<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
Commission file number 0-14199
ALEX. BROWN INCORPORATED
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(Exact name of registrant as specified in its charter)
Maryland 52-1434118
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
135 E. Baltimore St., Baltimore, MD
21202
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(Address of principal executive offices)
(Zip code)
410-727-1700
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(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.10 par value 15,350,865
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(Class) (Outstanding at August 2, 1995)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
INDEX
Page
Part I - Financial Information
Consolidated Statements of Earnings (Unaudited)
for the three month and six month periods ended
June 30, 1995 and June 24, 1994 1
Consolidated Statements of Financial Condition
as of June 30, 1995 (Unaudited) and December 2-3
Consolidated Statements of Stockholders' Equity
(Unaudited) for the six month periods ended
June 30, 1995 and June 24, 1994 4
Consolidated Statements of Cash Flows (Unaudited)
for the six month periods ended June 30, 1995
and June 24, 1994 5
Notes to Consolidated Financial Statements
(Unaudited) 6-7
Management's Discussion and Analysis of Results of
Operations and Financial Condition 8-11
Part II - Other Information 12
Signatures 13
Exhibit -
(11) Calculation of Earnings Per Share (Unaudited) 14
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Earnings
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 24, June 30, June 24,
1995 1994 1995 1994
-------- -------- -------- --------
Revenues:
<S> <C> <C> <C> <C>
Commissions $ 44,116 $ 33,850 $ 83,735 $ 71,894
Investment banking 75,384 53,371 115,651 104,634
Principal transactions 36,123 26,839 64,627 62,211
Interest and dividends 24,087 15,163 45,233 30,442
Advisory and other 21,405 14,652 43,205 37,106
-------- -------- -------- --------
Total 201,115 143,875 352,451 306,287
-------- -------- -------- --------
Operating expenses:
Compensation and benefits 109,493 83,330 191,738 170,812
Communications 8,593 6,869 15,844 13,295
Occupancy and equipment 11,146 7,264 19,719 13,889
Interest 8,268 4,490 15,047 10,051
Floor brokerage, exchange
and clearing fees 4,831 3,893 9,028 7,701
Other operating expenses 20,468 13,680 35,422 27,497
-------- -------- -------- --------
Total 162,799 119,526 286,798 243,245
-------- -------- -------- --------
Earnings before income taxes 38,316 24,349 65,653 63,042
Income taxes 15,326 9,861 26,261 25,532
-------- -------- -------- --------
Net earnings $ 22,990 $ 14,488 $ 39,392 $ 37,510
======== ======== ======== ========
Earnings per share:
Primary $ 1.50 $ 0.93 $ 2.61 $ 2.39
======== ======== ======== ========
Fully diluted $ 1.32 $ 0.83 $ 2.28 $ 2.11
======== ======== ======== ========
Weighted average number of
shares outstanding:
Primary 15,285 15,586 15,113 15,666
======== ======== ======== ========
Fully diluted 17,894 18,131 17,774 18,223
======== ======== ======== ========
Cash dividends declared
per share $ 0.20 $ 0.175 $ 0.375 $ 0.325
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
(1)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(in thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 23,782 $ 24,024
Receivables:
Customers 912,978 800,017
Brokers, dealers and clearing organizations 306,801 237,479
Current state income taxes 74 581
Other 51,456 40,308
Firm trading securities (Note 2) 123,443 93,352
Securities purchased under agreements
to resell 7,859 -
Deferred income taxes 20,273 17,675
Memberships in exchanges, at cost
(market $2,310 and $2,259) 323 323
Office equipment and leasehold improvements,
at cost less accumulated depreciation and
amortization of $41,120 and $37,177 37,449 29,405
Investment securities (Note 5) 43,887 32,835
Loans to employees to purchase convertible
subordinated debentures (Note 4) 38,336 33,412
Other assets 60,684 37,022
---------- ----------
$1,627,345 $1,346,433
========== ==========
</TABLE>
(continued)
(2)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Financial Condition (continued)
(in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ------------
(Unaudited)
<S> <C> <C> <C>
Bank loans $ 105,391 $ 72,943
Payables:
Cash management facility 75,632 62,296
Customers, including free credit balances 377,712 307,245
Brokers, dealers and clearing organizations 356,311 279,637
Current federal and state income taxes 6,861 2,145
Other 186,080 163,537
Securities sold, not yet purchased (Note 2) 29,138 25,842
Commitments and contingencies (Note 6)
5.75% Convertible subordinated debentures 20,860 24,690
Employee convertible subordinated debentures
(Note 4) 41,631 34,670
Stockholders' equity (Note 4):
Common stock of $.10 par value
Authorized 50,000,000 shares
Issued and outstanding 15,093,339 shares in 1995
and 14,290,012 shares in 1994 1,509 1,429
Additional paid-in capital 101,568 81,042
Loans to employees to purchase common stock (11,547) (11,011)
Retained earnings 336,199 301,968
---------- ----------
Total stockholders' equity 427,729 373,428
---------- ----------
$1,627,345 $1,346,433
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
(3)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Loans to
Employees
Additional To Purchase Total
Common Paid-in Common Retained Stockholders'
Stock Capital Stock Earnings Equity
------ --------- ---------- --------- ----------
Six months ended June 30, 1995
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $1,429 $ 81,042 $(11,011) $301,968 $373,428
Net earnings - - - 39,392 39,392
Issuance of 676,840 shares of
common stock 68 16,419 (1,319) - 15,168
Payments on employee loans - - 747 - 747
Repurchase and retirement of
7,344 shares of common stock (1) (221) - - (222)
Compensation payable in
common stock 13 4,328 - - 4,341
Loan forgiveness - - 36 - 36
Dividends paid - - - (5,161) (5,161)
------ -------- -------- -------- --------
Balance at June 30, 1995 $1,509 $101,568 $(11,547) $336,199 $427,729
====== ======== ======== ======== ========
Six months ended June 24, 1994
Balance at December 31, 1993 $1,536 $114,014 $(10,902) $241,017 $345,665
Net earnings - - - 37,510 37,510
Issuance of 299,001 shares of
common stock 30 5,162 (218) - 4,974
Payments on employee loans - - 205 - 205
Repurchase and retirement of
599,395 shares of common stock (60) (16,058) - - (16,118)
Compensation payable in
common stock 20 5,219 - - 5,239
Dividends paid - - - (4,656) (4,656)
------ -------- -------- -------- --------
Balance at June 24, 1994 $1,526 $108,337 $(10,915) $273,871 $372,819
====== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
(4)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 24,
1995 1994
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $ 39,392 $ 37,510
Reconciliation of net earnings to net cash
used for operating activities:
Depreciation and amortization 5,974 3,868
Non-cash compensation expense 6,961 5,239
Gain on investment securities (8,087) (5,565)
Other 50 24
(Increase) decrease in assets:
Receivables (192,924) 24,872
Firm trading securities (30,091) (35,789)
Securities purchased under agreements to resell (7,859) (9,975)
Deferred income taxes (2,598) (3,300)
Other assets (24,053) (14,429)
Increase (decrease) in liabilities:
Payables 174,400 (80,791)
Securities sold, not yet purchased 3,296 2,837
-------- --------
Net cash used for operating activities (35,539) (75,499)
-------- --------
Cash flows from financing activities:
Net proceeds (payments):
Short-term loans 36,246 86,678
Cash management facility 13,336 (23,448)
Payments on term loans (3,798) (4,375)
Issuance of common stock 11,488 4,933
Repurchase of common stock (222) (16,118)
Dividends paid to stockholders (5,161) (4,656)
-------- --------
Net cash provided by financing activities 51,889 43,014
-------- --------
Cash flows from investing activities:
Purchase of office equipment and leasehold
improvements (13,627) (5,555)
Purchase of investment securities (9,004) (12,769)
Sale of investment securities 6,039 14,333
-------- --------
Net cash used for investing activities (16,592) (3,991)
-------- --------
Net decrease in cash and cash equivalents (242) (36,476)
Cash and cash equivalents at beginning of period 24,024 57,005
-------- --------
Cash and cash equivalents at end of period $ 23,782 $ 20,529
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
(5)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1995
(Unaudited)
(1) The accompanying consolidated financial statements do not include all of
the information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles. In the opinion of management, all adjustments considered
necessary to fairly reflect the Company's financial position and results
of operations, consisting of normal recurring adjustments, have been
included. Certain items in 1994 have been reclassified to conform to the
current year presentation.
(2) Firm trading securities and securities sold, not yet purchased consisted
of the following (in thousands):
<TABLE>
<CAPTION>
Long Short
06/30/95 12/31/94 06/30/95 12/31/94
-------- -------- -------- --------
<S> <C> <C> <C> <C>
United States government
and agencies $ 4,072 $ 4,946 $ 7,911 $ 4,750
Mortgage-backed 8,205 648 - -
States and municipalities 56,030 39,978 292 329
Corporate debt 25,422 29,972 3,106 3,286
Corporate equity 29,714 17,808 17,829 17,477
-------- ------- -------- -------
$123,443 $93,352 $29,138 $25,842
======== ======= ======= =======
</TABLE>
(3) In July 1995, the Company declared a $.20 quarterly cash dividend payable
August 16, 1995 to stockholders of record on August 7, 1995.
(4) During 1995, the Company issued $8,030,926 convertible subordinated
debentures to certain employees pursuant to the 1991 Equity Incentive
Plan. The debentures are convertible into the Company's common stock
three and four years after the date issued. The Company made loans to
employees to fund the purchases of the debentures. During the first six
months of 1995, employees converted $521,583 convertible subordinated
debentures, which were issued in January 1991 and January 1992, into
45,088 shares of the Company's common stock.
During 1995, $3,905,000 par value of the 5.75% convertible subordinated
debentures were converted into 150,016 shares of the Company's common
stock.
(5) Investment securities at June 30, 1995 and December 31, 1994 included
$21.6 million and $13.6 million, respectively, of merchant banking
investments.
(6)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 1995
(Unaudited)
(6) COMMITMENTS AND CONTINGENCIES
Letters of Credit
At June 30, 1995, the Company's principal subsidiary, Alex. Brown &
Sons Incorporated, was contingently liable for up to $47,883,320
under unsecured letters of credit used to satisfy required margin
deposits at four securities clearing corporations.
Litigation
In the course of its investment banking and securities brokerage
business, Alex. Brown & Sons Incorporated has been named a defendant
in a number of lawsuits and may be required to contribute to final
settlements in actions, in which it has not been named a defendant,
arising out of its participation in the underwritings of certain
issues. A substantial settlement or judgment in any of these cases
could have a material adverse effect on the Company. Although the
ultimate outcome of such litigation is not subject to determination
at present, in the opinion of management, after consultation with
counsel, the resolution of these matters will not have a material
adverse effect on the Company's consolidated financial statements.
(7) RECENT DEVELOPMENTS
On July 10, 1995, the Company filed a shelf registration statement with
the Securities and Exchange Commission to register the offer and sale of
up to $150,000,000 of senior debt and convertible debt securities.
(7)
</PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Alex. Brown Incorporated (the "Company") is a holding company whose primary
subsidiary is Alex. Brown & Sons Incorporated ("Alex. Brown"), a major
investment banking and securities brokerage firm. The Company, like other
securities firms, is directly affected by general economic and market
conditions, including fluctuations in volume and price levels of securities,
changes in interest rates and demand for investment banking and securities
brokerage services, all of which have an impact on the Company's revenues as
well as its liquidity. Substantial fluctuations can occur in the Company's
revenues and net earnings due to these and other factors.
In periods of reduced market activity, profitability is likely to be adversely
affected because certain expenses, consisting primarily of salaries and
benefits, communications and occupancy expenses, remain relatively fixed.
Accordingly, net earnings for any period should not be considered
representative of any other period.
RESULTS OF OPERATIONS
Second Quarter 1995 Compared to Second Quarter 1994
Revenues totalled $201.1 million, a 40% increase as compared to $143.9 million
in the second quarter of 1994. Commission revenues increased 30% to $44.1
million for the quarter, primarily as a result of increased institutional and
private client listed commissions. Investment banking revenues increased 41% to
$75.4 million, primarily reflecting increases in underwriting revenues.
Partially offsetting this increase was a 17% decrease in merger and advisory
revenues which totalled $16.7 million. Principal transaction revenues increased
35% to $36.1 million, due to increases in revenues from OTC trading. This
increase was partially offset by a 37% decline in fixed income trading.
Interest and dividend revenues increased 59% to $24.1 million as a result of
higher interest rates and an increase in margin loan balances. Advisory and
other revenues increased 46% to $21.4 million, primarily due to an increase
in advisory fees, an increase of $1.2 million in the carrying value of merchant
banking investments as compared to a decline in the carrying value of
$2.0 million of merchant banking investments in the second quarter of 1994
and an increase in correspondent services revenues.
Operating expenses totalled $162.8 million, a 36% increase as compared to
$119.5 million in the second quarter of 1994. Compensation and benefits
increased 31% from $83.3 million to $109.5 million, primarily as a result of
increased incentive and commission expense. Communications expense increased
25% to $8.6 million, reflecting increased levels of business activity and
increased technology expenditures. Occupancy and equipment expense increased
53% to $11.1 million, primarily as a result of expansion in several offices,
increased technology expenditures and an expense provision related to vacating
certain office space prior to expiration of the lease of one of the Company's
offices. Interest expense increased 84% to $8.3 million from $4.5 million,
primarily as a result of the need to finance increased margin loans and
interest rate increases. Floor brokerage, exchange and clearing fees increased
24% to $4.8 million, reflecting an increased volume of listed trades. Other
operating expenses increased 50% to $20.5 million, primarily reflecting
increases in expenses associated with the level of business activity.
(8)
</PAGE>
<PAGE>
The Company's effective tax rate for the quarter was 40.0%, compared to 40.5%
for the second quarter of 1994.
As a result of the above, net earnings increased by 59% to $23.0 million from
$14.5 million in the second quarter of 1994. Primary and fully diluted
earnings per share were $1.50 and $1.32, respectively, as compared to $0.93 and
$0.83 for the same period in the prior year.
Six Months 1995 Compared to Six Months 1994
Revenues for the six months totalled $352.5 million, a 15% increase as compared
to $306.3 million in the first six months of 1994. Commission revenues
increased 16% to $83.7 million during the first half of 1995, primarily as a
result of increased institutional and private client listed commissions over
the same period in the prior year. Investment banking revenues increased 11% to
$115.7 million, primarily as a result of increases from underwriting revenues.
Principal transaction revenues increased 4% to $64.6 million, due to increases
in OTC trading revenues. Interest and dividend revenues increased 49% to
$45.2 million from $30.4 million, resulting from higher interest rates and
an increase in margin loan balances. Advisory and other revenues increased
16% to $43.2 million, reflecting increases in advisory and other fees,
investment and merchant banking revenues and an increase in correspondent
services revenues.
Operating expenses totalled $286.8 million, an 18% increase as compared to
$243.2 million in the first six months of 1994. Compensation and benefits
increased 12% to $191.7 million, primarily as a result of increased incentive,
salary and commission expense. Communications expense increased 19% to $15.8
million, reflecting increased levels of business activity and increased
technology expenditures. Occupancy and equipment expense increased 42% to
$19.7 million, primarily as a result of expansion in several offices, increased
technology expenditures and an expense provision related to vacating certain
office space prior to expiration of the lease of one of the Company's offices.
Interest expense increased 50% to $15.0 million from $10.1 million, primarily
as a result of the need to finance increased margin loans and interest rate
increases. Floor brokerage, exchange and clearing fees increased 17% to $9.0
million, reflecting an increased volume of listed trades. Other operating
expenses increased 29% to $35.4 million, primarily reflecting increases in
expenses associated with the level of business activity, which were partially
offset by a decline in affiliate expenses.
The Company's effective tax rate for the six months was 40.0%, compared to
40.5% for the first six months of 1994.
As a result of the above, net earnings increased by 5% to $39.4 million from
$37.5 million in the first six months of 1994. Primary and fully diluted
earnings per share were $2.61 and $2.28, respectively, as compared to $2.39 and
$2.11 for the same period in the prior year.
The weighted average number of shares outstanding for purposes of calculating
earnings per share includes shares related to outstanding dilutive stock
options and is affected by the market price of the Company's Common Stock.
Additionally, the calculation of fully diluted earnings per share assumes
the conversion into Common Stock of the Company's outstanding convertible
subordinated debt, if dilutive. These factors can result in lower rates
(9)
</PAGE>
<PAGE>
of increase or higher rates of decrease in earnings per share as compared to
the rates of increase or decrease in net earnings.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated statement of financial condition reflects a liquid
financial position. The majority of the long and short securities positions
in Alex. Brown's trading accounts are readily marketable and actively traded.
Customer receivables include margin balances and amounts due on uncompleted
transactions. Receivables from other brokers and dealers generally represent
either current open transactions, which usually settle within a few days, or
securities borrowed transactions which normally can be closed out within a few
days. Most of the Company's receivables are secured by marketable securities.
The Company also has investments in fixed assets and illiquid securities but
such investments are not a significant portion of the Company's total assets.
High yield securities, also referred to as "junk" bonds, are non-investment
grade debt securities which are rated by Standard & Poor's as lower than
BBB- and by Moody's Investors Service as lower than Baa3. The market
for high yield securities can be extremely volatile and many high yield
securities experienced significant price declines in the past several
years. At June 30, 1995, in its high yield operations, Alex. Brown had
$13.8 million of long inventory and $2.0 million of short inventory as
compared to $21.3 million of long inventory and $1.0 million of short
inventory at year-end 1994.
As of June 30, 1995, the carrying value of the Company's merchant banking
investments was $21.6 million, compared to $13.6 million at year-end 1994.
Gains related to merchant banking investments were $3.7 million for the first
six months of 1995, reflecting increases in the carrying value of three
merchant banking investments. It is anticipated that merchant banking
investments will generally have a holding period of three years or more and
will be funded with existing sources of working capital. The Company has no
outstanding bridge loans.
From time to time the Company makes subordinated loans to correspondents as
part of its correspondent services business. These loans may be secured or
unsecured and are funded through general working capital sources. At
June 30, 1995, $3.0 million of such loans were outstanding.
The Company finances its business through a number of sources, consisting
primarily of paid-in capital, funds generated from operations, free credit
balances in customers' accounts, deposits received on securities loaned,
repurchase agreements and bank loans.
The Company borrows from banks on a short-term basis under arrangements
pursuant to which the amount of funds available to the Company is based on the
value of the securities owned by the Company and customers' margin securities
pledged as collateral. In addition, the Company borrows on a long-term basis
from banks on both an unsecured basis and with fixed assets pledged as
collateral. The Company has historically been able to obtain necessary bank
borrowings and believes that it will continue to be able to do so in the
future. The Company also has a total of $125 million of unsecured and
secured financing from banks available under committed, revolving lines of
credit, of which $25 million expires in August 1995 and $100 million expires
in August 1996. There were no amounts outstanding under the Credit
(10)
</PAGE>
<PAGE>
Facilities as of June 30, 1995. The Company is currently in discussions
with regard to renewing the $25 million facility. The Credit Facilities
and certain term loans contain various restrictive covenants, the most
significant of which require the maintenance of minimum levels of net
worth by both the Company and Alex. Brown and minimum levels of net capital
by Alex. Brown.
Alex. Brown is required to comply with the net capital rule of the Securities
and Exchange Commission. The rule may limit the Company's ability to withdraw
capital from Alex. Brown. Alex. Brown has consistently exceeded minimum net
capital requirements under the rule. At June 30, 1995, Alex. Brown had
aggregate net capital of $235.1 million, which exceeded its minimum net capital
requirement by $216.0 million.
During the first six months of 1995, the Company repurchased a total of 9,298
shares (on a trade date basis) of its Common Stock at a cost of $0.3 million.
As of July 1995, the Company had a remaining repurchase authorization of
approximately 1.4 million shares. The Company anticipates that, subject to
market conditions, it will make additional repurchases in the future.
Management of the Company believes that existing capital and credit facilities,
when combined with funds generated from operations, will provide the Company
with sufficient resources to meet its present and reasonably foreseeable cash
and capital needs.
RISK MANAGEMENT
The Company records securities transactions on a settlement date basis,
generally the third business day following the transaction. The risk of loss
on unsettled transactions relates to customers' or brokers' inability or
refusal to meet the terms of their contracts. The Company monitors its
exposure to market and counterparty risk through a variety of financial,
position and credit exposure reporting and control procedures. The Risk
Management, Credit and Investment Committees, each of which meets on a
regular basis, include members of senior management. Each trading department
is subject to internal position limits established by the Risk Management
Committee which also reviews positions and results of the trading
departments. Alex. Brown's Credit Committee establishes and reviews
appropriate credit limits for customers and brokers seeking margin,
repurchase and reverse repurchase agreement facilities and securities
borrowed and securities loaned arrangements. The Investment Committee
approves investment purchases and sales and reviews holdings.
INFLATION
Because the Company's assets are, to a large extent, liquid in nature, they are
not significantly affected by inflation. However, the rate of inflation
affects the Company's expenses such as employee compensation, office space
leasing costs and communication charges, and increases therein may not be
readily recoverable in the price of services offered by the Company. To the
extent inflation results in rising interest rates and has other adverse effects
upon the securities markets and on the value of securities owned by the
Company, it may adversely affect the Company's financial position and results
of operations.
(11)
</PAGE>
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
Exide Electronics Group, Inc. On July 20, 1995, the Company was
dismissed, pursuant to a settlement, from a suit that had been pending since
May, 1990, captioned Bernard M. Branson v. Exide Electronics Corporation, et
al. The action had been filed in Delaware Chancery Court, New Castle County,
and pertained to the December, 1989 public offering (the "Offering") of 1.2
million shares of the Common stock of Exide Electronics Group, Inc. ("Exide")
at $12.50 per share. The Company was lead manager of the Offering's
underwriting syndicate and directly underwrote 224,000 shares. The Plaintiff
purported to represent a class consisting of all persons who purchased shares
of Exide in the Offering and alleged violation of the Securities Act of 1933
and of Delaware common law in connection with alleged untrue statements and
omissions of material facts in the registration statement and prospectus
prepared in connection with the Offering. The Company was not required to
contribute to the settlement.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement re: Calculation of Earnings Per Share
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1995
(12)
</PAGE>
<PAGE>
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.
ALEX. BROWN INCORPORATED
(Registrant)
Date: August 8, 1995 A. B. KRONGARD
------------------------------------
Chairman and Chief Executive Officer
Date: August 8, 1995 BEVERLY L. WRIGHT
-----------------------------------
Principal Financial Officer
(13)
</PAGE>
<PAGE>
Exhibit 11
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Calculation of Earnings Per Share
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1995 June 24, 1994
------------------- ------------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding:
Common stock 14,911 14,911 15,347 15,347
Stock options 374 401 239 239
Convertible subordinated
debentures - 2,582 - 2,545
------- ------- ------- -------
15,285 17,894 15,586 18,131
======= ======= ======= =======
Net earnings for
calculating earnings per
share:
Net earnings $22,990 $22,990 $14,488 $14,488
Interest expense on
convertible subordinated
debentures, net of tax - 582 - 519
------- ------- ------- -------
$22,990 $23,572 $14,488 $15,007
======= ======= ======= =======
Earnings per share $ 1.50 $ 1.32 $ 0.93 $ 0.83
======= ======= ======= =======
Six Months Ended Six Months Ended
June 30, 1995 June 24, 1994
------------------ ------------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Weighted average shares
outstanding:
Common stock 14,765 14,765 15,404 15,404
Stock options 348 430 262 279
Convertible subordinated
debentures - 2,579 - 2,540
------- ------- ------- -------
15,113 17,774 15,666 18,223
======= ======= ======= =======
Net earnings for
calculating earnings per
share:
Net earnings $39,392 $39,392 $37,510 $37,510
Interest expense on
convertible subordinated
debentures, net of tax - 1,145 - 995
------- ------- ------- -------
$39,392 $40,537 $37,510 $38,505
======= ======= ======= =======
Earnings per share $ 2.61 $ 2.28 $ 2.39 $ 2.11
======= ======= ======= =======
</TABLE>
(14)
</PAGE>
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1000
<C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> $23,782
<RECEIVABLES> $1,271,309
<SECURITIES-RESALE> $7,859
<SECURITIES-BORROWED> $0<F1>
<INSTRUMENTS-OWNED> $167,330
<PP&E> $37,449
<TOTAL-ASSETS> $1,627,345
<SHORT-TERM> $88,019
<PAYABLES> $1,002,596
<REPOS-SOLD> $0
<SECURITIES-LOANED> $0<F2>
<INSTRUMENTS-SOLD> $29,138
<LONG-TERM> $79,863
<COMMON> $1,509
$0
$0
<OTHER-SE> $426,220
<TOTAL-LIABILITY-AND-EQUITY> $1,627,345
<TRADING-REVENUE> $64,627
<INTEREST-DIVIDENDS> $45,233
<COMMISSIONS> $83,735
<INVESTMENT-BANKING-REVENUES> $115,651
<FEE-REVENUE> $43,205
<INTEREST-EXPENSE> $15,047
<COMPENSATION> $191,738
<INCOME-PRETAX> $65,653
<INCOME-PRE-EXTRAORDINARY> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $39,392
<EPS-PRIMARY> $2.61
<EPS-DILUTED> $2.28
<FN>
<F1>Included as part of receivables.
<F2>Included as part of payables.
</FN>
