Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Cash flows from operating activities:      
Net income $ 22,725 $ 33,786 $ 7,682
Adjustments to reconcile net income to      
Change in fair value of contingent consideration 664 238 (19)
Adjustment to deferred rent   805 387
Amortization of right-of-use assets 7,603    
Amortization of intangible assets 13,071 15,578 21,327
Depreciation and other amortization 9,223 8,461 7,508
Amortization of debt discount 654 432 449
Amortization of debt issue cost 882 591 41
Amortization of retention and forgivable loans 549 417 7,396
Amortization of contract acquisition costs 11,759 9,671 0
Deferred income taxes (1,799) 8,130 (7,662)
Benefit attributable to reduction of goodwill 0 541 0
Non-cash interest expense on forgivable loan 0 0 24
Gain on forgiveness of accrued interest under forgivable loans 0 (79) (295)
Gain on forgiveness of principal of note payable under forgivable loans 0 (2,143) (2,143)
Non-cash compensation expense 6,106 5,882 5,539
Loss on write-off of furniture, fixtures and leasehold improvements, net 22 26 21
(Increase) decrease in operating assets:      
Securities owned, at fair value 6,474 (7,042) (338)
Receivables from clearing brokers 982 24,475 (7,051)
Receivables from other broker-dealers 3,027 (4,256) (1,969)
Other receivables, net (2,868) (13,886) (6,073)
Insurance Trailing Commissions Receivable (9,482) 0 0
Contract acquisition costs, net (18,975) (29,057) 0
Notes receivable from financial advisors, net (3,521) 577 (21,563)
Cash surrender value of life insurance (3,824) 1,305 (2,501)
Income taxes receivable 2,156 (2,156) 0
Other assets 6,213 (15,366) 219
Increase (decrease) in operating liabilities:      
Securities sold, but not yet purchased, at fair value (2,155) 2,344 (151)
Accrued compensation 1,086 5,959 7,044
Accrued interest (123) (30) 222
Commissions and fees payable 4,413 8,690 6,627
Deferred compensation liability 6,100 2,461 914
Lease liability (7,757)    
Accounts payable and accrued liabilities 812 7,018 580
Net cash provided by operating activities 54,017 63,372 16,215
Cash flows from investing activities:      
Acquisition of Kestler Financial Group, net of cash received 0 (2,850) 0
Acquisition of Four Seasons Financial Group, net of cash received 0 (450) 0
Other business acquisitions 0 0 (179)
Purchases of fixed assets (13,044) (14,502) (9,896)
Purchase of intangible assets (5) (6) 0
Net proceeds from sale of equipment/disposal 1 0 0
Net cash used in investing activities (13,048) (17,808) (10,075)
Cash flows from financing activities:      
Issuance of Series A preferred stock 9,426 (273) 28,095
Issuance of common stock 2,778 4,266 9,066
Series A preferred stock dividends paid (34,689) (34,031) (32,482)
Common stock dividends paid (7,179) (8,794) (3,880)
Repurchases and retirement of common stock (10,880) (69,746) (5,293)
Repurchase of stock option award for cash 0 (3,000) (850)
Additional issuance costs related to SSN notes 0 0 (40)
Issuance of senior notes 55,062 104,375 73,197
Borrowings on term loan 7,000 0 8,000
Principal repayments on notes payable (309) (15,253) (7,039)
Bank loan and revolver repayments (1,917) (6,690) (1,992)
Net cash provided (used in) by financing activities 19,292 (29,146) 66,782
Net increase in cash and cash equivalents 60,261 16,418 72,922
Cash and cash equivalents including restricted cash, beginning of period 189,281 172,863 99,941
Cash and cash equivalents including restricted cash, end of period 249,542 189,281 172,863
Cash and cash equivalents including restricted cash, end of period 249,542 189,281 172,863
Supplemental cash flow information:      
Interest paid 21,706 9,870 1,974
Taxes paid 4,784 6,956 1,487
Net cash paid in acquisition 0 2,850 0
Non-cash financing activities:      
Issuance of 7.25% notes for repurchase of common stock 0 76,350 0
Foothill Securities, Inc.      
Cash flows from investing activities:      
Acquisition of Kestler Financial Group, net of cash received 0 0 179
Supplemental cash flow information:      
Liabilities assumed 0 0 (179)
Net cash paid in acquisition 0 0 (179)
Kestler Financial Group      
Cash flows from investing activities:      
Acquisition of Kestler Financial Group, net of cash received 0 (2,850) 0
Supplemental cash flow information:      
Assets acquired 0 9,093 0
Liabilities assumed 0 (793) 0
Net assets acquired 0 8,300 0
Promissory note 0 (5,450) 0
Net cash paid in acquisition 0 2,850 0
Four Seasons Financial Group      
Cash flows from investing activities:      
Acquisition of Kestler Financial Group, net of cash received 0 (450) 0
Supplemental cash flow information:      
Assets acquired 0 2,345 0
Liabilities assumed 0 (1,523) 0
Net assets acquired 0 822 0
Promissory note 0 (372) 0
Net cash paid in acquisition $ 0 $ 450 $ 0