(A) Dilutive effect of common equivalent shares not included since dilution is
less than 3%.
Page 14
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997
<PERIOD-START> JAN-01-1997 OCT-01-1997
<PERIOD-END> MAR-31-1997 MAR-31-1997
<CASH> 17,450 17,450
<RECEIVABLES> 275,972 275,972
<SECURITIES-RESALE> 30,817 30,817
<SECURITIES-BORROWED> 8,122 8,122
<INSTRUMENTS-OWNED> 121,061 121,061
<PP&E> 13,705 13,705
<TOTAL-ASSETS> 610,213 610,213
<SHORT-TERM> 18,142 18,142
<PAYABLES> 348,839 348,839
<REPOS-SOLD> 68,330 68,330
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 29,221 29,221
<LONG-TERM> 26,109 26,109
<COMMON> 1,377 1,377
0 0
0 0
<OTHER-SE> 80,661 80,661
<TOTAL-LIABILITY-AND-EQUITY> 610,213 610,213
<TRADING-REVENUE> 2,553 4,529
<INTEREST-DIVIDENDS> 8,521 16,634
<COMMISSIONS> 39,553 75,202
<INVESTMENT-BANKING-REVENUES> 1,994 3,284
<FEE-REVENUE> 2,981 5,779
<INTEREST-EXPENSE> 4,912 9,638
<COMPENSATION> 35,428 65,547
<INCOME-PRETAX> 4,115 8,225
<INCOME-PRE-EXTRAORDINARY> 4,115 8,225
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,510 5,017
<EPS-PRIMARY> 0.40 0.82
<EPS-DILUTED> 0.35 0.71
</TABLE>
