10
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSMISSION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period
from_______________________to_________________________
Commission file number: 0-14684
RYAN, BECK & CO., INC.
(Exact name of registrant as specified in its charter)
New Jersey
(State or other jurisdiction of incorporation or organization)
22-1773796
(I.R.S. Employer Identification No.)
80 Main Street, West Orange, New Jersey 07052
(Address of principal executive offices)
201-325-3000 (Issuer's telephone number)
Indicate by check (x) whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the past 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__________
APPLICABLE ONLY TO CORPORATE ISSUERS:
At November 1, 1996 there were 3,173,697 shares of Common Stock, par value
$.10 per share, outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
The following consolidated financial statements of Ryan, Beck & Co., Inc.
(the "Company") as of September 30, 1996 and for the three and nine months
ended September 30, 1996 and 1995 reflect all material adjustments and
disclosures which, in the opinion of management, are necessary for a fair
statement of results for the interim period. Certain information and
footnote disclosures required under generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these consolidated financial
statements be read in conjunction with the year-end consolidated financial
statements and notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 as filed with the Securities
and Exchange Commission.
The results of operations for the three and nine month periods ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the entire fiscal year or any other period.
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except per share data)
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 91$ 71
Cash segregated under federal and other regulations 33 11
Receivable from:
Brokers and dealers 6,949 909
Accrued revenues 373 110
Other 19 302
Securities owned, at market value 40,130 34,698
Prepaid income taxes 272 228
Deferred income taxes 1,088 634
Property and equipment, at cost, less accumulated
depreciation and amortization 379 703
Other assets 371 460
Total assets $ 49,705 $ 38,126
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to clearing broker $ -$ 16,180
Securities sold, but not yet purchased, at market value
33,394 5,809
Accrued employee compensation and benefits 2,594 1,698
Accounts payable and other accrued expenses 1,348 1,678
ESOP loan obligation 572 675
Total liabilities 37,908 26,040
Stockholders' equity:
Preferred stock - $.10 par value
Authorized - 2,000,000 shares
Issued and outstanding - 399,930 shares September 30, 1996
and 410,855 shares December 31, 1995 40 41
Common stock - $. 10 par value
Authorized - 30,000,000 shares
Issued and outstanding - 3,261,964 shares September 30, 1996
and 3,270,092 shares December 31, 1995 326 327
Additional paid-in capital 11,933 12,049
Retained earnings 1,059 818
Treasury Stock, at cost, 88,000 common shares September 30, 1996
and 13,618 common shares December 31, 1995 (624) (91)
Unearned compensation - restricted stock grants (388) (401)
Unearned ESOP compensation (549) (657)
Total stockholders' equity 11,797 12,086
Total liabilities and stockholders' equity $ 49,705 $ 38,126
See accompanying notes to consolidated financial statements.
</TABLE><TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Principal transactions $2,710 $3,664 $7,487 $10,713
Commissions 960 826 3,186 2,091
Investment banking 2,124 1,655 10,485 5,417
Interest and dividends 343 205 947 621
Other 71 88 76 217
Total revenues: 6,208 6,438 22,181 19,059
Operating expenses:
Compensation and benefits 4,814 3,864 13,879 11,336
Communications 326 323 1,061 901
Occupancy and equipment rental and depreciation 482 248
1,016 720
Floor brokerage, exchange and clearance fees 515 500
1,586 1,291
Interest 207 81 658 233
Other 965 608 2,595 1,765
Total operating expenses 7,309 5,624 20,795 16,246
Income (loss) before provision for income taxes (1,101) 814
1,386 2,813
Provision (benefit) for income taxes (440) 306 517
1,058
Net income (loss) $ (661) $ 508 $ 869 $1,755
Earnings (loss) per common share:
Primary $ (.22) $ .14 $ .23 $ .50
Fully diluted $ (.22) $ .14 $ .23 $ .49
Weighted average number of shares:
Primary 3,175 3,258 3,211 3,248
Fully diluted 3,494 3,573 3,532 3,571
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS' EQUITY
(In thousands, except per share data)
(UNAUDITED)
<CAPTION>
UnearnedUnearned Total
Additional CompensationESOP Stock-
CommonPreferredPaid-in RetainedRestricted Compen
- - - Treasuryholders'
Stock Stock Capital EarningsStock Grants sationStoc
k Equity
Nine months ended Sept. 30, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $308 $ 44$10,907 $2,323$(488)$ (837)$ - $12,257
Unearned compensation -
restricted stock grants - - - - (166) - - (166)
Amortization of restricted stock grants -
unearned compensation- - - - 170 - - 170
Amoritization of ESOP
unearned compensation- - 18 - - 137 - 155
Conversion of Preferred Stock
to Common Stock (29,225 shares) 3 (3) - - - - - -
Net income - - - 1,755 - - - 1,755
Dividends declared:Common stock - - - (1,853) -
- - - - (1,853)
Preferred stock - - - (135) - - -
(135)
Balance at September 30, 1995$311 $ 41$10,925$ 2,090$ (484)$ (700)$ - $12,183
Nine months ended Sept. 30, 1996
Balance at January 1, 1996 $327 $41$12,049 $818$(401)$(657) $(91) $12,086
Retirement of 19,393 shares of
common stock (2) - (127) - - - 129 -
Unearned compensation -
restricted stock grants - - - - (175) - - (175)
Amortization of restricted stock grants -
unearned compensation - - - - 188 - - 188
Amortization of ESOP
unearned compensation - - 11 - - 108 - 119
Conversion of Preferred stock
to Common stock (10,925 shares) 1 (1) - - - - - -
Purchase of Treasury stock
(93,475 shares) - - - - - - (662) (662)
Net Income - - - 869 - - - 869
Dividends declared:Common stock- - - (483) - - - (483)
Preferred stock - - - (145)
- - - - - (145)
Balance at September 30, 1996$ 326 $ 40$11,933$ 1,059$ (388)$ (549)$ (624) $11,797
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(In thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 869 $1,755
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 460 202
Amortization of restricted stock grants 188 170
Amortization of ESOP unearned compensation 119
155
Deferred income taxes (454) (187)
(Increase) decrease in assets:
Cash segregated under federal and other regulations
(22) -
Receivables -
Customers - 20
Brokers, dealers and clearing organizations
(6,040) (5,844)
Accrued revenues (263) (163)
Other 283 231
Securities owned, at market value (5,432) 599
Prepaid income taxes (44) -
Other assets 89 9
Increase (decrease) in liabilities:
Payables -
Payable to clearing broker (16,180) 3,015
Securities sold, but not yet purchased
at market value 27,585 4,467
Accrued employee compensation and benefits 896
(147)
Accounts payable and other accrued expenses
(330) (60)
Income taxes payable - (1,485)
Total adjustments 855 982
Net cash provided by operating activities 1,724 2,737
Cash flows from investing activities:
Capital expenditures $ (136) $ (443)
Net cash (used) in investing activities (136) (443)
Cash flows from financing activities:
Common stock repurchased for issuance of restricted stock grants
(175) (166)
Principal payments of ESOP obligation (103) (137)
Purchase of Treasury Stock (662) -
Dividends paid
Common (483) (1,853)
Preferred (145) (135)
Net cash (used) in financing activities (1,568) (2,291)
Net increase in cash 20 3
Cash at beginning of period 71 75
Cash at end of period $ 91 $ 78
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 564 $ 231
Income taxes 1,001 2,678
See accompanying notes to consolidated financial statements.
</TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the
financial position of Ryan, Beck & Co., Inc., (the "Company") as of
September 30, 1996, and the results of its operations and cash flows
for the three and nine month periods ended September 30, 1996 and
1995. All such adjustments are of a normal and recurring nature.
The accounting policies followed by the Company are set forth in the
notes to the Company's consolidated financial statements as set forth
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995. Certain reclassifications have been made to prior
years' consolidated financial statements to conform to the current
year's presentation.
The results of operations for the three month and nine month periods
ended September 30, 1996 are not necessarily indicative of the results
to be expected for the entire fiscal year or any other future period.
2. Securities owned are stated at market value. Securities in the
Company's trading accounts consist of the following:
<TABLE>
September 30, 1996 December 31,
(Unaudited) 1995
(In
thousands)
<S> <C> <C>
States and municipalities $ 9,636 $19,400
Corporate equity 8,198 1,833
Corporate debt 10,355 13,130
U.S. Government and agency 11,916 310
Other 25 25
Total $40,130 $34,698
</TABLE>
3. The Company is subject to the net capital provisions of Rule 15c3-1
under the Securities Exchange Act of 1934, which requires that the
Company's aggregate indebtedness shall not exceed 15 times net capital
as defined under such provision. Additionally, the Company, as a
market maker, is subject to supplemental requirements of rule 15c3-
1(a)4, which provides for a minimum net capital based on the number
and price of issues in which markets are made by the Company, not to
exceed $1,000,000. At September 30, 1996 and December 31, 1995, the
Company's net capital was approximately $3,639,000 and $5,663,000,
respectively, which exceeded minimum net capital requirements by
$2,639,000 and $4,663,000, respectively.
4.On June 19, 1996 the Board of Directors authorized the repurchase of
up to an additional $1 million worth of company stock. The purchases
may be made in the open market and through private transactions over
the next 24 months when the Board deems appropriate. The Company
originally approved a repurchase program of up to $1 million worth of
stock in July 1995. Through September 30, 1996, the Company has
repurchased 107,094 shares of stock (adjusted for a 5% stock dividend
declared January 26, 1996) at a cost of $751,538.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
a. Results of Operations
Three Months Ended September 30, 1996 Compared With Three Months Ended
September 30, 1995
Exclusive of one-time after-tax charges, net income for the three months
ended September 30, 1996 was $252, Compared to $508,000, or $.14 per
share during the same period ending September 30, 1995. Including one-
time after-tax charges of approximately $661,000, the Company reported a
net loss of $661,000, or $.22 per share. The one-time after-tax charges
of $661,000 are a result of three separate factors; $376,000, or $.13
per share, represents the Company's resolution of employment obligations
as a result of the resignation of a senior executive and Board member as
well as related severance adjustments; a total of $235,000, or $.08 per
share, reflects charge-offs associated with plans to move the Company's
headquarters to a larger and more modern facility in Livingston New
Jersey; and the remaining $50,000, or $.01 per share, represents costs
associated with a recently abandoned debt offering.
Total revenues decreased $230,000 or 3.6% to $6,208,000 in the three
months ended September 30, 1996 from $6,438,000 in the three months
ended September 30, 1995.
Revenues from principal transactions decreased $954,000 or 26.0% to
$2,710,000 in the 1996 period from $3,664,000 for the 1995 period. This
decrease can be attributed to a decrease of $430,000 from trading tax-
exempt securities, a decrease of $348,000 from trading equity securities
and a decrease of $176,000 from trading corporate debt securities. The
decrease in revenue attributable to corporate debt and tax-exempt
securities reflected an extraordinarily volatile bond market and the
continued compression of underwriting spreads in municipal securities.
The decrease in revenue attributable to trading equity securities
primarily reflects decreased spreads and increased volatility.
During the quarter ended September 30, 1996, the Company began
implementing a hedging strategy in its fixed-income trading activities
as part of its overall interest rate risk management strategy. While
this strategy is intended to minimize risk, it does not eliminate risk..
Particularly with volatile swings in interest rates, gains and losses
from hedging can materially impact trading results. The Company uses
temporary positions in both the futures and cash market in an effort to
protect the cash long position against loss from adverse price
fluctuations. This risk-transfer mechanism is viewed by management as
necessary to control interest rate risk and protect profit margins.
Gains and losses on contracts used in trading activities are recognized
currently by using the mark-to market method of accounting and are
included in the corporate trading income account. In the future, the
Company expects to establish a hedging strategy for its equity
positions.
Revenues from investment banking increased $469,000 or 28.3% to
$2,124,000 in the 1996 period from $1,655,000 for the 1995 period. This
increase was primarily due to a $986,000 and $194,000 increase in
underwriting corporate debt and municipal securities respectively.
Partially offsetting this increase in revenue was a decrease of $702,000
from consulting, placement and valuation fees. The increase in revenue
from underwriting corporate securities reflects the larger size of a
taxable debt underwriting for a financial institution which closed in
the three months ended September 30, 1996 as compared to the same period
in 1995. The increase in underwriting municipal securities reflects
increased levels of issuance of new municipal securities in the three
months ended September 30, 1996. The decrease in revenue from
consulting, placement and valuation fees resulted from a decrease in
merger and acquisition advisory fees and a decrease in revenues related
to thrift conversions including mutual holding company formations. The
decrease in revenues from merger and acquisition advisory fees and the
decrease in revenues related to thrift conversions including mutual
holding company formations both resulted from a decrease in the number
of transactions in the 1996 third quarter versus the 1995 third quarter.
The Company expects there to be greater uncertainty in the future with
respect to revenues resulting from thrift conversions and mutual holding
company formations because of increased competition and a smaller
universe of mutual institutions.
Commission revenue increased $134,000 or 16.2% to $960,000 in the three
months ended September 30, 1996 from $826,000 for the comparable period
in 1995. The increase in revenue includes an increase in equity
security commissions of $113,000 and an increase in mutual fund
commissions of $21,000. These increases are mainly attributable to
increased retail activity and higher mutual fund sales due to greater
investor demand and selection of funds.
Total operating expenses increased $1,685,000 or 30.0% to $7,309,000 in
1996 from $5,624,000 in 1995. This increase is primarily attributed to
an increase in compensation and benefits of $950,000, an increase in
other operating expenses of $357,000, an increase in occupancy and
equipment expense of $234,000 and an increase in interest expense of
$126,000. The increase in compensation and benefits is mainly
attributable to a $625,000 pre-tax charge as a result of the resignation
of a senior executive and Board member as well as related severance
adjustments, an increase in the number of employees and an increase in
commission expense attributed to increased trading volume. The increase
in other operating expenses is mainly attributable to an increase in
reserves, a pre-tax charge of $83,000 associated with an abandoned debt
offering and an increase in other operating expenses. The increase in
occupancy and equipment expense is mainly attributed to a pre-tax charge
of $192,000 to write off leasehold improvements and equipment as part of
the Company's plan to move its headquarters. The increase in interest
expense is attributable to higher average borrowing levels.
b. Results of Operations
Nine Months Ended September 30, 1996 Compared With Nine Months Ended
September 30, 1995
For the nine months ended September 30, 1996, exclusive of one-time
after-tax charges, net income was $1,530,000, or $.45 per share.
Including the one-time after-tax charges recorded in this year's third
quarter, net income for the nine months ended September 30, 1996 was
$869,000, or $.23 per fully-diluted share, compared with $1,755,000, or
$.49 per share for the prior year.
Total revenues increased $3,122,000 or 16.4% to $22,181,000 for the nine
months ended September 30, 1996 from $19,059,000 in the prior year
period.
Revenues from principal transactions decreased $3,226,000 or 30.1% to
$7,487,000 in the 1996 period from $10,713,000 for the nine months ended
September 30, 1995. This decrease can be attributed to a decrease of
$1,797,000 from trading tax-exempt securities, a decrease of $937,000
from trading corporate debt securities, and a decrease of $492,000 from
trading equity securities. The decrease in revenue attributable to
corporate debt and tax-exempt securities reflected an extraordinarily
volatile bond market and the continued compression of underwriting
spreads in municipal securities. The decrease in revenue from trading
equity securities was due to narrowing spreads, increased volatility and
larger inventory positions.
Revenues from investment banking increased $5,068,000 or 93.6% to
$10,485,000 in the 1996 period from $5,417,000 for the comparable 1995
period. This was due to a $1,851,000 increase in revenues related to
consulting, placement and valuation fees, an increase in revenue from
underwriting equity securities of $1,994,000 and an increase in revenue
from underwriting taxable and tax-exempt debt securities of $986,000 and
$237,000, respectively. The increase in consulting, placement and
valuation fees resulted from an increase in both revenues related to
thrift conversions and merger and acquisition advisory fees. The
increase in revenues during 1996 from thrift conversions including
mutual holding company formations, resulted from the greater size of the
transactions which closed in the first nine months of 1996 as compared
to the same period in 1995. Additionally, fee income from merger and
acquisition advisory services was significantly higher during the first
nine months of 1996. This was a result of a larger number of merger and
acquisition transactions during the 1996 period and the greater size of
the 1996 transactions versus 1995. The Company expects there to be
greater uncertainty in the future with respect to revenues resulting
from thrift conversions and mutual holding company formations because of
increased competition and a smaller universe of mutual institutions.
The increase in revenue from underwriting equity securities is due to
the consummation of two underwritings for financial institutions seeking
additional capital for growth purposes, as well as the closing of the
third Ryan Beck Banking Opportunity Trust. The increase in revenue from
underwriting tax-exempt debt securities reflects increased levels of
issuance of new municipal securities.
Commission revenue increased $1,095,000 or 52.4% to $3,186,000 in 1996
from $2,091,000 in 1995. The increase in revenue includes an increase
in equity security commissions of $775,000 and an increase in mutual
fund commissions of $320,000. These increases are mainly attributable
to increased retail trading activity and higher mutual fund sales due to
greater investor demand and selection of mutual funds.
Revenue from interest and dividends increased $326,000 or 52.5% to
$947,000 in 1996 from $621,000 in 1995. The increase in revenue from
interest and dividends is a result of higher average inventory levels
during the first nine months of 1996 as compared to the same period in
1995.
Total operating expenses increased $4,549,000 or 28.0% to $20,795,000 in
1996 from $16,246,000 in 1995. This increase is primarily attributable
to increases in compensation and benefits of $2,543,000, in other
operating expenses of $830,000, in interest expense of $425,000, in
occupancy and equipment expense of $296,000, and in floor brokerage,
exchange and clearance fees of $295,000. The increase in compensation
and benefits is partially attributable to a $625,000 pre-tax charge as a
result of the resignation of a senior executive and Board member as well
as related severance adjustments, and also reflects increased salary,
bonus and commission expenses which is consistent with higher investment
banking revenues and additional employees. The increase in other
operating expenses is primarily a result of an increase in legal
reserves, a pre-tax charge of $83,000 associated with an abandoned debt
offering and an increase in other expenses. The increase in interest
expense is due to higher average borrowing levels. The increase in
occupancy and equipment expense is mainly attributed to a pre-tax charge
of $192,000 to write off leasehold improvements and equipment as part of
the Company's plan to move its headquarters. The increase in floor
brokerage, exchange and clearance fees is a result of an increase in
trade volume during the first nine months of 1996 as compared with 1995.
Liquidity and Capital Funds
As of September 30, 1996, the Company's Consolidated Statement of
Financial Condition reflects an essentially liquid financial position,
with most of the Company's assets consisting of cash or assets readily
convertible into cash. The Company's securities positions (both long and
short) are, in most instances, readily marketable.
The Company finances its business through a number of sources,
consisting primarily of capital, funds generated by operations and short-
term secured borrowings. The Company maintains a facility pursuant to
which it may borrow from its clearing broker at prevailing federal funds
rate plus 100 basis points. The amount available for borrowing under
this facility is related to the level of securities inventory at the
clearing broker which may be pledged as collateral. At September 30,
1996, there were no borrowings from the clearing broker.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On December 13, 1991, an action was filed in the United States District
Court for the District of New Jersey under the caption Schiffli
Embroidery Workers Pension Fund v. Ryan, Beck & Co., Inc., et al (Civ.
Act. No. 91-5433) ("Schiffli") alleging that the Company and one of its
former account executives had engaged in violations of federal
securities laws, the Employee Retirement Income Security Act ("ERISA"),
the Racketeering Influenced and Corrupt Practices Act ("RICO"), and
various common law claims in connection with the purchase of
securities. On August 23, 1996, the Magistrate Judge entered an order
approving a settlement agreement to settle all claims in this matter, as
well as a related case discussed below. Pursuant to the terms of the
settlement agreement, the Company has settled all claims asserted
against it in this matter without admitting liability and pursuant to
terms which will not have a material adverse effect on the Company.
On September 27, 1995, an action was filed in the United States District
Court for the District of New Jersey under the caption Luis Lozada,
Trustee of Local 211 Staff Employees' Pension Plan and Luis Lozada,
Individually v. Ryan, Beck & Co., Inc. and Douglas A. MacWright Civ.
Act. No. 95-4743 (AMW) (U.S.D.C.D.N.J.). The allegations asserted by
the plaintiffs in this action were substantially similar to the
allegations made by the plaintiffs in the Schiffli matter above. The
claims asserted against the Company were for violations of ERISA and
various state-law claims including breach of trust agreement, negligence
and breach of contract. The Company has settled all claims asserted
against it in this matter without admitting liability and pursuant to
terms which will not have a material adverse effect on the Company.
On or about December 13, 1994, a complaint under the caption Robert J.
Buckley, et al. v. Northwest Savings Bank ("Northwest"), et. al., C.A.
No. 94-340-E (U.S.D.C. W.D. Pa.), was filed in the United States
District Court of the Western District of Pennsylvania. The complaint
alleges violations of the Securities Act of 1933, the Securities Act of
1934, as well as various state law securities and common law claims in
connection with Northwest Savings Bank's reorganization from a mutual
state savings bank to a stock mutual holding company.
The complaint alleges that the Company was retained as a consultant and
advisor to Northwest in connection with such transaction and engaged in
the promotion and sale of Northwest stock. The complaint further
alleges that the Offering Circular prepared in connection with the
initial public offering contained misstatements of material facts and
omitted to state material facts necessary to make the statements
contained within the Offering Circular not misleading, including false
statements representing the appraised valuation and number of shares to
be issued in the initial offering would be increased only if market and
economic conditions warranted such increase. The complaint alleges that
after the offering was concluded, the appraised value of Northwest was
increased and the offering was diluted by the sale of additional shares
and that such increase in appraised value was not warranted by market or
economic conditions.
The complaint seeks unspecified monetary damages against the defendants,
including the Company, on behalf of all persons who subscribed for and
purchased shares of common stock in Northwest's initial public offering.
In connection with the offering, Northwest executed an agency agreement
with the Company whereby Northwest agreed among other things to
indemnify and contribute sums to the Company for losses and legal fees
in connection with the offerings. Pursuant to the Agency Agreement,
Northwest has agreed to indemnify the Company and to advance reasonable
expenses incurred by the Company in connection with the lawsuit.
On March 13, 1995, the plaintiffs filed a Motion for Class
Certification. On March 24, 1995, the Company, as well as all other
defendants, filed a Motion to Dismiss the plaintiff's complaint. By
order dated November 17, 1995, the Court dismissed all federal law
claims in the complaint with prejudice against all defendants on the
ground that plaintiff failed to identify affirmative misrepresentations
and material omissions of fact in the Offering Circular. The court
relinquished jurisdiction over the remaining state law claims. On
December 14, 1995, plaintiff filed an appeal with the United States
Court of Appeals for the Third Circuit. Oral argument has been
postponed until January 1997 to allow for the submission of additional
briefs. While the outcome of the appeal is uncertain, the Company
believes that the decision of the District Court will be affirmed.
On January 11, 1996, the Company gave notice to Municipal Square
Associates ("Municipal Square"), its landlord at 80 Main Street, West
Orange, New Jersey that it had been constructively evicted as a result
of Municipal Square's breaches of the lease in failing to provide
adequate heating, air conditioning, security, janitorial and other
services.
On February 29, 1996, Municipal Square filed an action in the Superior
Court of New Jersey, Essex County, Law Division, under the caption
Municipal Square Associates v. Ryan, Beck & Co., Docket No. L 2751-96 in
which Municipal Square seeks a declaratory judgment that the lease is
not terminated and alternatively, that the Company's January 11th notice
had terminated the lease and triggered an early termination penalty of
$375,000.
The Company filed a counterclaim alleging that Municipal Square breached
the lease by failing to provide services which Municipal Square was
required to provide under the lease and alleging that Municipal Square's
conduct constituted a constructive eviction of the Company.
The suit is in the early stages of discovery. Although the outcome of
this litigation is inherently uncertain and no assurances regarding the
final outcome of this matter can be given, the Company intends to defend
vigorously this matter and to pursue its counterclaim for damages. The
Company believes that it has a meritorious defense, that it has
sustained substantial damages as a result of breaches of the lease by
Municipal Square, and that those damages significantly exceed the
damages claimed by Municipal Square.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submissions of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Materially Important Events
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports of Form 8-K
The Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on September 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RYAN, BECK & CO., INC.
By:/s/ Allen S. Greene
Allen S. Greene
President and
Chief Executive Officer
/s/ Leonard J. Stanley
Leonard J. Stanley
Senior Vice President
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Dated: November 11, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the September 30, 1996
10-Q and is qualified in it's entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 131
<SECURITIES> 40130
<RECEIVABLES> 8442
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 602
<PP&E> 3392
<DEPRECIATION> 2994
<TOTAL-ASSETS> 49703
<CURRENT-LIABILITIES> 37906
<BONDS> 0
0
40
<COMMON> 326
<OTHER-SE> 11431
<TOTAL-LIABILITY-AND-EQUITY> 49703
<SALES> 22181
<TOTAL-REVENUES> 22181
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20137
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 658
<INCOME-PRETAX> 1386
<INCOME-TAX> 517
<INCOME-CONTINUING> 869
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 869
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
