-----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, FYXNILS5y2QIKVi89IkgdbyE2KFnFBfGLj0BlbbihfCiyXbeGImk6E17T4bVjY7k ZFx3bBsMG1j7Vy3xYij3MQ== 0000718482-95-000003.txt : 19950608 0000718482-95-000003.hdr.sgml : 19950608 ACCESSION NUMBER: 0000718482-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDWARDS A G INC CENTRAL INDEX KEY: 0000718482 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [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: 95501314 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 November 30, 1994 Commission file number 1-8527 A.G. EDWARDS, INC. State of Incorporation: DELAWARE I.R.S. Employer Identification No. 43- 1288229 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 January 1, 1995, there were 61,656,736 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) November 30, February 28, 1994 1994 ASSETS Cash and cash equivalents $ 34,573 $ 40,341 Cash and government securities, at market, segregated under federal and other regulations 44,536 195,726 Securities purchased under agreements to resell 18,368 114,553 Receivable from brokers and dealers 175,690 260,858 Receivable from customers, less allowance for doubtful accounts of $3,425 and $3,400 1,474,984 1,218,145 Securities inventory, at market State and municipal 73,352 97,991 Government and agencies 18,116 28,864 Corporate 51,220 40,904 Property and equipment, at cost, net of accumulated depreciation and amortization of $139,391 and $124,423 167,761 145,441 Other assets 109,120 93,767 $ 2,167,720 $ 2,236,590 LIABILITIES AND STOCKHOLDERS' EQUITY Bank loans $ 131,900 $ -- Checks payable 128,835 111,947 Securities sold under agreements to repurchase 20,547 -- Payable to brokers and dealers 292,822 623,034 Payable to customers 408,414 355,224 Securities sold but not yet purchased, at market 45,763 24,109 Employee compensation and related taxes 223,801 285,213 Income taxes 2,450 9,959 Other liabilities 31,798 36,737 Total Liabilities 1,286,330 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 61,654,223 and 60,446,336 shares 61,654 60,446 Additional paid-in capital 182,778 165,124 Retained earnings 642,538 576,073 886,970 801,643 Less: Unamortized expense of restricted stock awards 5,580 11,276 Total Stockholders' Equity 881,390 790,367 $ 2,167,720 $ 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 Nine Months Ended November 30, Ended November 30, 1994 1993 1994 1993 REVENUES: Commissions $150,981 $ 193,612 $ 481,344 $ 563,720 Principal transactions 60,298 43,337 175,141 144,226 Investment banking 24,423 46,656 76,934 121,929 Interest 27,506 18,903 74,573 54,837 Other 25,926 24,764 78,236 71,837 289,134 327,272 886,228 956,549 EXPENSES: Compensation and benefits 183,965 210,392 572,217 617,945 Communications 18,713 18,335 55,223 54,764 Occupancy and equipment 18,793 17,145 54,432 49,973 Floor brokerage and clearance 3,660 3,606 10,824 11,441 Interest 1,948 249 5,109 971 Other operating expenses 13,829 12,663 39,567 40,408 240,908 262,390 737,372 775,502 EARNINGS BEFORE INCOME TAXES 48,226 64,882 148,856 181,047 INCOME TAXES 18,369 23,770 56,850 66,240 NET EARNINGS $ 29,857 $ 41,112 $ 92,006 $ 114,807 Earnings per share $.48 $.67 $1.49 $1.91 Dividends per share $.14 $.14 $.42 $.38 Average common and common equivalent shares outstanding 62,617 60,785 61,853 59,992 See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY NINE MONTHS ENDED NOVEMBER 30, 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 114,807 Cash dividends - $.38 per share (22,340) Treasury stock acquired (9) Stock issued: Employee stock purchase/option plans 1,134 22,780 427 Restricted stock 384 13,377 (11,953) (418) Amortization of restricted stock awards 6,722 Stock Split -- 5-for-4 11,914 (11,914) BALANCES, November 30, 1993 $ 59,591 $ 149,571 $ 544,512 $(13,523) $ 0 BALANCES, March 1, 1994 $ 60,446 $ 165,124 $ 576,073 $(11,276) $ 0 Net earnings 92,006 Cash dividends - $.42 per share (25,541) Treasury stock acquired (2,766) Stock issued: Employee stock purchase/option plans 1,211 16,848 3,370 Restricted stock (3) 806 381 (604) Amortization of restricted stock awards 5,315 BALANCES, November 30, 1994 $ 61,654 $ 182,778 $ 642,538 $ (5,580) $ 0 See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended November 30, 1994 1993 Cash Flows from Operating Activities: Net earnings $ 92,006 $ 114,807 Noncash items included in earnings 30,658 28,899 Decrease in segregated cash and government securities 151,190 240,479 (Decrease) increase in net payable to brokers and dealers (245,044) 29,236 Increase in net receivable from customers (203,649) (392,515) Decrease (increase) in net securities inventory 46,725 (7,864) Net change in other assets and liabilities (67,176) (16,854) Net cash used in operating activities (195,290) (3,812) Cash Flows from (payments for) Investing Activities: Securities purchased under agreements to resell 96,185 Capital expenditures and other investments (52,812) (17,416) Net cash provided by (used in) investing activities 43,373 (17,416) Cash Flows from (payments for) Financing Activities: Bank loans 131,900 22,300 Securities sold under agreements to repurchase 20,547 Employee stock transactions 22,009 25,731 Cash dividends (25,541) (22,340) Treasury stock (2,766) (9) Net cash provided by financing activities 146,149 25,682 Net (Decrease) Increase in Cash and Cash Equivalents (5,768) 4,454 Cash and Cash Equivalents at March 1 40,341 27,963 Cash and Cash Equivalents at November 30 $ 34,573 $ 32,417 Income tax payments totaled $67,858 and $80,172 during the nine month periods ended November 30, 1994 and 1993, respectively. Interest payments totaled $4,484 and $948 during the nine month periods ended November 30, 1994 and 1993, respectively. Supplemental disclosure of noncash financing activities - restricted stock awarded, net of forfeitures, totaled $11,953 during the nine month period ended November 30, 1993. See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED NOVEMBER 30, 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 nine months ended November 30, 1994, are not necessarily indicative of the results for the year ending February 28, 1995. COMMON STOCK: Options to purchase 1,250,000 shares of common stock granted to employees under the Employee Stock Purchase Plan are exercisable October 2, 1995, at 85% of market price based on dates specified in the plan. Employees purchased 1,228,565 shares at $15.30 per share in October 1994, of which, 132,559 shares were treasury shares. 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 November 30, 1994, Edwards' net capital of $558,531,000 was $531,905,000 in excess of the minimum required. A.G. EDWARDS, INC. AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION NINE MONTHS ENDED NOVEMBER 30, 1994 COMPARED TO NINE MONTHS ENDED NOVEMBER 30, 1993 Results of Operations The nine months ended November 30, 1994 saw a downturn of retail investor activity from the upward trend experienced during our last three fiscal years. Despite NYSE and Nasdaq overall trading volumes increasing, the retail investor portion has slowed versus the same period last year. The number of branches and brokers increased to 505 and 5,396, which represent increases of 4% and 6%, respectively, compared to the same period last year. Total revenues declined $70 million (7%) from last year, from $956 million to $886 million. Expenses were $737 million, a decrease of $38 million (5%), resulting in profit margins of 10.4% in 1994 versus 12.0% in 1993. Total commission revenue decreased $82 million (15%) primarily due to decreases in listed, over-the-counter and mutual fund revenue partially offset by an increase in the sale of annuities. The combination of listed and over-the- counter revenue decreased $34 million reflecting the uncertainty in the equity markets caused by rising interest rates. Despite NYSE total volume increasing 9%, the Company's listed trades were down 9%. Mutual fund revenue declined $53 million due mainly to a 60% drop in sales of income funds which reflects the industry wide downturn in mutual fund sales. Insurance revenue rose $5 million primarily due to increased customer demand for annuities. Revenues from principal transactions increased $31 million (21%). This increase was principally the result of rising interest rates this year which was followed by increased revenue from sales of debt securities, primarily municipal and government bonds. These sales increased $35 million while inventory gains decreased $3 million. Investment banking revenue decreased $45 million (37%) due to declines in nearly every category. Revenues from corporate equity issues dropped $26 million (43%) due to the drastic slow down in initial public offerings caused by the uncertainty and the poor performance of the equity markets. Municipal bond sales revenue decreased $8 million (53%) primarily due to the slow down in refundings as well as the decrease in the supply of new issues caused by higher interest rates this year. Management fees have also decreased $9 million (32%) 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 $20 million (36%) due to higher customer receivables, which are up 24%, coupled with higher interest rates. Other revenues increased $6 million (9%) due to an increase in fees received in connection with customer investments under professional management. Service fees have also increased due to a rise in custodial and transaction fees. Compensation and benefits decreased $46 million (7%) 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. Occupancy and equipment expense increased $4 million (9%) primarily due to branch expansion and an increase in software costs. Interest expense rose $4 million due to higher interest rates coupled with an increase in average short-term borrowings resulting from a continued increase in average customer receivables. Other expense decreased slightly with a decrease in costs associated with litigation being offset by increases in travel and broker registration fees. The effective income tax rate 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 NOVEMBER 30, 1994 COMPARED TO THREE MONTHS ENDED NOVEMBER 30, 1993 Net earnings for the quarter ended November 30,1994 were $30 million on revenues of $289 million compared to net earnings of $41 million on revenues of $327 million for the same period a year ago. The explanation of revenue and expense fluctuations presented in the results for the nine months ended 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 6: Exhibits and Reports on 8-K Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended November 30, 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: January 13, 1995 /s/ BENJAMIN F. EDWARDS,III BENJAMIN F. EDWARDS, III Principal Executive Officer Date: January 13, 1995 /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 NINE MONTH PERIOD ENDED NOVEMBER 30, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1000 9-MOS FEB-28-1995 MAR-01-1994 NOV-30-1994 34,573 1,498,291 18,368 152,383 142,688 167,761 2,167,720 131,900 832,961 20,547 223,361 45,763 0 61,654 0 0 819,736 2,167,720 175,141 74,573 439,517 76,934 88,155 5,109 572,217 148,856 148,856 0 0 92,006 1.49 1.49
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