SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): AUGUST 30, 1999
___________________
FECHTOR, DETWILER, MITCHELL & CO.
(Exact name of registrant as specified in charter)
DELAWARE 0-12926 95-2627415
(State of other jurisdiction (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
225 FRANKLIN STREET, 20TH FLOOR, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-747-0100
JMC GROUP, INC.
9710 SCRANTON ROAD, SUITE 100, SAN DIEGO, CALIFORNIA 92121
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- ------- ------------------------------------
On August 30, 1999, JMC Group, Inc. (the "Company") completed the
merger of its wholly owned subsidiary, JMC Merger, Inc., with and into
Fechtor, Detwiler & Co., Inc., ("Fechtor, Detwiler") a registered
broker-dealer headquartered in Boston, Massachusetts. The effect of
the merger was to make Fechtor, Detwiler a wholly owned subsidiary of
the Company. As consideration for the merger, the Company issued
6,600,000 shares of its Common Stock to the former shareholders of
Fechtor, Detwiler. Upon completion of the merger, the Company changed
its name to Fechtor, Detwiler, Mitchell & Co. effective August 30,
1999. The Company's Nasdaq trading symbol was changed to FEDM
effective September 1, 1999.
A copy of the press release concerning this announcement is
attached as Exhibit 2.1 to this Report and is hereby incorporated by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ------- ---------------------------------
(a) Financial Statements of Businesses Acquired.
The following financial statements of Fechtor, Detwiler are
incorporated by reference to the Company's Proxy Statement dated
August 5, 1999: Audited balance sheets as of December 31, 1998 and
1997 and audited Statements of Operations and Statements of Cash Flow
for each of the years ended December 31, 1998, 1997, and 1996.
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UNAUDITED FINANCIAL STATEMENTS OF FECHTOR, DETWILER & CO., INC.
Presented below are the unaudited balance sheets of Fechtor,
Detwiler as of June 30, 1999 and the unaudited Statements of
Operations and Statements of Cash Flow for each of the six month
periods ended June 30, 1999 and June 30, 1998.
STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
JUNE 30,
1999
-----------
ASSETS:
Cash $ 46,477
Deposits with clearing organizations 304,459
Marketable securities owned - at market 455
Pledged securities - LOC 254,420
Receivables from brokers, dealers and clearing
organizations 527,429
Receivables from customers 14,269,152
Deposits paid for securities borrowed 338,900
Equipment and improvements, net of accumulated
depreciation of $698,632 255,996
Exchange membership 13,000
Goodwill - previously existing 12,571
Other 173,776
-----------
Total assets $16,196,635
===========
LIABILITIES:
Notes payable-banks $ 9,667,995
Payables to brokers, dealers and clearing organizations 213,248
Payables to customers 2,597,876
Accounts payable and accrued liabilities 1,219,894
-----------
Total liabilities 13,699,013
-----------
SHAREHOLDERS' EQUITY:
Common stock, no par value - authorized-7,500 shares
issued-1,000 shares 131,563
Retained earnings 2,555,569
-----------
2,687,132
Less-100 shares of treasury stock, at cost 189,510
-----------
Total shareholders' equity 2,497,622
-----------
Total liabilities and shareholders' equity $16,196,635
===========
The accompanying notes are an integral part of these financial statements.
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STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30,
1999 1998
------------ ------------
REVENUES:
Commissions $ 3,735,506 $ 2,573,787
Principal transactions 3,085,651 2,083,296
Investment banking 451,000 622,500
Interest 398,753 321,352
Other income 195,964 130,654
------------ ------------
Total Revenues 7,866,874 5,731,589
------------ ------------
EXPENSES:
Compensation and benefits 4,514,934 3,334,392
General and administrative 658,136 489,701
Floor brokerage, clearing and commissions 843,251 649,136
Occupancy 323,443 418,111
Communications and data processing 266,765 286,169
Interest 144,006 168,072
Other operating expenses 511,149 385,097
------------ ------------
Total expenses 7,261,684 5,730,678
============ ============
Income before provision for taxes 605,190 911
PROVISION FOR TAXES 272,335 409
------------ ------------
Net income $ 332,855 $ 502
============ ============
STATEMENT OF RETAINED EARNINGS
(UNAUDITED)
FOR THE PERIODS ENDED JUNE 30,
1999 1998
------------- -------------
BALANCE, JAN 1, $ 2,222,714 $ 2,214,733
Net income 332,855 502
------------- -------------
BALANCE, JUNE 30, $ 2,555,569 $ 2,215,235
============= =============
The accompanying notes are an integral part of these financial statements.
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STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30,
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 332,855 $ 502
Adjustments to reconcile net income to
net cash provided by operating
activities-
Depreciation 43,217 73,404
Write-off of assets 16,552 -
Changes in-
Deposits with clearing organizations - (6,637)
Securities owned (455) -
Receivables from brokers, dealers and
clearing organizations (523,545) 10,706
Receivables from customers (6,189,341) 2,845,029
Deposits paid for securities borrowed 476,750 146,630
Securities sold, not yet purchased, at
market (1,369) (3,550)
Payables other than customers 165,315 (210,157)
Payables to customers (714,981) 1,205,212
Payables to brokers, dealers and
clearing organizations - 63,213
Other assets 53,339 73,546
------------ ------------
Total adjustments without
depreciation and write-off of
assets (6,734,287) 4,123,992
------------ ------------
Net cash provided by operating
activities (6,341,663) 4,197,898
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment and improvements (53,488) (39,098)
------------ ------------
Net cash used in investing activities (53,488) (39,098)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowed under notes payable - bank 5,867,995 (4,200,000)
------------ ------------
Net cash (used in) provided by
financing activities 5,867,995 (4,200,000)
------------ ------------
NET DECREASE IN CASH (527,156) (41,200)
CASH, BEGINNING OF YEAR 573,633 574,463
------------ ------------
CASH, END OF PERIOD $ 46,477 $ 533,263
============ ============
The accompanying notes are an integral part of these financial statements.
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NOTES TO UNAUDITED FINANCIAL STATEMENTS OF FECHTOR, DETWILER & CO., INC.
NOTE 1. BASIS OF PRESENTATION
The accompanying financial statements do not include all information
and footnote disclosures that are otherwise required by Regulation S-X
and that would normally be made in Fechtor, Detwiler's audited
financial statements. The financial statements do, however, reflect
all adjustments which are, in the opinion of management, necessary for
a fair statement of the results of the interim period presented.
NOTE. 2 USE OF ESTIMATES
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 revenues
and expenses during the reporting period. Actual results could vary
from the estimates that were used.
NOTE 3. NET CAPITAL REQUIREMENT
Fechtor, Detwiler is subject to the Uniform Net Capital Rule (Rule
15c3-1) of the Securities and Exchange Commission. Fechtor, Detwiler
computes its net capital under the alternative method permitted by the
rule, which requires that minimum net capital be the greater of
$250,000 or 2% of aggregate debit items arising from customer
transactions.
At June 30, 1999, Fechtor, Detwiler had a net capital of $2,036,277
which was $1,770,446 more than the minimum required net capital of
$265,831.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (CONTINUED)
- ------- ---------------------------------------------
(b) Pro Forma Financial Information.
Pro forma income statements for the year and three month periods
ended December 31, 1998 and March 31, 1999, respectively, and a pro
forma balance sheet as of March 31, 1999 are incorporated by reference
to the Company's Proxy Statement dated August 5, 1999. Presented
below is unaudited pro forma combined financial information that
reflects a purchase accounting method and is intended to give you a
better picture of what JMC Group, Inc. and Fechtor, Detwiler might
have looked like had the companies been combined on January 1, 1999.
The companies may have performed differently if they had actually been
combined. You should not rely on the pro forma information as being
indicative of the historical results that the two companies would have
achieved if they were one company, or the future results that the
combined companies will have after the merger.
PRO FORMA INCOME STATEMENT FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
HISTORICAL
HISTORICAL FECHTOR, PRO PRO
JMC GROUP DETWILER & FORMA FORMA
INC. CO., INC. ADJUSTMENTS COMBINED
REVENUES
Commissions $ 534,678 $ 3,735,506 $ 4,270,184
Interest 115,226 398,753 513,979
Principal transactions - 3,085,651 3,085,651
Investment Banking - 451,000 451,000
Other 3,006 195,964 198,970
----------- ------------ -------------
TOTAL REVENUES 652,910 7,866,874 8,519,784
----------- ------------ -------------
EXPENSES
Employee compensation and benefits 271,655 4,514,934 4,786,589
Fees to financial institutions 167,432 - 167,432
Professional fees 97,787 - 97,787
Rent 29,066 323,443 352,509
Telephone 14,863 - 14,863
Depreciation and amortization 7,945 - 7,945
General and administrative expenses 107,799 658,136 765,935
Communications and data processing - 266,765 266,765
Floor brokerage, clearing and
commissions - 843,251 843,251
Interest - 144,006 144,006
Merger related expenses 363,678 - 363,678
Other operating expenses - 511,149 511,149
----------- ------------ -------------
TOTAL EXPENSES 1,060,225 7,261,684 8,321,909
----------- ------------ -------------
INCOME (LOSS) BEFORE INCOME
TAXES (407,315) 605,190 197,875
INCOME TAX PROVISION (BENEFIT) (168,542) 272,335 103,793
----------- ------------ -------------
NET INCOME (LOSS) $ (238,773) $ 332,855 $ 94,082
=========== ============ =============
EARNINGS (LOSS) PER SHARE -
BASIC AND DILUTED $ (0.04) $ 369.84 $ 0.01
WEIGHTED AVERAGE NUMBER OF SHARES
BASIC 6,166,451 900 (900)
6,600,000 (1) 12,766,451
DILUTED 6,166,451 900 (900)
6,600,000 (1) 12,766,451
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PRO FORMA BALANCE SHEET AS OF JUNE 30, 1999
(UNAUDITED)
HISTORICAL
HISTORICAL FECHTOR, PRO PRO
JMC GROUP DETWILER & FORMA FORMA
INC. CO., INC. ADJUSTMENTS COMBINED
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,855,913 $ 46,477 $ 4,902,390
Receivables from insurance
companies 86,268 - 86,268
Income tax receivable 165,869 - 165,869
Receivables from brokers, dealers
and clearing organizations - 527,429 527,429
Receivables from customers - 14,269,152 14,269,152
Deposits paid for securities
borrowed - 338,900 338,900
Deposits with clearing
organizations - 304,459 304,459
Marketable securities at market - 455 455
Pledged securities - LOC - 254,420 254,420
Deferred tax asset 140,744 - 140,744
Other assets 134,210 173,776 307,986
-------------- ------------ ------------
TOTAL CURRENT ASSETS 5,383,004 15,915,068 21,298,072
-------------- ------------ ------------
Investment in OptiMark Technologies,
Inc. 1,000,000 - 1,000,000
Investment in purchased subsidiary
and goodwill arising from
acquisition - - 6,666,000 (2) 478,193
(6,187,807)(3)
Furniture, equipment and leasehold
improvements - net of accumulated
depreciation and amortization of
$528,785 for JMC Group, and
$698,632 for Fechtor, Detwiler 17,345 255,996 273,341
Asset-based fees purchased - net of
accumulated amortization of
$1,114,668 282,461 - 282,461
Exchange membership - 13,000 13,000
Goodwill - previously existing - 12,571 12,571
-------------- ------------ ------------
TOTAL ASSETS $ 6,682,810 $16,196,635 478,193 $23,357,638
============== ============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accrued fees to financial
institutions $ 54,189 $ - $ 54,189
Accrued expenses and other
liabilities 402,872 - 402,872
Accrued payroll and related
expenses 37,942 - 37,942
Notes payable - bank - 9,667,995 9,667,995
Payables to brokers, dealers
and clearing organizations - 213,248 213,248
Payables to customers - 2,597,876 2,597,876
Accounts payable and accrued
liabilities - 1,219,894 1,219,894
-------------- ------------ ------------
TOTAL CURRENT LIABILITIES 495,003 13,699,013 14,194,016
-------------- ------------ ------------
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PRO FORMA BALANCE SHEET AS OF JUNE 30, 1999 (CONTINUED)
(UNAUDITED)
HISTORICAL
HISTORICAL FECHTOR, PRO PRO
JMC GROUP DETWILER & FORMA FORMA
INC. CO., INC. ADJUSTMENTS COMBINED
STOCKHOLDERS' EQUITY
Preferred stock, no par
value; authorized 5,000,000
shares - - -
Common stock, $.01 par
value; authorized par
20,000,000 shares; issued
and outstanding 6,166,451
shares in 1999 for JMC Group;
no value - authorized 7,500
shares - issued and outstanding
1,000 shares for Fechtor,
Detwiler 61,664 131,563 (61,664)(3) 197,563
66,000 (2)
Treasury stock - 100 shares - (189,510) (189,510)
Additional paid-in-capital 583,276 - (583,276)(3) 6,600,000
6,600,000 (2)
Retained earnings 5,542,867 2,555,569 (5,542,867)(3) 2,555,569
-------------- ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 6,187,807 2,497,622 478,193 9,163,622
-------------- ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 6,682,810 $16,196,635 478,193 $23,357,638
============== ============ ============
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The foregoing Unaudited Pro Forma Financial Statements relate to
an Agreement and Plan of Merger under which Fechtor, Detwiler & Co.,
Inc., a Boston securities firm, became a subsidiary of JMC Group, Inc.
effective on August 30, 1999. The previous owners of Fechtor,
Detwiler received 6,600,000 shares of JMC Group, Inc. common stock,
making them the owners of approximately 52% of the outstanding shares
of common stock in JMC Group, Inc. The name of JMC Group, Inc. was
changed to Fechtor, Detwiler, Mitchell & Co. following consummation of
the merger.
(1) Adjusted to reflect issuance of shares for this transaction.
(2) Adjusted to record the merger as if it occurred on June 30, 1999.
(3) Adjusted to record consolidating elimination entry at June 30, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (CONTINUED)
- ------- ---------------------------------------------
(c) Exhibits.
The Following exhibit is filed herewith:
Exhibit 2.1 August 30, 1999 Press Release
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
FECHTOR, DETWILER, MITCHELL & CO.
Dated: September 14, 1999 By: /s/ ROBERT E. JEFFORDS
---------------------------
Robert E. Jeffords
Assistant Secretary
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