|JULY 21, 1999|
|Knight/Trimark Group Reports 178% Growth in Quarterly Revenues and 331% Growth in Quarterly Earnings Over Second Quarter 1998|
JERSEY CITY, N.J., July 21 /PRNewswire/ -- Knight/Trimark Group, Inc. (Nasdaq: NITE - news) today reported record results for the second quarter ended June 30, 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.
Second Quarter First Quarter Second Quarter 1999 1999 1998 Revenues ($) 224,047,186 182,664,136 80,612,588 Net income (1) ($) 50,194,764 37,406,875 11,660,413 Diluted EPS ($) 0.43 0.34 0.14 Trades executed 21,448,630 18,691,368 9,016,369 Average daily trades 340,454 306,416 143,117 Shares traded 21,319,768,752 15,943,152,289 9,477,317,566 First Half First Half 1999 1998 Revenues ($) 406,711,322 144,118,199 Net income (1) ($) 87,601,639 20,087,125 Diluted EPS ($) 0.77 0.23 Trades executed 40,139,998 16,588,034 Average daily trades 323,710 133,774 Shares traded 37,262,921,041 16,883,481,422
Revenues for the second quarter of 1999 rose 178% to $224.0 million, compared to $80.6 million for the second quarter of 1998. Net income(1) for the second quarter of 1999 totaled $50.2 million, or $0.43 per share on a diluted basis, a 331% increase from $11.7 million, or $0.14 per share on a diluted basis for the same period a year ago. Return on equity for the second
In addition to the improvements in year-over-year results, the Company also achieved sequential quarterly gains as revenues and net income for the second quarter of 1999 rose 23% and 34%, respectively, over the first quarter of 1999. The Company also achieved pre-tax margins of 38% in the second quarter of 1999, up from 35% in the first quarter of 1999 and 25% in the prior year's second quarter. Second quarter revenues from the Company's institutional business grew 36% from the first quarter, and represented 19% of the Company's second quarter trading revenues.
''We have continued to show extraordinary growth this past quarter as more and more retail investors are embracing the opportunities of online investing. Knight/Trimark has demonstrated an ability to capture an expanded share of this growing market by executing over 340,000 trades per day on average during the second quarter of 1999, an 11% increase from the prior quarter,'' said Kenneth D. Pasternak, the Company's President and Chief Executive Officer. ''As a result of our focus on customer service; technology; innovative trading methodologies; and scale, we have delivered a 331% increase to the second quarter's bottom line compared with our net income in the prior year's quarter.''
''To maintain our rapid growth, we have deepened the management team and are setting our sights on new horizons,'' said Pasternak. ''This past quarter we have appointed John Hewitt as president of Knight Securities, hired a new head of business development, embarked on a corporate branding and advertising campaign and opened our London institutional sales office. These developments set the stage for our plans to become the leading global market maker.''
''Knight/Trimark also has taken significant steps this past quarter to enhance our broker-dealer and institutional client service,'' continued Pasternak. ''To help put an end to pre-opening pricing confusion for retail investors, we introduced true mid-point pricing that will, regardless of order imbalances, offer our broker-dealer customers a single price opening. With mid-point pricing and our recent roll-out of automatic price improvement for S&P 500 orders, we are enhancing our product capabilities to provide our customers with immediacy, enhanced liquidity and price improvement above and beyond the national best bid and offer (NBBO).''
The AutEx Group (''AutEx'')(2) ranked Knight Securities as the largest market maker in Nasdaq/OTC securities for June 1999 with 4.3 billion shares traded, which represented a 17.49% total market share. This represents a 69% increase in market share from June 1998 when Knight achieved a 10.33% total market share and a 16% increase in market share from March 1999, as reported by AutEx. Additionally, in June 1999, AutEx ranked Knight/Trimark number three in listed securities volume with 1.1 billion shares traded, representing a 6.41% total market share.
Knight/Trimark, headquartered in Jersey City, N.J., is the parent company of Knight Securities and Trimark Securities. Knight Securities makes markets in over 7,100 equity securities listed on Nasdaq and on the OTC Bulletin Board (OTCBB) of the National Association of Securities Dealers (NASD). Trimark trades NYSE- and Amex-listed equity securities over the counter -- the Third Market. As the number one destination for online trade executions, Knight/Trimark is the processing power behind the explosive growth in securities trading via the Internet. The four-year-old company employs more than 550 people worldwide with offices in Jersey City, N.J.; Jericho and Purchase, N.Y.; Chicago, Ill.; Boston, Mass.; and London, England. Copies of this earnings release and other information on the Company can be obtained via the Internet at http://www.knight-sec.com or toll-free on the Company's investor information line at 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
(1) Net Income for the periods ended June 30, 1998 was adjusted to reflect pro forma income taxes 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. (2) The AutEx Group is a widely-recognized industry reporting service 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 June 30, Six Months Ended June 30, 1997 1998 1999 1998 Revenues Net trading revenue $216,437,894 $80,225,541 $394,988,315 $143,193,040 Commissions and fees 4,438,874 90,388 6,966,056 114,455 Interest, net 3,170,418 296,659 4,756,951 810,704 Total revenues 224,047,186 80,612,588 406,711,322 144,118,199 Expenses Employee compensation and benefits 70,166,936 23,453,470 127,459,220 39,811,804 Payments for order flow 35,354,189 19,489,651 67,782,016 35,746,170 Execution and clearance fees 19,806,117 10,147,988 37,763,284 20,373,665 Communications and data processing 4,009,431 2,516,119 7,948,485 4,684,365 Depreciation and amortization 2,182,328 1,346,834 4,133,619 2,639,428 Occupancy and equipment rentals 2,465,916 1,316,568 4,289,805 2,397,464 Professional fees 2,161,402 695,794 3,220,229 951,040 Business development 1,354,203 627,026 2,014,690 1,012,317 Interest on Preferred Units -- 261,574 -- 678,060 Other 832,212 300,699 1,661,093 583,316 Total expenses 138,332,734 60,155,723 256,272,441 108,877,629 Net income before taxes 85,714,452 20,456,865 150,438,881 35,240,570 Income tax expense 35,519,688 -- 62,837,242 -- Net income $50,194,764 $20,456,865 $87,601,639 $35,240,570 Basic earnings per share $0.45 -- $0.80 -- Diluted earnings per share $0.43 -- $0.77 -- Pro forma adjustment:* Net income before taxes -- $20,456,865 -- $35,240,570 Pro forma income tax expense -- 8,796,452 -- 15,153,445 Pro forma net income -- $11,660,413 -- $20,087,125 Pro forma basic and diluted earnings per share -- $0.14 -- $0.23 Shares used in the computation of basic earnings per share ** 110,916,677 -- 109,269,227 -- Shares used in the computation of diluted earnings per share ** 116,167,843 -- 114,142,368 -- Pro forma shares outstanding for basic and diluted earnings per share*** -- 85,603,272 -- 85,603,272
* 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 periods ended June 30, 1998. ** The shares used to calculate basic earnings per share for the periods ended June 30, 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 periods ended June 30, 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) June 30, December 31, 1999 1998 ASSETS Cash and cash equivalents $265,729,845 $117,381,556 Securities owned, at market value 201,768,405 100,476,151 Receivable from clearing brokers 139,802,052 107,503,274 Fixed assets and leasehold improvements at cost, less accumulated depreciation 13,732,228 12,014,991 Goodwill, less accumulated amortization 18,406,900 16,036,859 Other assets 12,170,250 5,447,544 Total assets $651,609,680 $358,860,375 LIABILITIES & STOCKHOLDERS' EQUITY Liabilities Securities sold, not yet purchased, at market value $219,267,126 $108,909,217 Short-term borrowings -- 10,000,000 Accrued compensation expense 36,583,038 16,529,004 Accrued execution and clearance fees 6,731,618 6,898,095 Accrued payments for order flow 8,575,989 8,672,668 Accounts payable, accrued expenses and other liabilities 8,281,717 5,445,112 Income taxes payable 3,199,718 2,285,620 Total liabilities 282,639,206 158,739,716 Stockholders' equity Class A Common Shares 1,057,338 981,244 Class B Common Shares 51,854 78,854 Additional paid-in capital 250,448,962 169,249,880 Retained earnings 117,412,320 29,810,681 Total stockholders' equity 368,970,474 200,120,659 Total liabilities and stockholders' equity $651,609,680 $358,860,375