<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
Commission file number 0-14199
ALEX. BROWN INCORPORATED
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Maryland 52-1434118
________________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One South Street, Baltimore, MD
21202
________________________________________________________________________________
(Address of principal executive offices)
(Zip code)
(410) 727-1700
________________________________________________________________________________
(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 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 24,945,328
- --------------------------------------------------------------------------------
(Class) (Outstanding at May 2, 1997)
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
INDEX
Page
Part I - Financial Information
Consolidated Statements of Earnings (Unaudited) for the three
months ended March 31, 1997 and 1996 1
Consolidated Statements of Financial Condition as of
March 31, 1997 (Unaudited) and December 31, 1996 2-3
Consolidated Statements of Stockholders' Equity (Unaudited)
for the three months ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows (Unaudited)
for the three months ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements (Unaudited) 6-7
Management's Discussion and Analysis of Results of
Operations and Financial Condition 8-10
Part II - Other Information 11
Signatures 12
Exhibit -
(11) Calculation of Earnings Per Share (Unaudited) 13
</PAGE>
<PAGE>
<TABLE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Earnings
(in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
---------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenues:
Commissions $ 58,222 $ 52,005
Investment banking 74,871 101,838
Principal transactions 31,994 52,508
Interest and dividends 35,653 32,909
Advisory and other 32,779 31,580
---------- ----------
Total revenues 233,519 270,840
---------- ----------
Operating expenses:
Compensation and benefits 122,434 145,575
Communications 10,704 8,642
Occupancy and equipment 9,144 8,763
Interest 12,308 12,185
Floor brokerage, exchange
and clearing fees 5,829 4,943
Other operating expenses 21,597 23,466
---------- ----------
Total operating expenses 182,016 203,574
----------- ----------
Earnings before income taxes 51,503 67,266
Income taxes 20,344 26,570
---------- ----------
Net earnings $ 31,159 $ 40,696
========== ==========
Earnings per share:
Primary $ 1.23 $ 1.67
========== ==========
Fully diluted $ 1.10 $ 1.48
========== ==========
Weighted average number of shares outstanding:
Primary 25,294 24,316
========== ==========
Fully diluted 29,079 28,009
========== ==========
Cash dividends declared per share $ 0.17 $ 0.133
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(in thousands)
ASSETS
<CAPTION>
March 31, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 71,689 $ 109,800
Receivables:
Customers 1,501,801 1,487,041
Brokers, dealers and clearing organizations 339,638 368,099
Current state and federal income taxes 4,139 17,429
Other 53,360 59,097
Firm trading securities (Note 2) 231,783 210,412
Securities purchased under agreements to resell 42,920 15,510
Deferred income taxes 50,194 46,433
Memberships in exchanges, at cost
(market $3,836 and $3,597) 323 323
Office equipment and leasehold improvements,
at cost less accumulated depreciation and
amortization of $47,589 and $44,580 56,795 48,079
Investment securities (Note 5) 57,742 56,889
Loans to employees to purchase convertible
subordinated debentures (Note 6) 60,657 54,454
Other assets 81,901 69,009
---------- ----------
$2,552,942 $2,542,575
========== ==========
</TABLE>
(continued)
</PAGE>
<PAGE>
<TABLE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Financial Condition (continued)
(in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
Bank loans $ 110,700 $ 29,900
Payables:
Cash management facility 61,864 83,733
Customers, including free credit balances 560,202 676,734
Brokers, dealers and clearing organizations 653,320 495,947
Current federal and state income taxes 4,223 1,840
Other 196,209 378,981
Securities sold, not yet purchased (Note 2) 70,133 48,223
7 5/8% Senior notes 109,490 109,475
5 3/4% Convertible subordinated debentures 11,797 11,797
Employee convertible subordinated debentures (Note 6) 72,611 62,043
Commitments and contingencies (Note 7)
Stockholders' equity (Note 6):
Common stock of $.10 par value
Authorized 50,000,000 shares
Issued and outstanding 24,920,106 shares in 1997
and 24,030,822 shares in 1996 2,492 2,403
Additional paid-in capital 156,371 125,882
Loans to employees to purchase common stock (9,392) (10,320)
Retained earnings 552,922 525,937
---------- ----------
Total stockholders' equity 702,393 643,902
---------- ----------
$2,552,942 $2,542,575
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(in thousands)
(Unaudited)
<CAPTION>
Loans To
Employees Total
Additional To Purchase Stock-
Common Paid-in Common Retained holders'
Stock Capital Stock Earnings Equity
----- ------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Three months ended March 31, 1997
Balance at December 31, 1996 $2,403 $125,882 $(10,320) $525,937 $643,902
Net earnings - - - 31,159 31,159
Issuance of 665,889 shares of
common stock 66 19,627 - - 19,693
Payments on employee loans - - 520 - 520
Repurchase and retirement of
4,866 shares of common stock - (201) - - (201)
Compensation payable
in common stock 23 11,063 - - 11,086
Loan forgiveness - - 408 - 408
Dividends paid - - - (4,174) (4,174)
------- -------- --------- --------- --------
Balance at March 31, 1997 $2,492 $156,371 $ (9,392) $552,922 $702,393
======= ======== ========= ========= ========
Three months ended March 31, 1996
Balance at December 31, 1995 $2,330 $113,234 $(12,470) $386,193 $489,287
Net earnings - - - 40,696 40,696
Issuance of 563,712 shares of
common stock 56 9,987 - - 10,043
Payments on employee loans - - 1,769 - 1,769
Repurchase and retirement of
2,901 shares of common stock - (79) - - (79)
Compensation payable
in common stock 26 7,061 - - 7,087
Loan forgiveness - - 52 - 52
Dividends paid - - - (3,175) (3,175)
------- -------- --------- --------- ---------
Balance at March 31, 1996 $2,412 $130,203 $(10,649) $423,714 $545,680
======= ======== ========= ========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 31,159 $ 40,696
Reconciliation of net earnings to net cash
used for operating activities:
Depreciation and amortization 2,675 3,166
Non-cash compensation awards 16,882 10,037
Gain on investment securities (703) (5,405)
Other (280) (66)
(Increase) decrease in assets:
Receivables 32,728 (142,953)
Firm trading securities (21,371) (56,584)
Deferred income taxes (3,761) (1,557)
Securities purchased under agreements to resell (27,410) 6,615
Other assets (13,223) (22,515)
Increase in liabilities:
Payables (139,548) 37,811
Securities sold, not yet purchased 21,910 (5,066)
---------- ---------
Net cash used for operating activities (100,942) (135,821)
--------- ---------
Cash flows from financing activities:
Net proceeds (payments):
Short-term loans 82,000 73,000
Securities sold under repurchase agreements 0 (2,460)
Cash management facility (21,869) 13,339
Payments on term loans (1,200) (1,996)
Issuance of common stock 19,486 10,501
Repurchase of common stock (201) (79)
Dividends paid to stockholders (4,174) (3,175)
--------- --------
Net cash provided by financing activities 74,042 89,130
--------- --------
Cash flows from investing activities:
Purchase of office equipment and leasehold improvements (11,061) (1,590)
Purchase of investment securities (5,705) (6,247)
Sale of investment securities 5,555 10,583
--------- ---------
Net cash provided by (used for) investing activities (11,211) 2,746
--------- ---------
Net decrease in cash and cash equivalents (38,111) (43,945)
Cash and cash equivalents at beginning of period 109,800 62,103
--------- ---------
Cash and cash equivalents at end of period $ 71,689 $ 18,158
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1997
(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 Alex. Brown Incorporated's (the "Company")
financial position and results of operations, consisting of normal
recurring adjustments, have been included. Certain revenue and
expense items in 1996 have been reclassified to conform presentation.
(2) Firm trading securities and securities sold, not yet purchased consisted
of the following (in thousands):
<TABLE>
<CAPTION>
Long Short
03/31/97 12/31/96 03/31/97 12/31/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
United States government
and agencies $ 10,645 $ 6,440 $42,130 $16,126
Mortgage-backed 15,408 30,913 - -
States and municipalities 117,075 97,306 389 379
Corporate debt 41,290 22,810 9,835 7,310
Equities and convertible debt 47,365 52,943 17,778 24,408
-------- -------- ------- -------
$231,783 $210,412 $70,133 $48,223
======== ======== ======= =======
</TABLE>
(3) In April, 1997, the Company declared a $0.17 per share quarterly cash
dividend payable May 14, 1997 to stockholders of record on May 2, 1997.
(4) On April 6, 1997 Bankers Trust New York Corporation and Alex. Brown
Incorporated announced that they signed a definitive agreement to merge.
Under terms of the agreement approved unanimously by both boards of
directors, each Alex. Brown common share will be exchanged for 0.83
shares of Bankers Trust common stock. The merger, which is expected to
be completed by the fourth quarter of 1997, is subject to customary closing
conditions, including certain regulatory approvals and shareholder
approvals. The transaction is expected to be tax-free to shareholders
and accounted for on a pooling-of-interests basis.
(5) Investment securities at March 31, 1997 and December 31, 1996 included $28.6
million and $24.5 million, respectively, of merchant banking investments.
(6) Convertible subordinated debentures issued to certain employees pursuant to
the 1991 Equity Incentive Plan are convertible into the Company's Common
Stock. The Company made loans to employees to fund the purchases of the
debentures. During the first three months of 1997, employees converted
$0.7 million convertible subordinated debentures, which were issued in prior
years, into 82,190 shares of the Company's common stock.
</PAGE>
<PAGE>
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
March 31, 1997
(Unaudited)
(7) COMMITMENTS AND CONTINGENCIES
Letters of Credit
At March 31, 1997, the Company's principal subsidiary, Alex. Brown & Sons
Incorporated, was contingently liable for up to $53.5 million under
unsecured letters of credit used to satisfy required margin deposits at
five 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.
(8) Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per
Share was issued in February 1997 and, effective for financial statements
issued for periods ending after December 15, 1997, establishes standards for
computing and presenting earnings per share ("EPS"). SFAS No. 128 replaces
the presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the
consolidated statement of earnings and requires the reconciliation of the
numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. Earlier application is
not permitted, but disclosure of pro forma EPS amounts computed using the
standards established by SFAS No. 128 is permitted in the notes to
financial statements for periods ending prior to the effective date. Pro
forma EPS for the three month periods ended March 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Basic $1.27 $1.71
Diluted $1.10 $1.48
</TABLE>
</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,
operating results and financial condition 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.
In the following discussion, all share and per share information have been
adjusted to reflect a three-for-two stock split paid on January 15, 1997.
RESULTS OF OPERATIONS
First Quarter 1997 Compared to First Quarter 1996
Revenues totaled $233.5 million, a 14% decrease as compared to $270.8 million in
the first quarter of 1996. Commission revenues increased 12% to $58.2 million
for the first quarter, primarily as a result of an increase in institutional and
private client commission revenues. Investment banking revenues decreased 26%
to $74.9 million, due to a 51% decrease in merger and advisory revenues to $14.9
million and a 21% decline in corporate underwriting revenues. Principal
transaction revenues decreased 39% to $32.0 million, primarily due to decreases
in equity trading. Interest and dividend revenues increased 8% to $35.7 million,
primarily as a result of interest earned on higher margin loan balances.
Advisory and other revenues increased 4% to $32.8 million. This increase was
primarily attributable to a 36% increase in advisory revenues to $22.8 million.
Partially offsetting this increase were lower gains from investments which
totaled $0.7 million in the first quarter as compared to $5.4 million in the
first quarter of the prior year and a 7% reduction in fees from correspondent
services to $6.8 million. Assets under management totaled approximately $12.8
billion at March 31, 1997.
Expenses totaled $182.0 million, an 11% decrease as compared to $203.6 million
in the first quarter of 1996. Compensation and benefits decreased 16% to $122.4
million from $145.6 million, as a result of decreased incentive expense.
Communications expense increased 24% to $10.7 million due to higher costs for
quote services and an increase in communications expense associated with the
Baltimore headquarters relocation completed during the quarter. Occupancy and
equipment expenses increased 4% to $9.1 million primarily as a result of
additional space with the new Baltimore headquarters. Interest expense
increased 1% to $12.3 million from $12.2 million primarily due to the cost of
financing increased margin loan balances. Floor brokerage, exchange and
clearing fees increased 18% to $5.8 million, primarily due to costs associated
with the increase in shares traded on the New York Stock Exchange. Other
operating expenses decreased 8% to $21.6 million due to a reduction of expenses
associated with the reduced level of business activity.
The Company's effective tax rate for the quarter was 39.5%, unchanged from the
first quarter of 1996.
As a result of the above, net earnings decreased 23% to $31.2 million from $40.7
million in the first quarter of 1996. Primary and fully diluted earnings per
share were $1.23 and $1.10, respectively, as compared to $1.67 and $1.48 for the
same period in the prior year.
</PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated statement of financial condition reflects a liquid
financial position. The majority of the securities (both long and short) 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 experienced significant declines
in the past several years. At March 31, 1997, in its high yield operations,
Alex. Brown had $14.6 million of long inventory and $1.2 million of short
inventory as compared to $9.4 million of long inventory and $6.5 million of
short inventory at year-end 1996.
As of March 31, 1997, the carrying value of the Company's merchant banking
investments was $28.6 million, compared to $24.5 million at year-end 1996.
There was a net loss related to merchant banking investments of $0.7 million
for the first three months of 1997. 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 March 31, 1997, $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, as well as through the issuance of debt
and equity securities.
The Company borrows from banks on a short-term basis both on an unsecured basis
and under arrangements pursuant to which the amount of funds available is based
on the value of the securities owned by the Company and customers' margin
securities pledged as collateral. In addition, the Company has borrowed on a
long-term basis from banks on both an unsecured basis and with fixed assets
pledged as collateral ("term loans"). The Company historically has been able to
obtain necessary bank borrowings and believes that it will continue to be able
to do so in the future. The Company and Alex. Brown have $450 million of unused
committed lines of credit under revolving credit agreements (the "Credit
Facilities") with various banks. The Credit Facilities expire between February
1998 and February 2000. The Credit Facilities and term loans contain various
restrictive financial 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. There were no outstanding
borrowings under the Credit Facilities at March 31, 1997. The Company and Alex.
Brown were in compliance with all restrictive covenants contained in the Credit
Facilities and term loans at March 31, 1997.
Alex. Brown is required to comply with the net capital rule of the Securities
and Exchange Commission. The Company's ability to withdraw capital from Alex.
Brown may be limited by the rule. Alex. Brown has consistently exceeded
minimum net capital requirements under the rule. At March 31, 1997, Alex.
Brown had aggregate net capital of $427.4 million, which exceeded its minimum
net capital requirement by $395.7 million.
</PAGE>
<PAGE>
During the first three months of 1997, the Company repurchased a total of 4,866
shares of its Common Stock at a cost of $0.2 million. As of March 31, 1997,
the Company had a remaining repurchase authorization of approximately 1.5
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 trade execution. 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.
</PAGE>
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
None.
Item 4 - Submission of Matters to a Vote of Security Holders
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement re: Calculation of Earnings Per Share
(b) A Form 8-K was filed on April 7, 1997 to report announcement of the
signing of a definitive agreement to merge Bankers Trust New York Corporation
and Alex. Brown Incorporated. Included as part of that filing was an exhibit
of the April 6, 1997 press release announcing the merger.
</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: May 9, 1997 A. B. KRONGARD
------------------------------------
A. B. Krongard
Chairman and Chief Executive Officer
Date: May 9, 1997 BEVERLY L. WRIGHT
------------------------------------
Beverly L. Wright
Principal Financial Officer
</PAGE>
<PAGE>
<TABLE>
Exhibit 11
ALEX. BROWN INCORPORATED AND SUBSIDIARIES
Calculation of Earnings Per Share
(in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
------------------ ------------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average shares outstanding:
Common stock 24,608 24,608 23,759 23,759
Stock options 686 690 557 640
Convertible subordinated debentures - 3,781 - 3,610
------- ------- ------- -------
25,294 29,079 24,316 28,009
======= ======= ======= =======
Net earnings for calculating earnings per share:
Net earnings $31,159 $31,159 $40,696 $40,696
Interest expense on convertible
subordinated debentures, net of tax - 747 - 626
------- ------- ------- -------
$31,159 $31,906 $40,696 $41,322
======= ======= ======= =======
Earnings per share $ 1.23 $ 1.10 $ 1.67 $ 1.48
======= ======= ======= =======
</TABLE>
</PAGE>
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1000
<C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> $71,689
<RECEIVABLES> $1,898,938
<SECURITIES-RESALE> $42,920
<SECURITIES-BORROWED> $0<F1>
<INSTRUMENTS-OWNED> $289,525
<PP&E> $56,795
<TOTAL-ASSETS> $2,552,942
<SHORT-TERM> $100,750
<PAYABLES> $1,475,818
<REPOS-SOLD> $0
<SECURITIES-LOANED> $0<F2>
<INSTRUMENTS-SOLD> $70,133
<LONG-TERM> $203,848
<COMMON> $2,492
$0
$0
<OTHER-SE> $699,901
<TOTAL-LIABILITY-AND-EQUITY> $2,552,942
<TRADING-REVENUE> $31,994
<INTEREST-DIVIDENDS> $35,653
<COMMISSIONS> $58,222
<INVESTMENT-BANKING-REVENUES> $74,871
<FEE-REVENUE> $32,779
<INTEREST-EXPENSE> $12,308
<COMPENSATION> $122,434
<INCOME-PRETAX> $51,503
<INCOME-PRE-EXTRAORDINARY> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $31,159
<EPS-PRIMARY> $1.23
<EPS-DILUTED> $1.10
<FN>
<F1>Included as part of receivables.
<F2>Included as part of payables.
</FN>
