SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8186
DAIN RAUSCHER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 41-1228350
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation of organization)
Dain Rauscher Plaza, 60 South Sixth Street
Minneapolis, Minnesota 55402-4422
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 371-2711
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 __X__ No _____
As of April 30, 1998, the Company had 12,383,313 shares
of common stock outstanding.
DAIN RAUSCHER CORPORATION
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998
INDEX
Page
----
I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
Signatures
Index of Exhibits
Exhibits
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAIN RAUSCHER CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
1998 1997
---------- ----------
(Unaudited)
Assets:
Cash and cash equivalents $ 51,815 $ 35,909
Receivable from customers 1,124,283 1,170,160
Receivable from brokers and dealers 274,901 229,421
Securities purchased under agreements to resell 327,822 135,777
Trading securities owned, at market 436,554 541,511
Equipment, leasehold improvements and
buildings, at cost, net 45,161 42,376
Other receivables 76,353 80,867
Deferred income taxes 44,922 44,868
Other assets 146,531 23,512
---------- ----------
$2,528,342 $2,304,401
========== ==========
Liabilities and Shareholders' Equity:
Liabilities:
Short-term borrowings $ 142,415 $ 179,000
Drafts payable 98,173 83,499
Payable to customers 597,128 601,949
Payable to brokers and dealers 557,887 580,970
Securities sold under repurchase agreements 158,756 170,906
Trading securities sold, but not yet
purchased, at market 344,738 127,364
Accrued compensation 71,732 128,463
Other accrued expenses and accounts payable 129,312 97,500
Subordinated and other debt 108,316 15,659
---------- ----------
2,208,457 1,985,310
---------- ----------
Shareholders' equity:
Common stock 1,556 1,546
Additional paid-in capital 94,859 89,321
Retained earnings 228,665 233,419
Treasury stock, at cost (5,195) (5,195)
---------- ----------
319,885 319,091
---------- ----------
$2,528,342 $2,304,401
========== ==========
See accompanying notes to consolidated financial statements.
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per-share amounts)
Three Months Ended March 31,
1998 1997
----------------------------
Revenues:
Commissions $ 72,924 $ 63,627
Principal transactions 36,795 42,024
Investment banking and underwriting 22,229 25,868
Interest 31,797 28,734
Asset management 13,330 10,500
Correspondent clearing 4,466 4,428
Other 6,473 4,891
-------- --------
Total revenues 188,014 180,072
Interest expense (15,567) (14,110)
-------- --------
Net revenues 172,447 165,962
-------- --------
Expenses excluding interest:
Compensation and benefits 110,960 101,484
Communications 12,187 11,309
Occupancy and equipment 11,519 9,763
Travel and promotional 7,213 6,577
Floor brokerage and clearing fees 2,827 2,927
Other 10,904 9,513
Merger-related charge 20,000 -
-------- --------
Total expenses excluding interest 175,610 141,573
-------- --------
Earnings:
Earnings (loss) before income taxes (3,163) 24,389
Income tax benefit (expense) 1,139 (8,634)
-------- --------
Net earnings (loss) $ (2,024) $ 15,755
======== ========
Earnings (loss) per share:
Basic $ (.16) $ 1.29
======== ========
Diluted $ (.16) $ 1.22
======== ========
Dividends per share $ .22 $ .18
======== ========
See accompanying notes to consolidated financial statements.
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended March 31,
1998 1997
----------------------------
Cash flows from operating activities:
Net earnings (loss) $ (2,024) $ 15,755
Adjustments to reconcile earnings to cash provided
(used) by operating activities, net of effect
of acquisition:
Depreciation and amortization 3,453 2,639
Deferred income taxes (54) (1,060)
Other non-cash items 2,106 1,872
Cash and short-term investments segregated
for regulatory purposes - (51,000)
Net payable to brokers and dealers (58,247) 46,162
Securities purchased under agreements to
resell (192,044) (189,956)
Net trading securities owned and trading
securities sold, but not yet purchased 328,404 36,782
Short-term borrowings and drafts payable
of securities companies 28,090 176,276
Net receivable from customers 41,055 (6,643)
Securities sold under repurchase agreements (12,150) 10,594
Accrued compensation (56,908) (50,987)
Other 12,653 24,332
--------- ---------
Cash provided by operating activities 94,334 14,766
--------- ---------
Cash flows from financing activities:
Proceeds from:
Issuance of common stock 1,215 1,037
Subordinated and other debt 80,000 -
Payments for:
Revolving credit agreement, net (50,000) -
Subordinated and other debt (9,000) (3,435)
Dividends on common stock (2,713) (2,203)
--------- ---------
Cash provided (used) by financing activities 19,502 (4,601)
--------- ---------
Cash flows from investing activities:
Proceeds from investment dividends and sales 1,532 -
Payments for :
Equipment, leasehold improvements and other (3,874) (3,509)
Acquisition, net of cash acquired (95,588) -
--------- ---------
Cash used by financing activities (97,930) (3,509)
--------- ---------
Increase in cash and cash equivalents 15,906 6,656
Cash and cash equivalents:
At beginning of period 35,909 34,387
--------- ---------
At end of period $51,815 $ 41,043
========= =========
Income tax payments totaled $2,651,000 and $6,453,000 and interest
payments totaled $11,489,000 and $12,430,000 during the three months
ended March 31, 1998 and 1997, respectively.
During the three months ended March 31, 1998, the Company had non-cash
financing activity of $21,657,000 representing subordinated debentures
issued as a portion of the consideration paid for an acquisition. Also
for the three months ended March 31, 1998 and 1997, respectively, the
Company had non-cash financing activity of $4,149,000 and $2,323,000
associated with the crediting of common stock to deferred compensation
plan participants.
See accompanying notes to consolidated financial statements.
DAIN RAUSCHER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Condensed Consolidated Financial Statements
The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with the instructions for
Form 10-Q and do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the
consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1997. In the opinion of management, all adjustments necessary for a
fair presentation of such interim consolidated financial statements
have been included. All such adjustments are of a normal recurring
nature. The results of operations for the three-month period ended
March 31, 1998, are not necessarily indicative of results for
subsequent periods.
Certain prior year amounts in the financial statements have been
reclassified to conform to the 1998 presentation.
B. Acquisition
On March 31, 1998, the Company acquired Wessels, Arnold &
Henderson, LLC ("WAH"), a privately held investment banking,
institutional equity sales and trading firm based in Minneapolis. The
transaction was accounted for as a purchase and, accordingly, the
revenues and operating results of WAH are not included in the
consolidated statements of operations for the three months ended March
31, 1998.
The consideration paid for the acquisition was $120 million of
cash and five-year subordinated debentures with a discounted value of
$21.7 million ($30 million face amount). Goodwill of approximately
$115 million was recorded and will be amortized over an estimated life
of 25 years.
The Company recorded a $20.0 million pretax charge ($12.8 million
after tax) during the 1998 first quarter for costs related to the
merger. Substantially all of the $20.0 million charge will result in
cash outflows, primarily during the second quarter of 1998. As a
result of the merger, approximately 150 jobs were eliminated. These
non-recurring costs include the following: $16.0 million for
severance; $2.5 million for space consolidation; and the remaining
$1.5 million for other integration costs. As of March 31, 1998,
approximately $2.8 million in expenditures, primarily severance, had
been incurred.
The following unaudited pro forma information has been prepared
assuming that the acquisition of WAH had occurred at the beginning of
the periods presented after including the impact of certain
adjustments including amortization of goodwill, increased interest
expense on acquisition debt and the related income tax effects. The
pro forma financial information below does not include the effect of
the $20.0 million charge recorded by the Company in the quarter ended
March 31, 1998 that was directly related to the acquisition of WAH.
Three Months Ended
March 31,
1998 1997
--------------------------
Statement of Operations Data:
Revenues $ 205,487 $ 194,843
Interest expense (17,895) (16,194)
--------- ---------
Net revenues 187,592 178,649
Expenses excluding interest 170,815 152,726
--------- ---------
Earnings before income taxes 16,777 25,923
Income tax expense (5,916) (9,186)
--------- ---------
Net earnings $ 10,861 $ 16,737
========= =========
Basic earnings per share $ .88 $ 1.37
========= =========
Diluted earnings per share $ .82 $ 1.29
========= =========
The pro forma financial information above is presented for
informational purposes only and is not necessarily indicative of the
actual results that would have been achieved had the merger been
consummated prior to the dates or periods indicated, nor are they
necessarily indicative of future operating results.
C. Short-Term Borrowings
On March 20, 1998, the Company entered into a $50 million
committed, revolving credit agreement to replace a similar facility
dated June 27, 1997. The facility expires March 19, 1999 and contains
a one-year renewal option. Loans under the facility are unsecured and
bear interest at a floating rate of the London Interbank Offering Rate
(LIBOR) plus 61 basis points. No amounts were outstanding under the
facility at March 31, 1998. The Company must comply with provisions
in the agreement regarding net worth, regulatory net capital and
indebtedness.
D. Subordinated and Other Debt
On March 31, 1998, the Company's broker-dealer subsidiary entered
into an $80 million subordinated term loan agreement with a group of
banks in connection with the acquisition of WAH. Proceeds from the
loan qualify as regulatory capital. Term loans under this agreement
are unsecured, and consist of advances bearing interest at either the
current Eurodollar Interbank Rate plus 160 basis points, or the
lead bank's published Reference Rate, at the discretion of the
Company. Principal payments under the agreement consist of $5.0
million per quarter beginning April 1, 1999 with the final
payment due on December 31, 2002. The Company must comply with
provisions in the agreement regarding net worth and regulatory net
capital.
On March 31, 1998, the Company also issued $30 million (face
amount) in 5-year zero coupon subordinated debentures in connection
with the acquisition of WAH. The debentures were recorded at a
discounted present value of $21.7 million.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with Item 7
(Management's Discussion and Analysis) of the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
Summary
The following is a consolidated summary of the Company's results
of operations for the three months ended March 31, 1998 and 1997:
Three Months Ended March 31,
1998 1997
----------------------------
Revenues.............................. $188,014 $180,072
Interest expense...................... (15,567) (14,110)
-------- --------
Net revenues.......................... 172,447 165,962
Expenses excluding interest and
merger-related expenses.............. 155,610 141,573
-------- --------
Operating earnings before income
taxes................................ 16,837 24,389
Income tax expense from operations.... (6,061) (8,634)
-------- --------
Net operating earnings................ 10,776 15,755
Merger-related expenses (net of tax).. (12,800) -
-------- --------
Net earnings (loss)................... $ (2,024) $ 15,755
======== ========
Earnings (loss) per share:
From net operating earnings:
Basic................................ $ 0.87 $ 1.29
Diluted.............................. $ 0.82 $ 1.22
Net:
Basic................................ $ (0.16) $ 1.29
Diluted.............................. $ (0.16) $ 1.22
Consolidated net operating earnings were $10.8 million, or $.82
per share diluted, during the first quarter of 1998 compared with
$15.8 million, or $1.22 per share, for the first quarter of 1997.
During the quarter , the Company's Private Client Group posted a 26-
percent increase in pretax profitability, primarily due to strong
sales of investment products to individual investors, and the Fixed
Income Capital Markets Group posted a 17-percent increase in pretax
profitability, principally the result of higher fees earned
underwriting securities for municipal and governmental clients. These
increases, however, were more than offset by a decline in the
profitability of the Equity Capital Markets Group ("ECM") from the
first quarter of 1997. A significant portion of this decline resulted
from uncertainty surrounding the Company's February 9, 1998
announcement that it would purchase Wessels, Arnold & Henderson, LLC,
("WAH") a privately held investment banking, institutional equity
sales and trading firm based in Minneapolis. This announcement,
coupled with the disruption brought about by the October 1997
announcement of the merger of the Company's former broker-dealer
subsidiaries into a single company, effectively was the second
reorganization of the ECM group within a four-month period that
included, among other things, job eliminations, managerial changes and
changes in assignments of customer accounts, research coverage and
trading coverage.
In conjunction with the acquisition of WAH, the Company recorded a
$20.0 million merger-related charge in the 1998 first quarter to cover
severance, space consolidation, systems/operations expenses and other
costs of integration. As a result of the charge, the Company incurred
a net loss of $2.0 million, or $.16 cents per share diluted, for the
quarter ended March 31, 1998. The $20.0 million charge exceeded
management's previous estimate of up to $15.0 million due to strategic
decisions to focus on certain industry sectors within the ECM
business. As a result, approximately 150 jobs were eliminated, more
than originally anticipated. Excluding the merger-related charge, the
Company expects the acquisition to have minimal impact on earnings in
1998, and to be accretive to earnings in the first full year of
operations.
Results of Operations
Commission revenues increased $9.3 million or 15 percent during
the 1998 first quarter over the first quarter of 1997 as a result of
higher sales of listed securities, mutual funds and insurance and
annuity products. Contributing also to the increase were higher
securities prices, particularly during February and March of 1998, and
higher volumes of securities trades including an 11-percent rise in
the New York Stock Exchange's average daily trading volume in the 1998
first quarter.
Revenues from principal transactions declined $5.2 million or 12
percent primarily due to lower trading revenues in over-the-counter
equity securities. The decline was primarily related to lower spreads
earned trading OTC equity securities resulting from management's
decision to provide increased liquidity in order to facilitate
institutional trading as well as smaller fractions used in share price
posting. Also contributing was the impact of the merger of the
Company's broker-dealer subsidiaries and the WAH acquisition (see
"Summary" above), as well as lower sales and trading of tax-exempt
fixed income securities. These declines were partially offset by
increases in sales and trading of taxable fixed income securities.
Similarly, investment banking and underwriting revenues declined
$3.6 million or 14 percent during the first quarter from the same
quarter of 1997 due primarily to lower underwriting transaction levels
in the ECM group. Management believes the lower revenue production was
due largely to the restructuring changes made as a result of the
merger of Dain Bosworth and Rauscher Pierce Refsnes, effective on
January 2, 1998, and the acquisition of WAH (see "Summary" above).
Offsetting some of this decline, however, were increases in fees
earned from underwriting securities for municipal and governmental
clients.
Net interest income increased $1.6 million or 11 percent during
the quarter, primarily due to a 17-percent increase in average margin
loan balances. The margin loan increase can be attributed to
favorable market conditions coupled with comparatively low interest
rates. The resulting increase in net interest income was partially
offset by the effects of a 50-percent decline in customer credit
balances in the 1998 first quarter versus the 1997 first quarter, due
primarily to transfers of certain customers' credit balances to
Company-sponsored money market funds.
Asset management revenues increased $2.8 million or 27 percent in
the first quarter over the prior year due to increased levels of
assets in fee-based, managed account programs at Dain Rauscher
Incorporated and, to a lesser degree, a 33-percent increase in assets
under management at the Company's money management subsidiary, Insight
Investment Management Inc.
Other revenues increased $1.6 million or 32 percent over the 1997
quarter primarily due to gains related to the sale of securities
previously obtained in connection with corporate underwriting
activities.
During the 1998 first quarter, compensation and benefits increased
$9.5 million or 9 percent due principally to increased commissions
associated with higher levels of operating revenues and higher
incentive compensation. Also contributing to the increase were higher
salary levels and a 3-percent rise in the average number of employees.
Expenses other than compensation and benefits increased $4.5
million or 11 percent over the 1997 first quarter principally due to :
(1) increased occupancy costs associated with office expansions and
office operating costs, including real estate taxes; (2) volume-driven
increases in communications market-data and clearing services; (3)
travel and promotional costs associated with the generation of new
business; (4) increased information system contractor and development
costs; and (5) increased litigation related expenses.
Liquidity and Capital Resources
On March 31, 1998, the Company's broker-dealer subsidiary entered
into an $80 million subordinated term loan agreement with a group of
banks in connection with the acquisition of WAH. Proceeds from the
loan qualify as regulatory capital. Term loans under this agreement
are unsecured, and consist of advances bearing interest at either the
current Eurodollar Interbank Rate plus 160 basis points, or the lead
bank's published Reference Rate, at the discretion of the Company.
Principal payments under the agreement consist of $5.0 million per
quarter beginning April 1, 1999 with the final payment due on December
31, 2002. The Company must comply with provisions in the agreement
regarding net worth and regulatory net capital.
On March 20, 1998, the Company entered into a $50 million
committed, revolving credit agreement to replace a similar facility
dated June 27, 1997. The facility expires March 19, 1999 and contains
a one-year renewal option. Loans under the facility are unsecured and
bear interest at a floating rate of the London Interbank Offering Rate
(LIBOR) plus 61 basis points. No amounts were outstanding under the
facility at March 31, 1998. The Company must comply with provisions
in the agreement regarding net worth, regulatory net capital and
indebtedness.
On March 31, 1998, the Company also issued $30 million (face
amount) in 5-year zero coupon subordinated debentures related to the
acquisition of WAH. The debentures were recorded at a discounted
present value of $21.7 million.
As described in Note K of the Consolidated Financial Statements of
the Company's 1997 Annual Report on Form 10-K, Dain Rauscher
Incorporated must comply with certain regulations of the Securities
and Exchange Commission and New York Stock Exchange, Inc. measuring
capitalization and liquidity. The broker-dealer continues to operate
above minimum net capital standards of 5 percent of aggregate debit
items. At March 31, 1998, net capital was $114.8 million, 9.5
percent of aggregate debit balances and $54.5 million in excess of the
5-percent requirement.
During the 1998 first quarter, the Company declared and paid a
regular quarterly dividend on its common stock of $.22 per share, an
increase of $.04 per share over the previous rate of $.18 per share.
The determination of the amount of future cash dividends, if any, to
be declared and paid will depend on the Company's future financial
condition, earnings and available funds.
Private Securities Litigation Reform Act of 1995 "Safe Harbor"
The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 and
is filing this cautionary statement in connection with such safe
harbor legislation. This Form 10-Q, the Company's Annual Report to
Shareholders, any Form 10-K, Form 10-Q or Form 8-K of the Company or
any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the
Company's current views with respect to future events and financial
performance. The words "believe," "expect," "anticipate," "intends,"
"estimate," "forecast," "project," "should" and similar expressions
are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The Company wishes to caution investors that any forward-looking
statements made by or on behalf of the Company are subject to
uncertainties and other factors that could cause actual results to
differ materially from such statements. These uncertainties and other
factors include, but are not limited to, the "Risk Factors" listed
below. Though the Company has attempted to list comprehensively these
important factors, the Company wishes to caution investors that other
factors may in the future prove to be important in affecting the
Company's results of operations. New factors emerge from time to time
and it is not possible for management to predict all such factors, nor
can it assess the impact of each such factor on the business or the
extent to which any factor, or a combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements.
Investors are further cautioned not to place undue reliance on
such forward-looking statements as they speak only to the Company's
views as of the date the statement is made. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
The Company herein incorporates by reference Exhibit 99 of the
Company's Annual Report on Form 10-K for the year ended December 31,
1997.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Item No. Item Method of Filing
- ----------------------------------------------------------------------
10 Employment Agreement dated March 31, Filed herewith.
1998 between the Company and Kenneth
J. Wessels.
11 Computation of Net Earnings Per Share. Filed herewith.
27 Financial Data Schedule. Filed herewith.
(b) Reports on Form 8-K
Three reports on Form 8-K were filed during the quarter ended March
31, 1998.
(1) Items reported:
Item 5 - Other events (Name change of registrant; NYSE trading
symbol change of registrant; merger of registrant's wholly-owned
broker-dealers)
Date of earliest event reported - January 2, 1998
Financial Statements Filed - None
(2) Items reported:
Item 5 - Other Events (Press releases regarding: (1) an increase
in the registrant's regular quarterly cash dividend from $.18
to $.22 per share; (2) announcement regarding acquisition of
Wessels, Arnold & Henderson, LLC).
Item 7 - Financial Statements and Exhibits
Exhibit 99.1 - Press release announcing increase in registrant's
regular quarterly cash dividend from $.18 to $.22 per share.
Exhibit 99.2 - Press release announcing acquistion of Wessels,
Arnold & Henderson, LLC.
Date of earliest event reported - February 5, 1998
Financial Statements Filed - None
(3) Items reported:
Item 2 - Acquisition of Wessels, Arnold & Henderson, LLC
Item 7 - Financial Statements, Pro Forma Financial Information
and Exhibits
(a) Financial Statements of Business Acquired
The following financial statements of WAH are incorporated by
reference to Exhibit 99.1 filed herewith:
Independent Auditors' Report
Combined Balance Sheet as of December 31, 1997
Combined Statement of Income for the Year Ended December 31, 1997
Combined Statement of Changes in Members' Equity for the Year
Ended December 31, 1997
Combined Statement of Cash Flows for the Year Ended December 31,
1997
Notes to Combined Financial Statements
(b) Pro Forma Financial Information
The following pro forma financial information is incorporated
by reference to Exhibit 99.2 filed herewith:
Pro Forma Combined Balance Sheet as of December 31, 1997
(unaudited)
Pro Forma Combined Statement of Operations for the Year Ended
December 31, 1997 (unaudited)
Notes to Pro Forma Combined Balance Sheet and Statement of
Operations
(c) Other Exhibits
Exhibit 2.1 - Agreement and Plan of Merger, dated February 8,
1998 among Dain Rauscher Corporation, Dain Rauscher Incorporated
and Wessels, Arnold & Henderson Group, LLC and Wessels, Arnold &
Henderson, LLC
Exhibit 4.1 - Form of Dain Rauscher Corporation Subordinated
Debenture
Exhibit 4.2 - Form of Dain Rauscher Corporation Stock Option
Agreement
Date of earliest event reported - March 31, 1998
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.
DAIN RAUSCHER CORPORATION
Registrant
Date: May 15, 1998 By David J. Parrin
---------------------- ---------------------------
David J. Parrin
Senior Vice President
and Controller
(Principal Accounting Officer)
DAIN RAUSCHER CORPORATION
INDEX OF EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1998
(a) Exhibits
Item No. Item Method of Filing
- ----------------------------------------------------------------------
10 Employment Agreement dated March 31, Filed herewith.
1998 between the Company and Kenneth
J. Wessels.
11 Computation of Net Earnings Per Share. Filed herewith.
27 Financial Data Schedule. Filed herewith.
(b) Reports on Form 8-K
Three reports on Form 8-K were filed during the quarter ended March
31, 1998.
(1) Items reported:
Item 5 - Other events (Name change of registrant; NYSE trading
symbol change of registrant; merger of registrant's wholly-owned
broker-dealers)
Date of earliest event reported - January 2, 1998
Financial Statements Filed - None
(2) Items reported:
Item 5 - Other Events (Press releases regarding: (1) an increase
in the registrant's regular quarterly cash dividend from $.18
to $.22 per share; (2) announcement regarding acquisition of
Wessels, Arnold & Henderson, LLC).
Item 7 - Financial Statements and Exhibits
Exhibit 99.1 - Press release announcing increase in registrant's
regular quarterly cash dividend from $.18 to $.22 per share.
Exhibit 99.2 - Press release announcing acquistion of Wessels,
Arnold & Henderson, LLC.
Date of earliest event reported - February 5, 1998
Financial Statements Filed - None
(3) Items reported:
Item 2 - Acquisition of Wessels, Arnold & Henderson, LLC
Item 7 - Financial Statements, Pro Forma Financial Information
and Exhibits
(a) Financial Statements of Business Acquired
The following financial statements of WAH are incorporated by
reference to Exhibit 99.1 filed herewith:
Independent Auditors' Report
Combined Balance Sheet as of December 31, 1997
Combined Statement of Income for the Year Ended December 31, 1997
Combined Statement of Changes in Members' Equity for the Year
Ended December 31, 1997
Combined Statement of Cash Flows for the Year Ended December 31,
1997
Notes to Combined Financial Statements
(b) Pro Forma Financial Information
The following pro forma financial information is incorporated
by reference to Exhibit 99.2 filed herewith:
Pro Forma Combined Balance Sheet as of December 31, 1997
(unaudited)
Pro Forma Combined Statement of Operations for the Year Ended
December 31, 1997 (unaudited)
Notes to Pro Forma Combined Balance Sheet and Statement of
Operations
(c) Other Exhibits
Exhibit 2.1 - Agreement and Plan of Merger, dated February 8,
1998 among Dain Rauscher Corporation, Dain Rauscher Incorporated
and Wessels, Arnold & Henderson Group, LLC and Wessels, Arnold &
Henderson, LLC
Exhibit 4.1 - Form of Dain Rauscher Corporation Subordinated
Debenture
Exhibit 4.2 - Form of Dain Rauscher Corporation Stock Option
Agreement
Date of earliest event reported - March 31, 1998