SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 27, 1997
Commission file number 0-14140
First Albany Companies Inc.
(Exact name of registrant as specified in its charter)
New York 22-2655804
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 South Pearl St., Albany, NY 12207
(Address of principal executive offices) (Zip Code)
(518) 447-8500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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 (1) No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
5,171,279 Shares of Common Stock were outstanding as of the close
of business on April 22, 1997.
FIRST ALBANY COMPANIES INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
PAGE
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Financial
Condition at March 27, 1997 and
December 31, 1996......................... 3
Condensed Consolidated Statements of Operations
for the Three Months Ended
March 27, 1997 and March 29, 1996......... 4
Condensed Consolidated Statements of Cash Flow
for the Three Months Ended
March 27, 1997and March 29, 1996.......... 5
Notes to Condensed Consolidated Financial
Statements.................................... 6-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 10-14
Part II - Other Information
Item 1. Legal Proceedings........................ 15
Item 6. Exhibits and Reports on Form 8-K......... 15-18
FIRST ALBANY COMPANIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
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<S>
March 27,
1997 December 31,
(In thousands of dollars) (Unaudited) 1996
Assets
Cash $ 2,400 $ 4,005
Cash and securities segregated under federal regs. 2,000
Securities purchased under agreement to resell 6,597 2,869
Securities borrowed 402,767 344,904
Receivables from:
Brokers, dealers and clearing agencies 967 1,856
Customers 144,460 128,130
Others 6,833 8,181
Securities owned 85,869 156,154
Investments 6,647 6,157
Office equipment and leasehold improvements, net 14,397 12,584
Other assets 12,011 10,945
- ---------------------------------------------------------------------------------------------
Total assets $684,948 $675,785
=============================================================================================
Liabilities and Stockholders' Equity
Liabilities
Short-term bank loans $131,312 $134,712
Securities loaned 417,069 350,577
Payables to:
Brokers, dealers and clearing agencies 4,014 3,150
Customers 35,271 48,174
Others 16,788 56,615
Securities sold but not yet purchased 11,762 10,075
Accounts payable 2,289 1,928
Accrued compensation 3,639 11,649
Accrued expenses 3,878 5,622
Notes payable 9,240 4,583
Obligations under capitalized leases 1,821 1,426
- ----------------------------------------------------------------------------------------------
Total liabilities 637,083 628,511
==============================================================================================
Commitments and Contingencies
Subordinated debt 5,000 5,000
- ----------------------------------------------------------------------------------------------
Stockholders' Equity
Common stock 54 54
Additional paid-in-capital 25,591 25,591
Retained earnings 18,575 18,556
Less treasury stock at cost (1,355) (1,927)
- ----------------------------------------------------------------------------------------------
Total stockholders' equity 42,865 42,274
- ----------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $684,948 $675,785
==============================================================================================
</TABLE>
See notes to the condensed consolidated financial statements.
FIRST ALBANY COMPANIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<S> <C> <C>
Three Months Ended
(In thousands of dollars except for per share March 27, March 29, and outstanding
share amounts) 1997 1996
Revenues
Commissions $ 11,581 $ 11,144
Principal transactions 14,566 16,188
Investment banking 3,196 4,295
Interest 10,052 6,439
Fees and other 2,664 2,224
- -----------------------------------------------------------------------------------------
Total revenues 42,059 40,290
Interest expense 8,424 4,954
- -----------------------------------------------------------------------------------------
Net revenues 33,635 35,336
=========================================================================================
Expenses (excluding interest)
Compensation and benefits 22,888 24,345
Clearing, settlement and brokerage costs 738 635
Communications and data processing 3,129 2,513
Occupancy and depreciation 3,107 1,857
Selling 1,755 1,503
Other 1,988 1,626
- -----------------------------------------------------------------------------------------
Total expenses (excluding interest) 33,605 32,479
- -----------------------------------------------------------------------------------------
Income before income taxes 30 2,857
Income tax(recovery) expense (36) 1,103
- -----------------------------------------------------------------------------------------
Income before extraordinary items 66 1,754
- -----------------------------------------------------------------------------------------
Extraordinary gain, net of taxes 305
- -----------------------------------------------------------------------------------------
Net Income $ 371 $ 1,754
=========================================================================================
Primary Earnings Per Share:
Income before extraordinary gain $ 0.01 $ 0.31
Extraordinary gain 0.05 0.00
- -----------------------------------------------------------------------------------------
Net Income $ 0.06 $ 0.31
=========================================================================================
Fully Diluted Earnings Per Share:
Income before extraordinary gain $ 0.01 $ 0.31
Extraordinary gain 0.05 0.00
- -----------------------------------------------------------------------------------------
Net Income $ 0.06 $ 0.31
=========================================================================================
Weighted average common
and common equivalent
shares outstanding:
Primary 5,761,745 5,718,084
Fully diluted 5,761,745 5,718,084
=========================================================================================
Dividend per common share outstanding $ 0.05 $ 0.05
=========================================================================================
</TABLE>
See notes to the condensed consolidated financial statements.
FIRST ALBANY COMPANIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<S> <C> <C> <C>
Three Months Ended
March 27, March 29,
(In thousands of dollars) 1997 1996
Cash flows from operating activities:
Net income $ 371 $ 1,754
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 1,042 739
Deferred income taxes 891 488
Undistributed earnings of affiliate (620)
Unrealized investment loss 133
(Increase) decrease in operating assets:
Cash and securities segregated under federal regs. (2,000) (1,600)
Securities purchased under agreement to resell (3,728)
Net receivables from customers (29,233) (12,034)
Net receivables from others 6,158
Securities owned, net 71,972 10,916
Other assets (1,957) (5,009)
Increase (decrease) in operating liabilities:
Securities loaned, net 8,629 8,927
Net payables to brokers, dealers, and
clearing agencies 1,753 4,146
Net payables to others (38,479)
Accounts payable and accrued expenses (9,393) (2,888)
- ------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (619) 11,597
- ------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of furniture, equipment, and leaseholds (2,370) (924)
(Increase) decrease in investments (3) 245
- ------------------------------------------------------------------------------------------------
Net cash used in investing activities (2,373) (679)
- ------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds (payments) of short-term bank loans (3,400) (16,706)
Proceeds of notes payable 5,000 3,859
Payments on notes payable (393)
Purchase of treasury stock (1,245)
Payments of obligations under capitalized leases (90)
Proceeds from issuance of common stock from treasury 478 233
Proceeds from issuance of restricted stock 689
Dividends paid (258) (228)
- ------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 1,387 (13,398)
- ------------------------------------------------------------------------------------------------
Decrease in cash (1,605) (2,480)
Cash at beginning of the year 4,005 5,450
- ------------------------------------------------------------------------------------------------
Cash at end of period $ 2,400 $ 2,970
================================================================================================
</TABLE>
See notes to the condensed consolidated financial statements.
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all normal, recurring adjustments, necessary
for a fair presentation of results for such periods. The results for any
interim period are not necessarily indicative of those for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. These consolidated financial statements
should be read in conjunction with the financial statements and notes for
the year ended December 31, 1996.
2. Investments
The Company's investment in Mechanical Technology Incorporated ("MTI") is
recorded under the equity method and at March 27, 1997 approximated
$3,212,000, which included goodwill of approximately $926,000 which is
being amortized. At March 27, 1997, the aggregate market value of the
Company's shares of MTI stock was $5,855,000.
During the first quarter of 1997, the Company realized an extraordinary
gain of $0.3 million. This extraordinary gain was the result of the
Company's investment in MTI. Per the equity method of accounting for
investments, the Company must record its share of MTI's extraordinary gains
as an extraordinary gain on the Company's books. During the first quarter
of MTI's 1997 fiscal year , MTI realized an extraordinary gain due to the
extinguishment of debt.
At March 27, 1997, the Company owned 200,000 shares of META Group, Inc.
This investment was carried at the value of $3,435,000 at March 27, 1997.
Part of this investment is recorded at cost due to certain restrictions
placed on the sale of these securities. The other portion of these
securities are readily marketable pursuant to Financial Accounting
Standards No. 115 "Accounting for Certain Investments in Debt and Equity
Securities". The fair market value of this investment was $3,850,000 at
March 27,1997.
3. Payables to Others
Amounts payable to others as of:
<TABLE>
<S> <C> <C> <C>
March 27, December 31,
(In thousands of dollars) 1997 1996
- -------------------------------------------------------------------------------------
Adjustment to record securities owned on
a trade date basis, net $ 4,822 $ 39,401
Others 11,966 17,214
- -------------------------------------------------------------------------------------
Total $ 16,788 $ 56,615
=====================================================================================
</TABLE>
For proprietary securities transactions, amounts receivable and payable
for securities transactions that have not reached their contractual
settlement date are recorded net on the statement of financial condition.
4. Notes Payable
Notes payable consists of a note for $4,239,583, which is collateralized
by fixed assets and is payable in monthly principal payments of $114,583
plus interest. The interest rate is 2.5% over the 90-day United States
Treasury Securities Rate (4.97% plus 2.5% on March 27, 1997). This note
matures April 1, 2000.
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
Notes payable also consists of a note for $5,000,000, which is
collateralized by fixed assets and is payable in monthly principal payments
of $104,167 plus interest. The interest rate is 2% over the 30-day London
InterBank Offered Rate ("LIBOR") (5.75% plus 2% on March 27,1997). One of
the more significant covenants requires FAC to maintain a minimum net
capital (as defined by Rule 15c3-1 of the Securities and Exchange
Commission) equal to three times the required minimum net capital. The
required minimum net capital as of March 27, 1997 was $3,004,000. The
amount of net capital as of March 27, 1997 was $19,085,000. This note
matures on March 27, 2001.
5. Obligations under Capitalized Leases
The following is a schedule of future minimum lease payments under capital
leases together with the present value of the net minimum lease payments as
of March 27, 1997:
(In thousands of dollars)
----------------------------------------------
1997 - (nine months) $ 327
1998 436
1999 439
2000 410
2001 484
2002 69
----------------------------------------------
Total Minimum Lease Payments 2,165
Less: Amount Representing Interest 344
----------------------------------------------
Present Value of Minimum Lease Payments $1,821
==============================================
6. Subordinated Debt
The subordinated debt of $5,000,000 bears interest at 9.25%. Interest is
paid monthly with the principal amount due at maturity on July 31, 2001.
The loan agreement includes financial covenants for debt and equity. One
of the more significant covenants requires First Albany Corporation to
maintain a minimum net capital (as defined by Rule 15c3-1 of the Securities
and Exchange Commission) of $7,500,000. The amount of net capital as of
March 27,1997 was $19,085,000. The lender has the right to exercise stock
options on 84,000 shares of the Company's stock at $11.90 per share. This
right expires July 31, 2000.
7. Commitments and Contingencies
In the normal course of business, the Company has been named a defendant,
or otherwise has possible exposure, in several claims. Certain of these
are class actions which seek unspecified damages which could be
substantial. Although there can be no assurance as to the eventual outcome
of litigation in which the Company has been named as a defendant or
otherwise has possible exposure, the Company has provided for those actions
it believes are likely to result in adverse dispositions. Although further
losses are possible, the opinion of management, based upon the advice of
its attorneys and general counsel, is that such litigation will not, in the
aggregate, have a material adverse effect on the Company's liquidity or
financial position, although it could have a material effect on quarterly
or annual operating results in the period in which it is resolved.
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
8. Stockholders' Equity
In January, 1997, the Board of Directors declared the regular quarterly
dividend of $0.05 per share payable on February 25, 1997 to shareholders of
record on February 11, 1997.
In April 1997, the Board of Directors declared the regular quarterly
dividend of $0.05 per share for the first quarter, ended March 27, 1997,
along with a 5% stock dividend. Both are payable on May 27, 1997 to
shareholders of record on May 12, 1997.
9. Net Income Per Common and Common Equivalent Share
Net income per common and common equivalent share for both the primary and
fully diluted computations have been based upon the weighted average number
of common shares and the dilutive common stock equivalents outstanding.
The dilutive effect of the common stock equivalents was determined using
the treasury stock method.
Net income per common and common equivalent share, along with both the
primary and fully dilutive weighted average common and common equivalent
shares outstanding, have been adjusted to reflect all of the 5% stock dividends
declared, including the 5% stock dividends declared in April 1997, payable on
May 27, 1997.
10. Net Capital Requirements
The Company's broker-dealer subsidiary, First Albany Corporation, is
subject to the Securities and Exchange Commission's Uniform Net Capital
Rule which requires the maintenance of a minimum net capital as calculated
and defined by the Rule. As of March 27, 1997, the broker-dealer
subsidiary had aggregate net capital, as defined, of $19,085,000 -
exceeding the required net capital by $16,081,000.
11. New Accounting Standards
Financial Accounting Standards Board No. 125 - "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
This statement which would be effective for all transfers after December
31, 1997, addresses several matters that have a significant impact of the
Broker/Dealer industry. It addresses how and when to record transferred
assets, transfers of partial interests, servicing of financial assets,
securitizations, transfers of sales-type and direct financing lease
receivables, securities lending transactions, repurchase agreements
including "dollar rolls," "wash sales," loan syndications and
participations, risk participations in banker's acceptances, factoring
arrangements, transfers of receivables with recourse, and extinguishments
of liabilities, collateral, repurchase agreements and how to amortize
servicing assets and liabilities.
Financial Accounting Standards No. 128 - "Earnings Per Share." This
statement which is effective for financial statements issued for periods
ending after December 15, 1997, simplifies the computation of earnings per
share (EPS) by replacing the "primary" EPS requirements with a "basic" EPS
computation based upon weighted-average shares outstanding. This new
standard requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation.
Management has not yet made a determination of the impact, if any, that
the adoption of these standards would have on the consolidated financial
statements.
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<TABLE>
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1997 vs.
Three Months Ended 1996 Percentage
March 27, March 29, Increase Increase
(In thousands of dollars) 1997 1996 (Decrease) (Decrease)
- -------------------------------------------------------------------------------------
Revenues
Commissions $11,581 $11,144 $ 437 4%
Principal transactions 14,566 16,188 (1,622) (10)%
Investment banking 3,196 4,295 (1,099) (26)%
Interest income 10,052 6,439 3,613 56%
Fees and others 2,664 2,224 440 20%
- -------------------------------------------------------------------------------------
Total revenues 42,059 40,290 1,769 4%
Interest expense 8,424 4,954 3,470 70%
- -------------------------------------------------------------------------------------
Net revenues 33,635 35,336 (1,701) (5)%
- -------------------------------------------------------------------------------------
Expenses (excluding interest)
Compensation and benefits 22,888 24,345 (1,457) (6)%
Clearing, settlement and
brokerage costs 738 635 103 16%
Communications and
data processing 3,129 2,513 616 25%
Occupancy and depreciation 3,107 1,857 1,250 67%
Selling 1,755 1,503 252 17%
Other 1,988 1,626 362 22%
- -------------------------------------------------------------------------------------
Total expenses (excluding interest) 33,605 32,479 1,126 3%
- -------------------------------------------------------------------------------------
Income before income taxes 3 2,857 (2,827) (99)%
- -------------------------------------------------------------------------------------
Income tax (recovery) expense (36) 1,103 (1,139) (103)%
- -------------------------------------------------------------------------------------
Income before extraordinary items 66 1,754 (1,688) (96)%
- -------------------------------------------------------------------------------------
Extraordinary gain, net of taxes 305 305
- -------------------------------------------------------------------------------------
Net Income $ 371 $ 1,754 $ (1,383) (79)%
=====================================================================================
Net interest income
Interest income $10,052 $ 6,439 $ 3,613 56%
Interest expense 8,424 4,954 3,470 70%
- -------------------------------------------------------------------------------------
Net Interest Income $ 1,628 $ 1,485 $ 143 10%
=====================================================================================
</TABLE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position
and results of operations during the periods included in the accompanying
condensed consolidated financial statements.
Business Environment
First Albany Corporation, a wholly-owned subsidiary of the Company, is a
full service investment banking and brokerage firm. Its primary business
includes the underwriting, distribution, and trading of fixed income and
equity securities. The investment banking and brokerage businesses earn
revenues in direct correlation with the general level of trading activity
in the stock and bond markets. This level of activity cannot be controlled
by the Company; however, many of the Company's costs are fixed. Therefore,
the Company's earnings, like those of others in the industry, reflect the
activity in the markets and can fluctuate accordingly.
Results of Operations
Three Month Periods Ended March 27, 1997 and March 29, 1996
Net Income
Net income for the quarter ended March 27, 1997 was $0.4 million or $0.06
per share compared to $1.8 million or $0.31 per share a year ago. The
firm's divisions experienced mixed results during the quarter due to the
uncertainty in the financial markets. The retail and municipal divisions'
net revenues were up 11% and 49%, respectively, while net revenues for the
equity capital markets division decreased 44% and for the fixed income
capital markets division decreased 22%. Earnings also were affected by the
Company's investment in people and technology, which is critical to the
Company's long-term success. The Company is aggressively seeking ways to
decrease costs to limit the impact of these investments on our near-term
results; however, management expects this pressure on margins will continue
for the near-term.
Commissions
Commission revenues increased $0.4 million or 4% in this year's first
quarter. Revenues from mutual fund commissions increased $0.5 million
while revenues from listed and over-the-counter commissions decreased $0.1
million.
Principal Transactions
Principal transactions decreased $1.6 million or 10% in this year's first
quarter. This amount was comprised of a decrease in equity securities of
$1.6 million, a decrease in taxable fixed income of $0.3 million and an
increase in municipal bonds of $0.3 million.
Investment Banking
Investment banking revenues decreased $1.1 million or 26% in this year's
first quarter. Revenues from selling concessions were down $1.2 million
(equities decreased $1.4 million, municipals increased $0.3 million and
taxable fixed income decreased $0.1 million), underwriting fees decreased
$0.3 million (equities decreased $0.3 million), and investment banking fees
increased $0.4 million (primarily due to an increase in municipals).
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Fees and Others
Fees and other revenues increased $0.4 million or 20% reflecting increased
service charges and financial service revenues.
Compensation and Benefits
Compensation and benefits decreased $1.5 million or 6% due primarily to
the decrease in revenues.
Communications and Data Processing
Communications and data processing expenses increased $0.6 million or 25%
in the first quarter. Communications expense increased $0.5 million due the
firm's upgrade in technology and increased headcount. Data processing
expense increased $0.1 million.
Occupancy and Depreciation
Occupancy and depreciation expenses increased $1.3 million or 67%
primarily as a result of the upgrade of our retail branch technology and
the expansion of our retail and institutional offices in New York City.
Other
Other expenses increased $0.4 million or 22% partially due to an
investment in enhanced client communications.
Income Taxes
Income taxes decreased $1.1 million due to a decrease in pre-tax earnings.
The Company's effective tax rate decreased as a result of an increased
proportion of tax-exempt interest income to "income before taxes".
Extraordinary gain, net of taxes
During the first quarter of 1997, the Company realized an extraordinary
gain of $0.3 million. This extraordinary gain was the result of the
Company's investment in Mechanical Technology Incorporated ("MTI"). The
Company's investment in MTI is recorded under the equity method. Per the
equity method of accounting for investments, the Company must record its
share of MTI's extraordinary gains as an extraordinary gain on the
Company's books. During the first quarter of MTI's fiscal year 1997, MTI
realized an extraordinary gain due to the extinguishment of debt.
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Liquidity and Capital Resources
A substantial portion of the Company's assets, similar to other brokerage
and investment banking firms, is liquid, consisting of cash and assets
readily convertible into cash. These assets are financed primarily by the
Company's interest-bearing and non-interest-bearing payables to customers,
payables to brokers and dealers secured by loaned securities, and bank
lines-of-credit. Securities borrowed and securities loaned along with
receivables from customers and payables to customers will fluctuate
primarily due to the current level of business activity in these areas.
Securities owned will fluctuate as a result of changes in the level of
positions held to facilitate customer transactions and changes in market
conditions. Payable to others decreased primarily because of a decrease in
the adjustment to record securities owned on a trade date basis. Accrued
compensation decreased primarily due to the payment in the March 1997
quarter of calendar 1996 year-end bonuses and incentive compensation.
At March 27, 1997, First Albany Corporation and Northeast Brokerage
Services Corporation, both registered broker-dealer subsidiaries of First
Albany Companies Inc., were each in compliance with the net capital
requirements of the Securities and Exchange Commission and had capital in
excess of the minimum required.
Management believes that funds provided by operations and a variety of
committed and uncommitted bank lines-of-credit-totaling $200,000,000 of
which approximately $68,688,000 were unused as of March 27, 1997-will
provide sufficient resources to meet present and reasonably foreseeable
short-term financing needs.
In January, 1997, the Board of Directors declared the regular quarterly
dividend of $0.05 per share payable on February 25, 1997 to shareholders of
record on February 11, 1997.
In April 1997, the Board of Directors declared the regular quarterly
dividend of $0.05 per share for the first quarter, ended March 27, 1997,
along with a 5% stock dividend. Both are payable on May 27, 1997 to
shareholders of record on May 12, 1997.
The Company believes that funds provided by operations will also provide
sufficient resources for the acquisition of office equipment and leasehold
improvements, current long-term loan repayment requirements, and other long-
term requirements.
New Accounting Standards
Financial Accounting Standards Board No. 125 - "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
This statement which would be effective for all transfers after December
31, 1997, addresses several matters that have a significant impact of the
Broker/Dealer industry. It addresses how and when to record transferred
assets, transfers of partial interests, servicing of financial assets,
securitizations, transfers of sales-type and direct financing lease
receivables, securities lending transactions, repurchase agreements
including "dollar rolls," "wash sales," loan syndications and
participations, risk participations in banker's acceptances, factoring
arrangements, transfers of receivables with recourse, and extinguishments
of liabilities, collateral, repurchase agreements and how to amortize
servicing assets and liabilities.
Financial Accounting Standards No. 128 - "Earnings Per Share." This
statement which is effective for financial statements issued for periods
ending after December 15, 1997, simplifies the computation of earnings per
share (EPS) by replacing the "primary" EPS requirements with a "basic" EPS
computation
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
based upon weighted-average shares outstanding. This new standard requires
a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation.
Management has not yet made a determination of the impact, if any, that
the adoption of these standard would have on the consolidated financial
statements.
Part II-Other Information
Item 1. Legal Proceedings
In the normal course of business, the Company has been named a defendant,
or otherwise has possible exposure, in several claims. Certain of these
are class actions which seek unspecified damages that could be substantial.
Although there can be no assurance as to the eventual outcome of litigation
in which the Company has been named as a defendant or otherwise has
possible exposure, the Company has provided for those actions most likely
to result in adverse dispositions. Although further losses are possible,
the opinion of management, based upon the advice of its attorneys and
general counsel, is that such litigation will not, in the aggregate, have a
material adverse effect on the Company's liquidity or financial position,
although it could have a material effect on quarterly or annual operating
results in the period in which it is resolved.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement Re: Computation of Per Share Earnings.
(27) Selected Financial Data Schedule BD
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
First Albany Companies Inc.
(Registrant)
Date:5/7/97 /s/ Alan Goldberg
--------------------
Alan P. Goldberg
President/Director
Date:5/7/97 /s/ David Cunningham
--------------------
David J. Cunningham
Vice President and Chief Financial Officer
(Principal Accounting Officer)
FIRST ALBANY COMPANIES INC. (Exhibit 11)
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<S> <C> <C>
Three Months Ended
March 27, March 29,
(In thousands of dollars, except per share amounts) 1997 1996
Primary:
- --------------------------------------------------------------------------------
Net income $ 371 $1,754
================================================================================
Weighted average number of shares
outstanding during the period* 5,400 5,321
Incremental shares under stock options
computed under the treasury stock
method using the average market price
of the issuer's stock during the period 362 397
- --------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares outstanding 5,762 5,718
================================================================================
Net income per share $ 0.06 $ 0.31
================================================================================
Fully Diluted:
- --------------------------------------------------------------------------------
Net income $ 371 $1,754
================================================================================
Weighted average number of shares
outstanding during the period* 5,400 5,321
Incremental shares under stock options
computed under the treasury stock method
using the higher of the average or ending
market price of the issuer's stock
at the end of the period 362 397
- --------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares outstanding 5,762 5,718
================================================================================
Net income per share $ 0.06 $ 0.31
================================================================================
</TABLE>
*Per share figures and shares outstanding have been restated
for all dividends declared, including the May 1997 5% stock dividends.
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C>
<PERIOD-TYPE> 3-MOS
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