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Wednesday April 21, 8:03 am Eastern Time
Company Press Release
SOURCE: Knight/Trimark Group, Inc.
Knight/Trimark Group Reports 188% Growth in Quarterly Revenues And 344% Growth in Quarterly Earnings Over First Quarter 1998; Announces a Two-For-One Stock Split
EPS of $0.67 Driven by Increased Market Share, Expanded Margins and Record Volumes Fueled by the Growth of Internet On-line Trading
JERSEY CITY, N.J., April 21 /PRNewswire/ -- Knight/Trimark Group, Inc. (Nasdaq: NITE - news) today reported record results for the first quarter ended March 31, 1999. Knight/Trimark Group is the leading market maker in both Nasdaq securities and the over-the-counter market for New York Stock Exchange- and American Stock Exchange-listed securities.
First Quarter 1999 vs. First Quarter 1998
-- 188% growth in revenues -- 147% growth in trades executed
-- 344% growth in net income (A) -- 115% growth in shares traded
First Quarter 1999 vs. Fourth Quarter 1998
-- 53% growth in revenues -- 35% growth in trades executed
-- 113% growth in net income -- 33% growth in shares traded
First Quarter Fourth Quarter First Quarter
1999 1998 1998
Revenues ($) 182,664,136 119,278,424 63,532,217
Net income (A)($) 37,406,875 17,536,859 8,426,713
Diluted EPS ($) 0.67 0.33 0.20
Trades executed 18,691,368 13,796,127 7,571,665
Average daily trades 306,416 215,564 124,126
Shares traded 15,943,152,289 12,017,814,616 7,406,163,856
Revenues for the first quarter of 1999 rose 188% to $182.7 million, compared to $63.5 million for the first quarter of 1998. Net income(A) for the first quarter of 1999 totaled $37.4 million, or $0.67 per share on a diluted basis, a 344% increase from $8.4 million, or $0.20 per share on a diluted basis for the same period a year ago. Return on equity for the first quarter of 1999, stated on an annualized basis, was 64%.
In addition to the improvements in year-over-year results, the Company also achieved sequential quarterly gains as revenues and net income for the first quarter of 1999 rose 53% and 113%, respectively, over the fourth quarter of 1998. The Company also achieved pre-tax margins of 35% in the first quarter of 1999, up from 25% in the fourth quarter of 1998.
''We are very proud of our results during this quarter. As the largest execution destination for all equity transactions originated over the Internet, we feel that Knight/Trimark is uniquely positioned to continue to benefit from the unprecedented growth in online trading,'' said Kenneth D. Pasternak, the Company's President and CEO. ''Achieving pre-tax margins of over 35% in the first quarter is testament to the success of our business model and the operating leverage we can achieve with our record-breaking volumes.''
Knight/Trimark Group executed over 306,000 trades per day on average during the first quarter of 1999, a 42% increase from the fourth quarter of 1998. Additionally, the Company executed 520,000 trades on April 19, 1999, a Company record.
First quarter revenues from the Company's institutional business grew 39% from the fourth quarter, and represented 17% of the Company's first quarter trading revenues. Additionally, the Company announced on April 14th that its new London-based subsidiary, Knight Securities International, Ltd., received regulatory approval from the Securities and Futures Authority in the United Kingdom. Commencing operations in May 1999, Knight Securities International will initially operate as an institutional sales office, arranging transactions in U.S. equity securities between European institutional customers and Knight Securities.
The Company also announced that its Board of Directors approved a two-for- one stock split of the Company's Class A and Class B Common Stock. Shareholders of record as of the close of business on April 30, 1999 will receive, in the form of a stock dividend, one additional share for each share held by them. On or about May 14, 1999, the transfer agent will distribute the additional shares. Upon completion of the split, the Company will have 110,899,204 shares of common stock outstanding.
''We are pleased with the recent performance of our stock and feel that this illustrates the investing public's better understanding of Knight/Trimark's business model. This stock split reflects the Company's continued confidence in the success of our business strategy and our commitment to making Knight/Trimark's stock broadly accessible to individuals as well as institutional investors while maintaining a strong stock price,'' said Mr. Pasternak.
In April, the Company announced the rollout of its proprietary eKNIGHT(TM) Web product, a sophisticated Internet-based electronic order entry and order management product. This secure proprietary Internet product will provide Knight/Trimark's customers (broker-dealers and institutions) with electronic access to its trading systems, enabling them to initiate and monitor securities transactions from their desktops.
The AutEx Group (''AutEx'')(B) ranked Knight Securities, Inc. (''Knight''), the OTC market-making subsidiary of Knight/Trimark Group, as the largest market-maker in Nasdaq/OTC securities for March 1999 with 3.6 billion shares traded, which represented a 15.04% total market share. This represents a 52% increase in market share from March 1998 when Knight traded 1.9 billion shares, representing a 9.91% total market share, as reported by AutEx. Additionally, in March 1999, AutEx ranked Knight/Trimark Group number two in listed securities volume with 1.3 billion shares traded representing a 6.88% total market share.
Knight/Trimark Group is the leading market maker in both Nasdaq securities and the over-the-counter market for New York Stock Exchange (NYSE)- and American Stock Exchange (AMEX)-listed equity securities -- the Third Market. Knight/Trimark is the parent company of Knight Securities and Trimark Securities. Knight Securities trades in approximately 7,000 equity securities listed on Nasdaq and on the OTC Bulletin Board (OTCBB) of the National Association of Securities Dealers (NASD). Trimark Securities trades NYSE- and AMEX-listed equity securities over the counter. Knight/Trimark Group is ''Dedicated to Execution Solutions(TM).''
Copies of this earnings release and other information on the Company can be obtained via the Internet at www.knight-sec.com or toll-free on the Company's investor information line at 1-877-INFO-NITE.
The matters described herein contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the Company's control which could cause actual results to differ materially from historical results, performance or other expectations and from any opinions or statements expressed with respect to future periods. These factors include, but are not limited to, the Company's ability to implement its growth strategies, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, intellectual property rights, and other factors detailed in the Company's registration statement and periodic reports filed with the Securities & Exchange Commission.
(A) Net Income for the quarter ended March 31, 1998 was adjusted to
reflect pro forma income taxes for the full period related to the
Company's reorganization from a limited liability company to a C
corporation in connection with the Company's initial public offering
on July 8, 1998.
(B) The AutEx Group is a widely-recognized industry reporting services
that provides daily statistics on trading activity and broker-dealer
market-share, as reported by broker-dealers.
KNIGHT/TRIMARK GROUP, INC.
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31,
1999 1998
Revenues
Net trading revenue $178,550,421 $62,967,499
Commissions and fees 2,527,182 39,067
Interest, net 1,586,533 525,651
Total revenues 182,664,136 63,532,217
Expenses
Employee compensation and benefits 57,292,284 16,168,160
Payments for order flow 32,427,827 16,256,518
Execution and clearance fees 17,957,167 10,240,677
Communications and data processing 3,939,054 2,169,675
Depreciation and amortization 1,951,291 1,291,164
Occupancy and equipment rentals 1,823,889 1,081,542
Professional fees 1,058,827 262,746
Business development 660,487 376,850
Interest on Preferred Units -- 416,486
Other 828,881 484,692
Total expenses 117,939,707 48,748,510
Net income before taxes 64,724,429 14,783,707
Income tax expense 27,317,554 --
Net income $37,406,875 $14,783,707
Basic earnings per share $0.70
Diluted earnings per share $0.67
Pro forma adjustment:*
Net income before taxes $14,783,707
Pro forma income tax expense 6,356,994
Pro forma net income $8,426,713
Pro forma basic and diluted earnings per share $0.20
Shares used in the computation of
basic earnings per share ** 53,801,736
Shares used in the computation of
diluted earnings per share ** 55,786,025
Pro forma shares outstanding for basic and
diluted earnings per share*** 42,801,636
* Before its reorganization to a C Corporation on July 13, 1998, the
Company, as a limited liability company, was not subject to income
taxes.Pro forma income tax expense was computed based on an effective
tax rate of 43% for the entire quarter ended March 31, 1998.
** The shares used to calculate basic earnings per share for the quarter
ended March 31, 1999 reflect the weighted average shares outstanding
during the period.The shares used to calculate diluted earnings per
share include the effect of dilutive stock options.
*** Pro forma shares outstanding for the quarter ended March 31, 1998
have been determined as if the Company's reorganization to a C
Corporation occurred as of January 1, 1998, but do not include shares
issued in connection with the Company's initial public offering on
July 13, 1998.
KNIGHT/TRIMARK GROUP, INC.
Consolidated Statements of Financial Condition
(Unaudited)
March 31, December 31,
1999 1998
ASSETS
Cash and cash equivalents $251,228,271 $117,381,556
Securities owned, at market value 97,403,167 100,476,151
Receivable from clearing brokers 83,981,104 107,503,274
Fixed assets and leasehold
improvements at cost, less
accumulated depreciation 11,684,273 12,014,991
Goodwill, less accumulated amortization 16,924,297 16,036,859
Other assets 10,258,811 5,447,544
Total assets 471,479,923 $358,860,375
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Securities sold, not yet purchased,
at market value $72,220,537 $108,909,217
Short-term borrowings -- 10,000,000
Accrued compensation expense 28,626,766 16,529,004
Accrued execution and clearance fees 7,431,620 6,898,095
Accrued payments for order flow 10,526,616 8,672,668
Accounts payable, accrued
expenses and other liabilities 5,767,423 5,445,112
Income taxes payable 28,257,193 2,285,620
Total liabilities 152,830,155 158,739,716
Stockholders' equity
Class A Common Shares 528,569 490,622
Class B Common Shares 25,927 39,427
Additional paid-in capital 250,877,716 169,779,929
Retained earnings 67,217,556 29,810,681
Total stockholders' equity 318,649,768 200,120,659
Total liabilities and
stockholders' equity $471,479,923 $358,860,375
SOURCE: Knight/Trimark Group, Inc.
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