Knight/Trimark Group Reports Record Third Quarter 1998 Results
PR Newswire, Wednesday, October 21, 1998 at 08:52
EPS of $0.25 Driven by Increased Volume and Record Revenues
JERSEY CITY, N.J., Oct. 21 /PRNewswire/ -- Knight/Trimark Group, Inc.
(NASDAQ:NITE) today reported record financial results for the third quarter
and nine months ended September 30, 1998. Knight/Trimark is a 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.
Third Quarter 1998 vs. Third Quarter 1997
-- 58% growth in revenues
-- 69% growth in net income(1)
First Nine Months of 1998 vs. First Nine Months of 1997
-- 48% growth in revenues
-- 77% growth in net income(1)
Revenues for the 1998 third quarter rose 58% to $92.4 million, compared to
$58.6 million for the third quarter of 1997. Net income(1) for the third
quarter of 1998 totaled $13.2 million, or $0.25 per basic and diluted share, a
69% increase from $7.8 million, or $0.15 per basic and diluted share for the
same period a year ago. Return on equity for the third quarter of 1998,
stated on an annualized basis, was 31%; and the Company achieved pre-tax
margins of 25%. The number of shares used in the pro forma basic and diluted
calculations for the third quarters of 1998 and 1997 was 52,554,882 shares and
51,504,882 shares, respectively. The 52,554,882 shares used to calculate 1998
earnings per share reflects the weighted average shares outstanding subsequent
to the Company's reorganization and initial public offering in July 1998.
Year-to-date revenues increased 48% to $236.5 million from $159.6 million
for the first nine months of 1997. Net income(1) for the nine months ended
September 30, 1998, totaled $33.2 million, or $0.63 per basic and diluted
share, a 77% increase from $18.8 million, or $0.36 per basic and diluted
share, for the nine months ended September 30, 1997. The Company achieved
pre-tax margins of 25% for the nine months ended September 30, 1998.
In addition to the improvements in year-over-year results, the Company
also achieved sequential quarterly gains as revenues for the quarter ended
September 30, 1998 rose 15% and net income(1) increased 13% over the quarter
ended June 30, 1998.
Kenneth D. Pasternak, President and Chief Executive Officer of
Knight/Trimark Group, commented on the results, "We are pleased to have met
each of our financial and operational objectives during the third quarter,
posting solid year-over-year increases in revenues, profits and earnings per
share while growing market share and increasing margins. The substantial
increases we've achieved in net trading revenue demonstrate Knight/Trimark's
expertise in executing our innovative, value-added trading methodologies and
taking advantage of our cutting-edge technological efficiencies during the
recent volatile market conditions."
Mr. Pasternak continued, "As one of the most efficient and technologically
advanced transaction processors, we are in the enviable position of having the
ability to leverage Knight/Trimark's trading infrastructure to capitalize on
increased trading volume."
Knight/Trimark also reported that trades executed during the quarter ended
September 30, 1998, increased 89% to 10.5 million from 5.5 million for the
comparable period a year ago. Shares traded during the third quarter of 1998
rose 88% to 9.5 billion from 5.0 billion during the third quarter of 1997.
Average daily net trading revenue for the third quarter of 1998 grew 53% to
$1.4 million from $918,000 for the comparable 1997 period.
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
Net trading
revenue (in $) 89,962,029 57,834,882 233,023,366 157,665,531
Trades executed 10,509,894 5,549,837 27,097,928 13,470,980
Average daily
trades 164,217 88,093 144,138 72,037
Shares traded 9,471,296,000 5,025,399,00026,354,778,000 12,012,284,000
Knight/Trimark Group, Inc. is a 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 makes markets in approximately 7,700
over-the-counter (OTC) equity securities. Trimark Securities makes markets in
all NYSE- and Amex-listed equity securities. Knight/Trimark Group, Inc. is
"Dedicated to Execution Solutions."(TM)
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.
(1) Net income is 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.
KNIGHT/TRIMARK GROUP, INC.
Condensed Consolidated Statements of Income
(Unaudited, in thousands except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues
Net trading revenue $89,962 $57,835 $233,023 $157,665
Commissions, net 1,351 226 1,546 535
Interest, net 1,062 511 1,885 1,442
Total revenues 92,375 58,572 236,454 159,642
Expenses
Employee compensation
and benefits 28,322 15,034 67,814 39,539
Payments for order flow 20,351 16,136 56,111 51,106
Execution and clearance
fees 11,774 8,576 32,203 21,860
Communications and
data processing 3,020 1,832 7,660 4,872
Depreciation and
amortization 1,516 1,083 4,151 3,082
Occupancy and equipment
rentals 1,586 666 3,981 1,768
Professional fees 1,256 566 2,230 1,115
Business development 606 322 1,595 998
Interest on Preferred Units 37 435 715 1,516
Other 824 295 1,671 846
Total expenses 69,292 44,945 178,131 126,702
Net income before taxes 23,083 13,627 58,323 32,940
Income tax expense 9,259 --- 9,259 ---
Net income $13,824 $13,627 $49,064 $32,940
Basic and diluted
earnings per share $0.26 $0.93
Pro forma adjustment:*
Net income before taxes $23,083 $13,627 $58,323 $32,940
Pro forma income tax
expense 9,926 5,860 25,079 14,164
Pro forma net income $13,157 $7,767 $33,244 $18,776
Pro forma basic and
diluted earnings
per share $0.25 $0.15 $0.63 $0.36
Weighted average shares
of Class A & Class B
stock outstanding ** 52,554,882 52,554,882
Pro forma shares of
Class A & Class B
stock outstanding*** 51,504,882 51,504,882
* Before its reorganization to a C Corporation on July 13, 1998, the
Company, as a limited liability company, was not subject to income
taxes. Actual income expense represents income taxes incurred from July
13, 1998 through September 30, 1998. Pro forma income tax expense
represents pro forma income tax expense (at an effective income tax rate
of 43%) as if the Company was a C Corporation for the entire quarter
ended September 30, 1998.
** The 52,554,882 shares used to calculate 1998 earnings per share
reflect the weighted average shares outstanding subsequent to the
Company's reorganization and issuance of 11.5 million shares of the
Company's Class A common stock in conjunction with the Company's initial
public offering in July 1998.
*** Pro forma shares outstanding represents adjustments related to the
Company's reorganization from a limited liability company to a C
Corporation and the related initial public offering of 10,000,000 shares
of Class A common stock, as described in the Company's prospectus dated
July 8, 1998, as filed with the Securities and Exchange Commission.
Such amounts assume that the 30-day option to purchase an additional
1,500,000 shares of Class A common stock granted to the underwriters of
the Company's IPO, as described in the prospectus, was not exercised.
Such option was exercised on August 3, 1998.
KNIGHT/TRIMARK GROUP, INC.
Consolidated Statements of Financial Condition
(in thousands)
(Unaudited)
September 30, December 31,
1998 1997
ASSETS
Cash and cash equivalents $140,505 $13,797
Securities owned, at market value 55,005 61,726
Receivable from clearing brokers 65,639 30,152
Fixed assets and leasehold
improvements at cost,
less accumulated depreciation 11,477 7,353
Goodwill, less accumulated amortization 15,445 14,193
Other assets 2,403 651
Total assets $ 290,474 $ 127,872
LIABILITIES & MEMBERS'/
STOCKHOLDERS' EQUITY
Liabilities
Securities sold, not yet purchased,
at market value $44,780 $21,061
Distribution on Common Units
payable to members --- 8,405
Short-term borrowings 25,000 ---
Accrued compensation expense 14,907 6,113
Accrued execution and clearance fees 4,395 3,966
Accrued payments for order flow 4,982 3,764
Accounts payable, accrued expenses
and other liabilities 4,588 2,181
Interest payable on Preferred Units --- 425
Subordinated note --- 500
Mandatorily Redeemable Preferred A Units --- 12,484
Mandatorily Redeemable Preferred B Units --- 15,000
Income taxes payable 9,238 ---
Total liabilities 107,890 73,899
Members' Equity
Common Units --- 7,345
Undistributed income --- 46,628
Stockholders' equity
Class A Common Shares 491 ---
Class B Common Shares 39 ---
Additional paid-in capital 169,780 ---
Retained earnings 12,274 ---
Total members'/stockholders' equity 182,584 53,973
Total liabilities and members'/
stockholders' equity $290,474 $ 127,872
SOURCE Knight/Trimark Group, Inc.
-0- 10/21/98
/NOTE TO EDITORS: For more information on Knight/Trimark Group, via fax
at no charge, please dial 1-800-PRO-INFO and enter ticker symbol "NITE"./
/CONTACT: Robert Turner, Exec. Vice President, CFO & Treasurer of Knight-
Trimark, 201-557-6845; or general, Julie Gottlieb, analysts, Cecelia Heer, or
media, Wendy Shapiro, 212-661-8030, all of The Financial Relations Board/ |
