-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YixiheeawR2wvqTu00SSoHCtIb/MUh3A3Zei9FUYZdockqr+alv/zm8IVaNsGHmN AbYrSvZGTu/U0h395Q8oHw== 0000718482-94-000011.txt : 19941024 0000718482-94-000011.hdr.sgml : 19941024 ACCESSION NUMBER: 0000718482-94-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940831 FILED AS OF DATE: 19941014 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDWARDS A G INC CENTRAL INDEX KEY: 0000718482 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 431288229 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08527 FILM NUMBER: 94552789 BUSINESS ADDRESS: STREET 1: ONE N JEFFERSON AVE CITY: ST LOUIS STATE: MO ZIP: 63103 BUSINESS PHONE: 3142893000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________ FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended August 31, 1994 Commission file number 1-8527 A.G. EDWARDS, INC. DELAWARE 43-1288229 State of Incorporation I.R.S. Employer Identification No. ONE NORTH JEFFERSON AVENUE ST. LOUIS, MISSOURI 63103 Registrant's telephone number, including area code: (314) 289-3000 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 of 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 X No At September 30, 1994, there were 60,411,680 shares of A.G. Edwards, Inc. common stock, par value $1, issued and outstanding. A.G. EDWARDS, INC. INDEX PART I. FINANCIAL INFORMATION Consolidated balance sheets Consolidated statements of earnings Consolidated statements of stockholders' equity Consolidated statements of cash flows Notes to consolidated financial statements Management's financial discussion PART II. OTHER INFORMATION SIGNATURES
A.G. EDWARDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) August 31, February 28, ASSETS 1994 1994 Cash and cash equivalents $ 35,434 $ 40,341 Cash and government securities, at market, segregated under federal and other regulations 47,605 195,726 Securities purchased under . agreements to resell 13,113 114,553 Receivable from brokers and dealers 213,362 260,858 Receivable from customers, less allowance for doubtful accounts of $3,415 and $3,400 1,383,711 1,218,145 Securities inventory, at market State and municipal 73,176 97,991 Government and agencies 21,505 28,864 Corporate 38,314 40,904 Property and equipment, at cost, net of accumulated depreciation and amortization of $135,078 and $124,423 165,842 145,441 Other assets 110,611 93,767 $2,102,673 $2,236,590 LIABILITIES AND STOCKHOLDERS' EQUITY Bank loans $ 123,800 $ -- Checks payable 116,195 111,947 Payable to brokers and dealers 367,909 623,034 Payable to customers 380,668 355,224 Securities sold but not yet purchased, at market 24,011 24,109 Employee compensation and related taxes 212,622 285,213 Income taxes 2,428 9,959 Other liabilities 35,827 36,737 Total Liabilities 1,263,460 1,446,223 Stockholders' Equity: Preferred stock, $25 par value: Authorized 4,000,000 shares, none issued Common stock, $1 par value: Authorized 250,000,000 shares Issued 60,544,239 and 60,446,336 shares 60,544 60,446 Additional paid-in capital 167,182 165,124 Retained earnings 621,310 576,073 849,036 801,643 Less: Unamortized expense of restricted stock awards 7,431 11,276 Treasury stock, at cost (137,660 shares) 2,392 Total Stockholders' Equity 839,213 790,367 $2,102,673 $2,236,590
See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended August 31, August 31, 1994 1993 1994 1993 REVENUES: Commissions $155,225 $185,969 $ 330,363 $ 370,108 Principal transactions 57,937 49,831 114,843 100,889 Investment banking 31,252 36,620 52,511 75,273 Interest 25,328 18,335 47,067 35,934 Other 25,776 23,617 52,310 47,073 295,518 314,372 597,094 629,277 EXPENSES: Compensation and benefits 190,035 202,632 388,252 407,553 Communications 17,798 18,268 36,510 36,429 Occupancy and equipment 18,416 16,324 35,639 32,828 Floor brokerage and clearance 3,323 3,965 7,164 7,835 Interest 2,185 518 3,161 722 Other operating expenses 12,565 15,871 25,738 27,745 244,322 257,578 496,464 513,112 EARNINGS BEFORE INCOME TAXES 51,196 56,794 100,630 116,165 INCOME TAXES 19,601 21,188 38,481 42,470 NET EARNINGS $ 31,595 $ 35,606 $ 62,149 $ 73,695 Earnings per share $ .51 $ .60 $ 1.01 $ 1.24 Dividends per share $ .14 $ .12 $ .28 $ .24 Average common and common equivalent shares outstanding 61,484 59,667 61,471 59,595
See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY SIX MONTHS ENDED AUGUST 31, 1994 AND 1993 (In thousands, except per share amounts) (Unaudited) Unamortized Additional Expense of Common Paid-in Retained Restricted Treasury Stock Capital Earnings Stock Awards Stock BALANCES, March 1, 1993 $ 46,159 $ 125,328 $ 452,045 $ (8,292) $ 0 Net earnings 73,695 Cash dividends - $.24 per share (13,997) Treasury stock acquired (9) Stock issued: Employee stock purchase/option plans 128 1,925 269 Restricted stock 384 13,371 (12,178) (260) Amortization of restricted stock awards 4,537 BALANCES, August 31, 1993 $ 46,671 $ 140,624 $ 511,743 $(15,933) $ 0 BALANCES, March 1, 1994 $ 60,446 $ 165,124 $ 576,073 $(11,276) $ 0 Net earnings 62,149 Cash dividends - $.28 per share (16,912) Treasury stock acquired (2,766) Stock issued: Employee stock purchase/option plans 101 1,285 815 Restricted stock (3) 773 305 (441) Amortization of restricted stock awards 3,540 BALANCES, August 31, 1994 $ 60,544 $ 167,182 $ 621,310 $ (7,431) $(2,392)
See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended August 31, 1994 1993 Cash Flows from Operating Activities: Net earnings $ 62,149 $ 73,695 Noncash items included in earnings 22,161 19,932 Decrease in segregated cash and government securities 148,121 238,981 Decrease in net payable to brokers and dealers (207,629) (30,061) Increase in securities sold under agreements to repurchase 30,240 Increase in net receivable from customers (140,122) (392,743) Decrease (increase) in net securities inventory 34,666 (25,512) Net change in other assets and liabilities (95,967) (42,304) Net cash used in operating activities (176,621) (127,772) Cash Flows from Investing Activities Proceeds from (payments for): Securities purchased under agreements to resell 101,440 Capital expenditures and other investments (36,683) (10,942) Net cash provided by (used in) investing activities 64,757 (10,942) Cash Flows from Financing Activities Proceeds from (payments for): Bank loans 123,800 151,700 Employee stock transactions 2,835 3,639 Cash dividends (16,912) (13,997) Treasury stock (2,766) (9) Net cash provided by financing activities 106,957 141,333 Net (Decrease) Increase in Cash and Cash Equivalents (4,907) 2,619 Cash and Cash Equivalents at March 1 40,341 27,963 Cash and Cash Equivalents at August 31 $ 35,434 $ 30,582 Income tax payments totaled $45,750 and $54,566 during the six month periods ended August 31, 1994 and 1993, respectively. Interest payments totaled $2,420 and $605 during the six month periods ended August 31, 1994 and 1993, respectively. Supplemental disclosure of noncash financing activities - restricted stock awarded, net of forfeitures, totaled $12,178 during the six month period ended August 31, 1993. See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED AUGUST 31, 1994 (Unaudited) FINANCIAL STATEMENTS: The consolidated financial statements include the accounts of A.G. Edwards, Inc. and its wholly owned subsidiaries (collectively referred to as the "Company"), including its principal subsidiary, A.G. Edwards & Sons, Inc. ("Edwards"), and have been prepared in conformity with generally accepted accounting principles. These financial statements should be read in conjunction with the Company's annual report for the year ended February 28, 1994. Where appropriate, prior years' financial information has been reclassified to conform with the current year presentation. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been reflected. All such adjustments consist of normal recurring accruals unless otherwise disclosed in these interim financial statements. The results of operations for the six months ended August 31, 1994, are not necessarily indicative of the results for the year ending February 28, 1995. COMMON STOCK: All share amounts and share data have been restated to reflect a five for four stock split, effected in the form of a stock dividend, declared in November 1993. NET CAPITAL REQUIREMENTS: Edwards is subject to the uniform net capital rule of the Securities and Exchange Commission ("SEC"). This rule requires Edwards to maintain a minimum net capital, as defined, and to notify, and sometimes obtain approval of, the SEC and other regulatory organizations for substantial withdrawals of capital and loans to affiliates. At August 31, 1994, Edwards' net capital of $525,904,000 was $499,848,000 in excess of the minimum required. A.G. EDWARDS, INC. AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION SIX MONTHS ENDED AUGUST 31, 1994 COMPARED TO SIX MONTHS ENDED AUGUST 31, 1993 Results of Operations The six months ended August 31, 1994 saw a downturn from the high level of retail investor activity experienced during our last three fiscal years. Despite NYSE and NASDAQ overall trading volumes increasing, the retail investor volume has slowed versus the same period last year. The number of branches and brokers increased to 504 and 5,314, which represent increases of 4% and 5%, respectively, compared to the same period last year. Total revenues declined $32 million (5%) versus last year, from $629 million to $597 million. Expenses were $496 million, a decrease of $17 million (3%), resulting in profit margins of 10.4% in 1994 versus 11.7% in 1993. Total commission revenue decreased $40 million (11%) primarily due to decreases in listed, OTC and mutual fund revenue, partially offset by an increase in insurance revenue. Listed and OTC revenue decreased a combined $21 million and mutual fund revenue declined $27 million reflecting the uncertainty in the equity markets and rising interest rates. Despite NYSE total volume increasing 10%, the Company's listed trades were down 8% reflecting a slowdown in retail investor activity. Insurance revenue rose $8 million (23%) primarily due to increased customer demand for annuities caused by higher interest and tax rates this year. Revenues from principal transactions increased $14 million (14%). This increase was a result of rising interest rates which was followed by increased revenue from sales of debt securities, primarily municipal and government bonds, which increased $17 million while inventory gains decreased $4 million. Investment banking revenue decreased $23 million (30%) principally due to a decline in corporate equity, municipal bond and management fee revenues. Revenues from corporate equity issues dropped $13 million (36%) due to a drastic slow down in initial public offerings caused by the uncertainty in the equity markets. Municipal bond revenue decreased $7 million (43%) primarily due to a reduction in refundings as well as a decrease in the supply of new issues caused by higher interest rates this year. Management fees decreased $3 million (16%) due to participation as manager or co-manager in a smaller number of offerings, in both corporate equity and municipal bond issues, this year. Interest revenues increased $11 million (31%) due to higher customer receivables, which are up 26%, coupled with higher interest rates. Other revenues increased $5 million (11%) due to an increase in fees received in connection with customer investments under professional management. Service fees have also increased primarily due to a rise in administrative transaction fees. Compensation and benefits decreased $19 million (5%) primarily from lower commission expense due to decreased commissionable revenue and a decline in incentive related compensation caused by reduced earnings. These were partially offset by increased salaries and related benefits as a result of branch and home office expansion. The effective income tax rate has increased due to higher state income taxes. Liquidity and Capital Resources No material changes have taken place since February 28, 1994 regarding the Company's liquidity, capital resources and overall financial condition. THREE MONTHS ENDED AUGUST 31, 1994 COMPARED TO THREE MONTHS ENDED AUGUST 31, 1993 Net earnings for the quarter ended August 31, 1994 were $32 million on revenues of $296 million compared to net earnings of $36 million on revenues of $314 million for the same period a year ago. The explanations of revenue and expense fluctuations presented in the results for the six month period are generally applicable to the three months of operations. PART II. OTHER INFORMATION Item 1: Legal Proceedings There have been no material changes in the legal proceedings previously reported in the Company's Annual Report on Form 10-K for the year ended February 28, 1994. Item 4: Submission of Matters to a Vote of Security Holders (C) The results of the annual meeting of stockholders, held on June 23, 1994, were previously reported on Form 10-Q filed for the quarter ended May 31, 1994. Item 6: Exhibits and Reports on 8-K Exhibits: Exhibit 27 - Financial Data Schedule, Article BD for the six month period ended August 31, 1994 Reports on Form 8-K: There were no reports on Form 8-K filed during the quarter ended August 31, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. A.G. EDWARDS, INC. (Registrant) Date: October 14, 1994 /s/ Benjamin F. Edwards, III BENJAMIN F. EDWARDS, III Principal Executive Officer Date: October 14, 1994 /s/ David W. Mesker DAVID W. MESKER Principal Financial Officer EX-27 2
BD THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTH PERIOD ENDED AUGUST 31, 1991, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 6-MOS FEB-28-1995 MAR-01-1994 AUG-31-1994 35,434 1,397,683 13,113 199,390 132,995 165,842 2,102,673 123,800 762,105 0 302,530 24,011 0 60,544 0 0 778,669 2,102,673 114,843 47,067 303,489 52,511 57,755 3,161 388,252 100,630 100,630 0 0 62,149 1.01 1.01
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