-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UTipdtEVQugiAlU2uq6Wb4D1qFOf3scGC6cFdrphP6pNdqwNqZzFaxfE42yQH8kV YGUJlsAPS/bIz8HsPWWMDw== 0000718482-96-000002.txt : 19960116 0000718482-96-000002.hdr.sgml : 19960116 ACCESSION NUMBER: 0000718482-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960112 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: 96503219 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, 1995 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 January 1, 1996, there were 63,377,364 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, 1995 1995 ASSETS Cash and cash equivalents $ 35,311 $ 41,464 Cash and government securities, at market, segregated under federal and other regulations 47,279 43,808 Securities purchased under agreements to resell 91,993 42,819 Receivable from brokers and dealers 410,308 309,417 Receivable from customers, less allowance for doubtful accounts of $3,440 and $3,450 1,503,548 1,359,172 Securities inventory, at market: State and municipal 85,710 77,834 Government and agencies 37,944 30,239 Corporate 36,626 44,489 Property and equipment, at cost, net of accumulated depreciation and amortization of $165,809 and $145,072 179,874 167,570 Other assets 120,632 107,470 $2,549,225 $2,224,282 LIABILITIES AND STOCKHOLDERS' EQUITY Checks payable $ 137,643 $ 106,973 Payable to brokers and dealers 490,238 462,693 Payable to customers 545,665 415,741 Securities sold but not yet purchased, at market 22,917 39,478 Employee compensation and related taxes 274,933 246,120 Income taxes 3,408 2,370 Other liabilities 37,478 31,626 Total Liabilities 1,512,282 1,305,001 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 63,669,624 and 62,294,211 shares 63,670 62,294 Additional paid-in capital 219,129 194,863 Retained earnings 760,005 665,992 1,042,804 923,149 Less: Unamortized expense of restricted stock awards 823 3,868 Treasury Stock, at cost (198,118 shares) 5,038 Total Stockholders' Equity 1,036,943 919,281 $2,549,225 $2,224,282 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, 1995 1994 1995 1994 REVENUES: Commissions $219,197 $150,981 $ 618,333 $481,344 Principal transactions 46,832 60,298 159,793 175,141 Investment banking 28,817 24,423 76,281 76,934 Interest 33,464 27,506 98,841 74,573 Other 33,577 25,926 95,988 78,236 361,887 289,134 1,049,236 886,228 EXPENSES: Compensation and benefits 231,557 183,965 672,431 572,217 Communications 20,071 18,713 59,392 55,223 Occupancy and equipment 19,921 18,793 58,098 54,432 Floor brokerage and clearance 3,940 3,660 12,106 10,824 Interest 524 1,948 2,428 5,109 Other operating expenses 16,025 13,829 47,684 39,567 292,038 240,908 852,139 737,372 EARNINGS BEFORE INCOME TAXES 69,849 48,226 197,097 148,856 INCOME TAXES 26,850 18,369 75,460 56,850 NET EARNINGS $ 42,999 $ 29,857 $ 121,637 $ 92,006 Earnings per share $.67 $.48 $1.90 $1.49 Dividends per share $.16 $.14 $.44 $.42 Average common and common equivalent shares outstanding 64,909 62,617 64,172 61,853 See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY NINE MONTHS ENDED NOVEMBER 30, 1994 AND 1995 (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, 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 BALANCES, March 1, 1995 $62,294 $194,863 $665,992 $ (3,868) $ 0 Net earnings 121,637 Cash dividends - $.44 per share (27,624) Treasury stock acquired (5,129) Stock issued: Employee stock purchase/option plans 1,376 23,994 530 Restricted stock 272 135 (439) Amortization of restricted stock awards 2,910 BALANCES, November 30, 1995 $63,670 $219,129 $760,005 $ (823) $(5,038) 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, 1995 1994 Cash Flows from Operating Activities: Net earnings $121,637 $ 92,006 Noncash items included in earnings 31,935 30,658 (Increase) decrease in segregated cash and government securities (3,471) 151,190 Increase in net receivable from brokers and dealers (73,346) (245,044) Increase in net receivable from customers (14,452) (203,649) (Increase) decrease in net securities inventory (24,279) 46,725 Net change in other assets and liabilities 47,790 (67,176) Net cash provided by (used in) operating activities 85,814 (195,290) Cash Flows from (payments for) Investing Activities: Securities purchased under agreements to resell (49,174) 96,185 Capital expenditures and other investments (35,908) (52,812) Net cash (used in) provided by investing activities (85,082) 43,373 Cash Flows from (payments for) Financing Activities: Bank loans 131,900 Securities sold under agreements to repurchase 20,547 Employee stock transactions 25,868 22,009 Cash dividends (27,624) (25,541) Treasury stock (5,129) (2,766) (6,885) 146,149 Net Decrease in Cash and Cash Equivalents (6,153) (5,768) Cash and Cash Equivalents at March 1 41,464 40,341 Cash and Cash Equivalents at November 30 $ 35,311 $ 34,573 Income tax payments totaled $79,257 and $67,858 during the nine month periods ended November 30, 1995, and 1994, respectively. Interest payments totaled $2,691 and $4,484 during the nine month periods ended November 30, 1995, and 1994, respectively. See Notes to Consolidated Financial Statements.
A.G. EDWARDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED NOVEMBER 30, 1995 (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, 1995. 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, 1995, are not necessarily indicative of the results for the year ending February 29, 1996. COMMON STOCK: Options to purchase 1,250,000 shares of common stock granted under the Employee Stock Purchase Plan are exercisable October 1, 1996 at 85% of market price based on dates specified in the plan. Employees purchased 1,247,073 shares at $18.09 per share in October 1995. NET CAPITAL REQUIREMENTS: Edwards is subject to the uniform net capital rule administered by 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, 1995, Edwards' net capital of $677,165,000 was $650,146,000 in excess of the minimum required. A.G. EDWARDS, INC. AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION NINE MONTHS ENDED NOVEMBER 30, 1995 COMPARED WITH NINE MONTHS ENDED NOVEMBER 30, 1994 Results of Operations The nine months ended November 30, 1995, saw an upturn of retail investor activity compared with the level experienced during our last fiscal year. The NYSE and Nasdaq overall trading volumes increased 23% and 41%, respectively, over the prior year, which is reflected in a 21% increase in total company customer trades. The number and size of customer trades and the product mix generally affect the level of revenues. The number of branches and brokers increased to 534 and 5,668, which represent increases of 6% and 5%, respectively, compared with the same period last year. Total revenue increased $l63 million (18%) over last year, from $886 million to $1,049 million. Expenses were $852 million, an increase of $115 million (16%), resulting in a rise in net profit margins from 10.4% last year to 11.6% this year. Total commission revenues increased $137 million (28%) primarily due to increases in listed, OTC and mutual fund revenues. The combined listed and OTC revenue increased $108 million reflecting the recent rise in volume in the equity markets, contrasted with the uncertainty in the equity markets last year caused by rising interest rates. Revenue from mutual fund sales and distribution fees increased $19 million (12%) primarily due to the strong performances of growth funds following the rise in the equity markets. Revenue from principal transactions declined $15 million (9%) with lower revenue from all debt products partially offset by higher corporate equity revenue. Customer demand for debt securities declined primarily due to the strong equity market and relatively flat interest rates this year, compared with a sluggish equity market and a rising interest rate environment last year. As a result, revenue from bond sales has fallen $32 million. As a partial offset, bond inventory gains rose $3 million due to lower gains last year from rising interest rates. Corporate equity revenue rose $13 million (47%) reflecting a 41% increase in overall Nasdaq volume caused by the rising equity market. Investment banking revenues were flat primarily due to decreases in corporate equity and management fee revenues offset by increases in corporate debt revenue. Revenues from corporate equity issues and management fees declined a combined $4 million due to the participation in several large deals last fiscal year. Although activity in the initial public offering market has increased recently, it was slow early this year due to the poor performance of the equity markets last year. Revenue from corporate debt issues rose $4 million due to increased activity in the new issue market for corporate debt securities and a rise in sales of certificates of deposit. Interest revenue increased $24 million (33%) primarily due to higher interest rates earned on customer receivables, debt inventory and short-term investments. Higher levels of debt inventory and short-term investments also contributed to this increase. Other revenue increased $18 million (23%) resulting from an increase in customer investments under professional management. Revenue from service fees also increased due to a rise in custodial and administrative transaction fees. Compensation and benefits expenses increased $100 million (18%) due to increases in most categories. Commission expense increased due to the rise in commissionable revenue. General and administrative salaries and related benefits increased due primarily to general increases and expansion. Incentive related compensation rose as a result of higher earnings. Liquidity and Capital Resources No material changes have taken place since February 28, 1995 regarding the Company's liquidity, capital resources and overall financial condition. THREE MONTHS ENDED NOVEMBER 30, 1995 COMPARED WITH THREE MONTHS ENDED NOVEMBER 30, 1994 Net earnings for the quarter ended November 30, 1995 were $43 million on revenues of $362 million compared with net earnings of $30 million on revenues of $289 million for the same period one year ago. The explanation of revenue and expense fluctuations presented for the nine month period are generally applicable to the three months of operations with the exception of investment banking revenue. Investment banking revenue increased $4 million (18%) due to the rise in activity in the initial public offering market for equities during the third quarter this year, which follows the continued strength of the equity markets. 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, 1995. Item 6: Exhibits and Reports on 8-K Exhibit 27 Financial Data Schedule. (This financial data schedule is only required to be submitted with the Company's Quarterly Report in Form 10-Q as filed electronically to the SEC's EDGAR database.) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended November 30, 1995. 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 12, 1996 /s/ Benjamin F. Edwards III BENJAMIN F. EDWARDS, III Principal Executive Officer Date: January 12, 1996 /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, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS FEB-29-1996 NOV-30-1995 35,311 1,530,197 91,993 383,659 160,280 179,874 2,549,225 0 1,002,868 0 445,611 22,917 0 0 0 63,670 973,273 2,549,225 159,793 98,841 567,126 76,281 108,977 2,428 672,431 197,097 197,097 0 0 121,637 1.90 1.90
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