U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to ____________________
Commission File Number: 33-89966
TREMONT ADVISERS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction 06-1210532
or incorporation or organization) (I.R.S. Employer Identification No)
555 Theodore Fremd Avenue, Rye, New York 10580
(Address of principal executive offices) (Zip Code)
(914) 925-1140
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period) that the issuer 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE
PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the Registrant's Class A Common Stock, $0.01
par value, as of the close of business on July 31, 1998 was 1,284,718, and the
number of shares outstanding of the Registrant's Class B Common Stock, $0.01 par
value, was 2,804,604 as of the same date.
<PAGE>
INDEX
<TABLE>
Tremont Advisers, Inc.
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements. (Unaudited) Page
Condensed Consolidated Balance Sheets - June 30, 1998 (unaudited) 1
and December 31, 1997 (audited)
Condensed Consolidated Statements of Income -
six and three months ended June 30, 1998 and 1997 2
Condensed Consolidated Statements of Cash Flows -
six and three months ended June 30, 1998 and 1997 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURE 15
Exhibit 27. Financial Data Schedule 16
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Tremont Advisers, Inc.
Condensed Consolidated Balance Sheets
<TABLE>
<S> <C> <C>
June 30 December 31
1998 1997
(Unaudited) (Audited)
Assets
Current Assets
Cash and cash equivalents $ 914,214 $ 820,801
Accounts receivable, less allowances for
bad debts of $35,000 and $25,000 respectively 2,496,499 2,011,445
Receivable from officer --- 200,000
Prepaid expenses and other 108,106 123,103
-------- --------
Total current assets 3,518,819 3,155,349
Investments in limited partnerships (Cost--$908,467 and $803,467) 1,477,956 1,221,487
Investments in joint ventures (Cost--$532,667 and $371,667) 125,184 99,345
Other investments (Cost--$86,000) 68,151 75,420
Fixed assets, net 364,891 401,153
Other assets 28,958 28,958
------- -------
Total assets $5,583,959 $4,981,712
========== ==========
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 37,797 $ 50,490
Accrued expenses 830,221 1,112,734
Income taxes payable 17,823 1,143
Deferred income taxes payable 171,500 171,500
-------- --------
Total current liabilities 1,057,341 1,335,867
Deferred income taxes payable 230,671 160,600
Shareholders' equity
Preferred Stock $1 par value, 350,000 shares
authorized, issued and outstanding - none --- ---
Class A Common Stock, $0.01 par value, 5,000,000 shares
authorized, 1,284,718 shares issued and outstanding 12,847 12,847
Class B Common Stock, $0.01 par value, 5,000,000 shares
authorized, 2,804,604 and 2,802,104 shares issued and
outstanding, respectively 28,046 28,021
Additional paid in capital 4,734,643 4,725,293
Accumulated deficit (479,589) (1,280,916)
--------- ----------
Total shareholders' equity 4,295,947 3,485,245
---------- ----------
Total liabilities and shareholders' equity $5,583,959 $4,981,712
========== ==========
See accompanying notes.
Note:The condensed Consolidated Balance Sheet at December 31, 1997 has been
derived from the audited financial statements at that date.
</TABLE>
<PAGE>
Tremont Advisers, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Six months ended Three months ended
June 30 June 30
1998 1997 1998 1997
------------------------------------ ---------------------------------
Revenues
Consulting fees $4,336,129 $2,316,269 $2,335,369 $1,207,807
Performance fees 316,488 177,941 280,606 76,387
Commissions 218,209 122,244 97,767 83,583
-------- -------- -------- -------
Total revenues 4,870,826 2,616,454 2,713,742 1,367,777
Expenses
Compensation 1,793,357 1,420,269 936,109 699,885
General and administrative 1,155,609 569,718 609,082 311,585
Consulting 660,941 277,913 344,892 140,120
Depreciation and amortization 82,459 54,492 41,968 27,811
----------- ------- -------- -------
Total expenses 3,692,366 2,322,392 1,932,051 1,179,401
---------- ---------- ---------- ----------
1,178,460 294,062 781,691 188,376
Equity in earnings of limited
partnerships, net 151,468 91,675 73,874 53,571
Loss from operations of
joint ventures, net (135,160) (40,048) (108,296) (13,187)
Other income, net 15,741 16,550 7,574 9,931
------- ------- ------ ------
Income before income taxes 1,210,509 362,239 754,843 238,691
Provision for income taxes 409,182 69,600 222,359 51,850
-------- ------- --------- -------
Net income $ 801,327 $ 292,639 $ 532,484 $ 186,841
========= ========= ========== =========
Net income per Common Share $ 0.20 $ 0.08 $ 0.13 $ 0.05
===== ====== ====== ======
Net income per Common Share
assuming dilution $ 0.19 $ 0.07 $ 0.12 $ 0.05
====== ====== ====== ======
</TABLE>
See accompanying notes.
<PAGE>
Tremont Advisers, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<S> <C> <C>
Six months ended
June 30
1998 1997
--------------------------------
Operating Activities
Net income $801,327 $292,639
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 82,459 54,492
Equity earnings of limited partnerships (151,468) (91,675)
Loss from operations of joint ventures 135,160 40,048
Loss from other investments 7,269 ---
Deferred income taxes 70,071 ---
Changes in operating assets and liabilities:
Accounts receivable, net (485,054) 321,621
Receivable from officer 200,000 ---
Prepaid expenses and other 14,997 (99,581)
Accounts payable (12,693) 13,760
Accrued expenses (282,513) (513,812)
Income taxes, net 16,680 56,814
Deferred revenue --- 28,334
----- -------
Net cash provided by operating activities 396,235 102,640
Investing activities
Purchase of fixed assets (46,197) (58,460)
Investments in limited partnerships (105,000) (135,000)
Investment in joint ventures (161,000) (209)
Investment in other investments --- (100)
Proceeds from sale of other investments --- 84,000
----- -------
Net cash used by investing activities (312,197) (109,769)
Financing Activities
Exercise of Class B Common Stock options 9,375 ---
------ ----
Net cash provided by financing activities 9,375 ---
Net increase (decrease) in cash and cash equivalents 93,413 (7,129)
Cash and cash equivalents at beginning of period 820,801 551,710
-------- --------
Cash and cash equivalents at end of period $914,214 $544,581
========= =========
See accompanying notes.
</TABLE>
<PAGE>
Tremont Advisers, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation have been
included. Operating results for the six and three months ended June 30, 1998 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1997.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from such estimates.
Net Income per Common Share: Basic earnings per share is based on the weighted
average number of shares of Common Stock outstanding during the period. Diluted
earnings per share is based on the weighted average number of shares outstanding
during the period adjusted for the effects of dilutive securities.
Concentrations of Credit Risk: The Company's accounts receivable are not
concentrated in any specific geographic region, but are concentrated in the
investment industry. At June 30, 1998, the Company had accounts receivable of
$340,998 from Starvest Funds, Ltd. and $265,017 from The Broad Market Prime
Fund, L.P., respectively. Although the Company's exposure to credit risk
associated with nonpayment by customers is affected by conditions within the
investment industry, no other customer exceeded 10% of the Company's net
receivables at June 30, 1998.
Income Taxes: The provision for income taxes includes federal and state taxes
currently payable and those deferred because of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The income tax provision also
gives effect to permanent differences between financial and taxable income,
resulting in a lower effective tax rate than the statutory income tax rate.
Deferred income taxes were not provided on certain undistributed foreign
earnings ($200,000 at June 30, 1998 ) of Tremont (Bermuda) Limited because such
undistributed earnings are expected to be reinvested indefinitely overseas. If
these amounts were not considered permanently reinvested, additional deferred
taxes of approximately $68,000 would have been provided. A valuation allowance
is recorded, based on available evidence when it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
<PAGE>
NOTE B - Investments in Limited Partnerships
At June 30, 1998 and December 31, 1997, Tremont Partners Inc.'s ("TPI")
investments in The Broad Market Fund, L.P. were $756,046 and $688,592 and
represented .42% and .51% of the fund's net assets, respectively. Summarized
unaudited financial information of The Broad Market Fund, L.P. is as follows:
June 30, 1998 December 31, 1997
------------- -----------------
Total assets $179,031,012 $162,511,390
Total liabilities 205,010 28,567,596
Six months ended June 30
1998 1997
-----------------------------
Net investment income $13,023,476 $1,156,111
Net realized and unrealized
gain on investments 1,472,081 8,574,940
---------- ----------
Net income $14,495,557 $9,731,051
=========== ==========
At June 30, 1998, TPI's investments in Meridian Horizon Fund, L.P., GamTree,
L.P., The F.W. Thompson Fund, L.P., and The Broad Market Prime Fund, L.P. were
$358,222, $195,810, $115,174 and $52,704, respectively. At December 31, 1997,
TPI's investments in Meridian Horizon Fund, L.P., GamTree, L.P, The F.W.
Thompson Fund, L.P. and The Broad Market Prime Fund, L.P. were $299,483,
$186,717, $46,695 and $0, respectively. Effective July 1, 1998, TPI resigned as
a Co-General Partner to Meridian Horizon Fund, L.P. The aggregated summarized
unaudited financial information of these entities, as reported by the Funds'
underlying investment managers, is as follows:
June 30, 1998 December 31, 1997
------------- -----------------
Total assets $410,756,961 $249,504,158
Total liabilities 83,609,979 60,805,159
Six months ended June 30
1998 1997
---------------------------
Net investment loss $(3,285,015) $( 633,570)
Net realized and unrealized gain
on investments 35,312,575 6,016,979
----------- ----------
Net income $32,027,560 $ 5,383,409
=========== ===========
NOTE C - Accrued Expenses
Accrued expenses consist of the following:
June 30, 1998 December 31, 1997
(Unaudited) (Audited)
Professional and consulting fees $ 475,396 $ 741,105
Compensation 274,962 200,000
Note payable 63,882 87,840
Employee benefit plan --- 46,566
Other 15,981 37,223
------- -------
$ 830,221 $1,112,734
========= ==========
<PAGE>
NOTE D - Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<S> <C> <C>
Six months ended Three months ended
June 30 June 30
1998 1997 1998 1997
-------------------------- ---------------------------
Numerator:
Net Income - numerator for
basic and dilutive earnings
per share (income available
to common shareholders) $801,327 $292,639 $532,484 $186,841
Denominator:
Denominator for basic
earnings per share - weighted
average shares 4,087,521 3,884,457 4,088,220 3,884,457
Effect of dilutive securities:
Employee stock options 240,278 113,407 273,363 128,847
Denominator for diluted
earnings per share; adjusted
weighted-average shares and
assumed conversions 4,327,799 3,997,864 4,360,884 4,217,067
Basic earnings per share $ 0.20 $ 0.08 $ 0.13 $ 0.05
Diluted earnings per share $ 0.19 $ 0.07 $ 0.12 $ 0.05
</TABLE>
NOTE E - Contingencies
The Company is being sued by a former employee for alleged breach of contract
and defamation. The Company believes that the suit is without merit; however,
should the plaintiff prevail the Company believes that it is likely that the
damages will not be material to the Company's assets or operations.
NOTE F - Subsequent Events
On July 13, 1998 the Company, with a joint venture partner, formed Tremont
Investment Management, Inc. ("TIMI"). TIMI, which is 65% owned by the Company,
has applied for registration with the Ontario Securities Commission as an
adviser in the categories of investment counsel and portfolio manager and as a
limited market dealer under the Securities Act (Ontario).
<PAGE>
The Company's Board of Directors recently adopted, through a written
consent of a majority of shareholders, to amend its Certificate of
Incorporation to increase the authorized number of shares of Class B Common
Stock, $.01 par value, from five million (5,000,000) to ten million
(10,000,000). Also included in this amendment is the entitlement of each holder
of Class A Common Stock, $.01 par value, to convert his or her shares into an
equivalent number of Class B Common Stock, $.01 par value.
Item 2.Management's Discussion and Analysis
Tremont Advisers, Inc.'s (the "Company") revenues are derived from consulting
and specialized investment services provided to institutional and other clients,
as well as management fees from certain investment funds under its management.
Consulting fees are generally a function of the amount of assets under
management and the percentage fees charged to clients. Management fees are based
on a percentage of the assets of the fund and are usually paid on a monthly
basis. The Company also receives asset-based fees for investments placed by
Tremont (Bermuda) Limited ("TBL"), its wholly-owned offshore subsidiary, in
certain offshore mutual funds. The Company provides other consulting services,
generally on a fixed fee basis, whether as annual retainer fees or single
project fees. The Company's principal operating expenses consist of its costs of
personnel and independent consultants. It is management's intention to continue
the Company's focus on launching new products and taking advantage of its
growing world-wide relationships to expand its operations.
Consulting fees for the six months ended June 30, 1998 increased by $2,019,860
or approximately 87.2% as compared to the six months ended June 30, 1997. The
increases in revenue were primarily as a result of increases in the assets
managed, increases in the value of the assets within the respective investment
vehicles and from new clients. At the Company's wholly-owned domestic
subsidiary, Tremont Partners, Inc. ("TPI"), consulting fees increased from
$1,449,820 for the six months ended June 30, 1997 to approximately $2,932,624
for the six months ended June 30, 1998. The increase is primarily due to
increases in revenues from the following related entities: The Broad Market
Prime Fund, L.P. ($666,149), Meridian Horizon Fund, L.P. ($281,377), and The
Broad Market Fund, L.P. ($214,694). Consulting fees also increased domestically
as a result of Tremont Securities, Inc. ("TSI") realizing consulting fees from
the sale of limited partnership interests. These fees amounted to $52,275 for
the six months ended June 30, 1998 and did not occur during the six months ended
June 30, 1997. TBL's consulting fees increased from $866,449 for the six months
ended June 30, 1997 to approximately $1,351,230 for the six months ended June
30, 1998. The increase is primarily due to increases in revenues from Kingate
Global Fund Class B Shares ($204,919), as well as from several new clients.
Consulting fees for the Company for the three months ended June 30, 1998
increased by $1,127,562, or approximately 93.4% as compared to the three months
ended June 30, 1997. The increases in revenues were primarily as a result of
increases in the assets managed, increases in the value of the assets within the
respective investment vehicles and a larger client base. TPI's consulting fees
increased from $762,482 for the three months ended June 30, 1997 to
approximately $1,556,752 for the three months ended June 30, 1998. The increase
was primarily due to increases in revenues from The Broad Market Prime Fund,
L.P. ($378,853), Meridian Horizon Fund, L.P. ($149,413), The Broad Market Fund,
L.P. ($100,491) and Chrysler Minority Equity Trust ($93,994). Consulting fees
also increased domestically as a result of TSI realizing consulting fees from
the sale of limited partnership interests. These fees amounted to $44,085 for
the three months ended June 30, 1998 and did not occur during the three months
ended June 30, 1997. TBL's consulting fees increased from $445,325 for the three
months ended June 30, 1997 to approximately $734,530 for the three months ended
<PAGE>
June 30, 1998. The increase was primarily due to increases in revenues from
Kingate Global Fund Class B Shares ($110,947), as well as from several new
clients.
Performance fees for the six and three months ended June 30, 1998 increased by
$138,547 or 77.9% and $204,219 or 267.3%, respectively, as compared to the six
and three months ended June 30, 1997, primarily as a result of underlying
investment vehicles outperforming their established benchmarks.
Commissions received by TSI, the Company's wholly-owned broker dealer
subsidiary, increased by $95,965 or 78.5% and $14,184 or 17.0%, respectively,
for the six and three months ended June 30, 1998 compared to similar periods in
1997. These increases are primarily as a result of increased trading activities
by TSI's clients.
Management expects that for the remainder of 1998 the Company will become less
dependent on a small number of large clients as the Company is continuing to
develop relationships with a variety of different entities. The Company is also
utilizing these relationships to create diversified ways to package and
distribute its subsidiaries' proprietary products. In addition, management
expects performance fee revenue to increase during periods of positive market
conditions, but management cannot predict with any accuracy performance fee
income due to changing market conditions and other outside factors.
Compensation expense increased for the six and three months ended June 30, 1998
by $373,088 or 26.3% and $236,224 or 33.8%, respectively, as compared to the six
and three months ended June 30, 1997, as a result of the Company's continued
efforts to attract and retain qualified employees. These efforts resulted in an
increase in the number of employees to 31 at June 30, 1998 from 28 at June 30,
1997. Compensation expense also increased due to salary increases for certain
employees that became effective January 1, 1998 and as a result of increased
health care costs associated with the increase in the number of employees.
General and administrative expenses consist primarily of rent,
telecommunications, travel and entertainment, professional fees and other
related expenses. General and administrative expenses increased $585,891 or
102.8% and $297,497 or 95.5%, respectively, for the six and three months ended
June 30, 1998, as compared to similar periods in 1997. The increase in general
and administrative expenses was primarily due to the costs related to the
Company's continued expansion to service its growth, including moving to a
larger office facility in September, 1997. It was also due to an increase in
professional fees and other related costs of launching new business ventures
which were and are currently in the start-up phase.
Consulting expenses increased $383,028 or 137.8% and $204,772 or 146.1%,
respectively, for the six and three months ended June 30, 1998, as compared to
the six and three months ended June 30, 1997, primarily as a result of the
increase in the number of clients and an increase in revenues from clients
subject to the Company's revenue sharing arrangements. For example, TSI shares a
certain percentage of the commissions earned by it with the clearing
broker-dealer providing it with securities clearing services. TPI and TBL also
have revenue sharing arrangements applicable to certain clients.
Depreciation and amortization increased $27,967 or 51.3% and $14,157 or 50.9%,
respectively, for the six and three months ending June 30, 1998 compared to
similar periods in 1997. The increase resulted from the purchases of fixed
assets after June 30, 1997. These purchases included computer upgrades, new
software and the expansion of the computer network, as well as furniture and
<PAGE>
fixtures for the Company's new executive offices. The Company made capital
expenditures of $46,197 during the six months ended June 30, 1998.
Equity in earnings from investments in limited partnerships increased $59,793 or
65.2% and $20,303 or 37.9%, respectively, for the six and three months ended
June 30, 1998, compared to similar periods in 1997. This increase was primarily
due to increased investment performance compared to similar periods in 1997.
Cash provided by operations was $396,235 for the six months ended June 30, 1998
as compared to $102,640 for the six months ended June 30, 1997. The $508,688
increase in net income was offset by changes in working capital accounts. These
changes include an increase in accounts receivable and a decrease in accrued
expenses, offset by a decrease in a receivable from officer. The positive cash
flow provided by operating activities was offset by cash used by investing
activities of $312,197 for the six months ended June 30, 1998.
Profitability is dependent on the ability of the Company to maintain existing
client relationships, several of which currently account for a significant
portion of the Company's revenues, to increase assets under management for its
clients, and to market its services to new accounts.
The Company believes it has adequate capital resources and working capital to
bring to market those products currently in the developmental stage, and that
the revenue stream from these, as well as from existing products, will be
sufficient to support future growth. The Company has no material short-term or
long-term debt obligations.
The Company owns options to purchase 8,000 shares of a privately-held investment
adviser specializing in 401(k) investment allocation advice over the Internet.
The options were granted at $10 per share and have vested or will vest 25% on
January 1, 1996; 25% in equal installments at the end of each month between
January 1, 1997 and December 31, 1997; and 50% in equal installments at the end
of each month between January 1, 1998 and December 31, 1998. The options have a
five year term and were valued at zero by the Company at June 30, 1998.
The Company owns 30,000 shares of common stock of a privately-held financial
services company formed in 1996. The shares were received by the Company as a
result of an employee's participation as a board member of such company. At June
30, 1998 the shares of common stock were valued at zero.
The Company, with a joint venture partner, formed Tremont Investment Management,
Inc. ("TIMI"). TIMI, 65% owned by the Company, has applied for registration with
the Ontario Securities Commission as an adviser in the categories of investment
counsel and portfolio manager and as a limited market dealer under the
Securities Act (Ontario).
The Company has received the necessary shareholder consent to an amendment to
its Certificate of Incorporation increasing the authorized number of shares of
Class B Common Stock, $.01 par value, from five million (5,000,000) to ten
million (10,000,000) shares. This amendment also grants holders of Class A
Common Stock, $.01 par value, the right to convert their shares into an equal
number of shares of Class B Common Stock.
<PAGE>
The Company is being sued by a former employee for alleged breach of
contract and defamation. The Company believes that the suit is without
merit; however, should the plaintiff prevail the Company believes that it is
likely that the damages will not be material to the Company's assets or
operations.
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to determine the applicable year. Any computer
programs that have time sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculation causing significant disruptions of operations, including,
among other things, a temporary inability to process transactions or engage in
similar normal business activities. Based on a recent assessment, the Company
determined all but one of its significant computer systems are currently enabled
for year 2000 entries and the Company believes such system will be compliant
within the second quarter of 1999. The cost of the assessment was immaterial to
the Company and the Company believes that the cost of its compliance actions
will also be immaterial to the Company. However, the Company could be adversely
affected if the computer systems used by the Company's service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. The Company is currently in communication with these other
companies to determine if there is reasonable cause for concern.
Certain statements in this Management's Discussion and Analysis constitute
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance, or achievements expressed or implied by
such forward looking statements. These forward looking statements were based on
various factors and were derived utilizing numerous important assumptions and
other factors that could cause actual results to differ materially from those in
the forward looking statements, including, but not limited to: uncertainty as to
the Company's future profitability and the Company's ability to develop and
implement operational and financial systems to manage rapidly growing
operations, competition in the Company's existing and potential future lines of
business, and other factors. Other factors and assumptions not identified above
were also involved in the derivation of these forward looking statements, and
the failure of such other assumptions to be realized, as well as other factors,
may also cause actual results to differ materially from those projected. The
Company assumes no obligation to update these forward looking statements to
reflect actual results, changes in assumptions or changes in other factors
affecting such forward looking statements.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company has been sued by a former employee for alleged breach of contract
and defamation. The Company believes that the suit is without merit; however,
should the plaintiff prevail the Company believes that it is likely that the
damages will not be material to the Company's assets or operations.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on June 11, 1998, the
stockholders elected the following to serve as directors until the next Annual
Meeting of Stockholders and until their successors are duly elected and
qualified.
For Against
Sandra L. Manzke 6,557,130 8,172
Robert I. Schulman 6,557,130 8,172
John L. Keeley, Jr. 6,557,130 8,172
Jimmy L. Thomas 6,557,130 8,172
Alan A. Rhein 6,557,130 8,172
Richard E. O'Brien 6,557,130 8,172
The stockholders also voted to ratify the selection of Ernst & Young LLP to
serve as the Company's auditors for the fiscal year ending December 31, 1998.
The vote was as follows:
For Against Abstain
6,565,302 0 0
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended June 30, 1998.
<PAGE>
Signature
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.
Tremont Advisers, Inc.
Date: August 7, 1998 /s/ Stephen T. Clayton
Stephen T. Clayton
Chief Financial Officer
(Duly authorized Officer and
Principal Financial and Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
TREMONT ADVISERS, INC.
JUNE 30, 1998
THIS SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 1998 AND FOR THE SIX MONTH
PERIOD THEN ENDED. THIS INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<CIK>0000880320
<NAME> Tremont Advisers, Inc.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 914,214
<SECURITIES> 0
<RECEIVABLES> 2,531,499
<ALLOWANCES> (35,000)
<INVENTORY> 0
<CURRENT-ASSETS> 3,518,819
<PP&E> 806,499
<DEPRECIATION> (441,608)
<TOTAL-ASSETS> 5,583,959
<CURRENT-LIABILITIES> 1,057,341
<BONDS> 0
0
0
<COMMON> 40,893
<OTHER-SE> 4,255,054
<TOTAL-LIABILITY-AND-EQUITY> 5,583,959
<SALES> 0
<TOTAL-REVENUES> 4,870,826
<CGS> 0
<TOTAL-COSTS> 3,692,366
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,210,509
<INCOME-TAX> 409,182
<INCOME-CONTINUING> 801,327
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 801,327
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.19
</TABLE>
