SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(mark one)

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file No. 0-30066

SANDERS MORRIS HARRIS GROUP INC.

(Exact name of registrant as specified in its charter)

Texas		76-0583569
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

600 Travis, Suite 3000
Houston, Texas 77002
(Address of principal executive office)

(713) 993-4610
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý NO o

The number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding as of August 1, 2002, was 16,613,928.

SANDERS MORRIS HARRIS GROUP INC. AND SUBSIDIARIES

INDEX

PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Item 1.			Financial Statements

			Condensed Consolidated Balance Sheet as of June 30, 2002 and December 31, 2001 (unaudited)

			Condensed Consolidated Statement of Income for the Three and Six Months Ended June 30, 2002 and 2001 (unaudited)

			Condensed Consolidated Statement of Shareholders’ Equity for the Six Months Ended June 30, 2002 (unaudited)

			Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2002 and 2001 (unaudited)

			Notes to Condensed Consolidated Financial Statements (unaudited)

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.			Quantitative and Qualitative Disclosures About Market Risk

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings

Item 4.		Submission of Matters to a Vote of Security Holders

Item 6.		Exhibits and Reports on Form 8-K

SANDERS MORRIS HARRIS GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands, except share and per share amounts)

(unaudited)

	June 30,			December 31,
	2002			2001
ASSETS
Cash and cash equivalents	$	30,297		$	30,410
Receivables, net of allowance of $285
Broker-dealers	779			540
Customers	3,456			1,918
Related parties	5,315			6,688
Other	679			631
Deposits with clearing brokers	250			250
Securities owned	12,897			12,153
Securities available for sale	3,476			1,691
Intangible assets, net of accumulated amortization of $4,268	47,673			47,601
Furniture and equipment, net	3,088			1,924
Deferred income taxes, net	705			828
Other assets	1,091			675
Total assets	$	109,706		$	105,309

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Accounts payable and accrued liabilities	$	10,008		$	8,538
Payable to clearing broker-dealers	50			63
Securities sold, not yet purchased	95			122
Other liabilities	219			252
Total liabilities	10,372			8,975

Commitments and contingencies

Minority interests	124			51

Shareholders’ equity:
Preferred stock, $0.10 par value; 10,000,000 shares authorized; no shares issued and outstanding				—
Common stock, $0.01 par value; 100,000,000 shares authorized; 17,341,226 and 17,009,402 shares issued, respectively	173			170
Additional paid-in capital	110,168			109,159
Receivables for shares issued	(778		)	(541		)
Accumulated deficit	(5,696		)	(8,766		)
Accumulated other comprehensive loss	(131		)	(57		)
Unearned compensation	(1,522		)	(1,097		)
Treasury stock at cost, 676,030 and 597,038 shares, respectively	(3,004		)	(2,585		)
Total shareholders’ equity	99,210			96,283
Total liabilities and shareholders’ equity	$	109,706		$	105,309

The accompanying notes are an integral part of the condensed consolidated financial statements.

SANDERS MORRIS HARRIS GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(in thousands, except share and per share amounts)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2002		2001		2002		2001
Revenues:
Commissions	$	11,372	$	6,003	$	21,032	$	12,614
Principal transactions	612		2,927		5,395		4,922
Investment banking	4,087		2,907		7,763		6,932
Fiduciary, custodial and advisory fees	1,927		1,586		3,640		3,236
Interest and dividends	461		498		887		1,209
Other income	750		394		1,315		755
Total revenues	19,209		14,315		40,032		29,668

Expenses:
Employee compensation and benefits	12,463		8,406		25,885		17,224