SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended December 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
Commission file number 1-9109
RAYMOND JAMES FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Florida No. 59-1517485
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
(813) 573-3800
(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 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
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the close of the latest practicable
date.
20,475,696 shares of Common Stock as of__February 5, 1995
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Form 10-Q for the Quarter Ended December 30, 1994
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Consolidated Statement of Financial Condition as of
December 30, 1994 (unaudited), and September 30, 1994 2
Consolidated Statement of Operations (unaudited) for the
three month period ended December 30, 1994 and
December 31, 1993 3
Consolidated Statement of Cash Flows (unaudited) for the
three months ended December 30, 1994 and
December 31, 1993 4
Notes to Consolidated Financial Statements (unaudited) 5-6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 7-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11: Computation of Earnings Per Share 10
(b) Reports on Form 8-K: None
All other items required in Part II have been previously filed or
are not applicable for the quarter ended December 30, 1994.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(in thousands, except share amounts)
December 30, September 30
------------ -------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 118,395 $ 54,021
Assets segregated pursuant to Federal regulations:
Cash and cash equivalents 162,161 145,398
Short-term investments 52,986 14,964
Other investments 19,775 33,872
Other short-term investments 18,578 47,332
Receivables:
Brokerage customers 375,675 348,077
Stock borrowed 596,199 747,272
Brokers and dealers 22,268 14,410
Other 14,217 14,643
Trading and investment account securities 183,015 169,381
Investment in leveraged lease 10,144 9,940
Property and equipment, net 43,195 42,080
Deferred income taxes 22,697 20,584
Prepaid expenses and other assets 41,736 36,288
----------- -----------
$1,681,041 $1,698,262
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage note payable $ 13,205 $ 13,243
Payables:
Brokerage customers 670,371 516,794
Stock loaned 610,714 771,666
Brokers and dealers 22,573 23,837
Trade and other 49,001 46,811
Trading account securities sold but not yet purchased 32,079 33,032
Accrued compensation 43,397 59,514
Income taxes payable 9,215 5,913
----------- -----------
1,450,555 1,470,810
----------- -----------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock; $.10 par value; authorized 10,000,000
shares; outstanding -0- shares - -
Common stock; $.01 par value; authorized 50,000,000
shares; issued 20,348,556 and 21,777,271 shares 217 217
Additional paid-in capital 51,904 52,375
Unrealized gain(loss) on securities available for sale (456)
Retained earnings 198,331 192,280
----------- -----------
249,996 244,872
Less: 1,428,715 and 1,282,929 common shares in treasury,
at cost (19,510) (17,420)
------------ -----------
230,486 227,452
------------ -----------
$1,681,041 $1,698,262
See Notes to Consolidated Financial Statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended
December 30, December 31,
1994 1993
------------ -------------
Revenues:
Securities commissions $ 71,596 $ 83,780
Investment banking 5,426 16,907
Investment advisory fees 11,904 11,494
Interest 19,680 13,198
Correspondent clearing 944 1,081
Principal trading profits 596 2,467
Financial services fees 5,417 4,540
Other 149 946
------------- -----------
115,712 134,413
============= ===========
Expenses:
Employee compensation 69,975 86,270
Data communications 6,256 5,490
Occupancy and equipment costs 5,023 3,533
Interest 12,347 7,751
Clearing and floor brokerage 1,964 1,914
Business development 3,702 3,567
Other 3,932 4,687
----------- ----------
103,199 113,212
=========== ==========
Income before income taxes and minority interests 12,513 21,201
Provision for income taxes 4,633 7,930
Minority interests in losses
of consolidated subsidiaries (11) (7)
----------- ----------
Net income $ 7,891 $ 13,278
=========== ==========
Net income per share $ .38 $ .62
=========== ==========
Cash dividends declared per
common share $ .09 $ .08
=========== ==========
Average common equivalent shares outstanding 20,472 21,346
=========== ==========
See Notes to Consolidated Financial Statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(UNAUDITED)
(in thousands)
Three Months Ended
December 30, December 31,
1994 1993
------------ ------------
Cash flows from operating activities:
Net income $ 7,891 $ 13,278
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,432 1,425
(Increase) decrease in assets:
Short-term investments (9,268) (24,292)
Deposits with clearing organizations (4,233) (5,030)
Receivable from:
Brokerage customers (27,598) (52,370)
Stock borrowed 151,073 (243,023)
Brokers and dealers (7,858) 8,547
Other 499 11,053
Trading and investment account securities (490) (18,141)
Deferred income taxes (2,113) (2,963)
Prepaid expenses and other assets (1,492) 7,319
Increase (decrease) in liabilities:
Payable to:
Brokerage customers 153,577 81,903
Stock loaned (160,952) 244,053
Brokers and dealers (1,264) 19,346
Trade and other 2,190 (2,096)
Accrued employee compensation and other expenses (16,117) (19,534)
Income taxes currently payable 3,302 5,174
---------- ----------
Total adjustments 81,688 11,371
---------- ----------
Net cash provided by operating activities 89,579 24,649
---------- ----------
Cash flows from investing activities:
Additions to fixed assets, net (3,547) (2,672)
----------- ----------
Cash flows from financing activities:
Borrowings from banks and financial institutions - -
Payments on borrowings from banks and financial
institutions (38) (34)
Issuance of common stock 720 776
Purchase of treasury stock (3,280) -
Cash dividends on common stock (1,841) (1,720)
Unrealized (loss) on securities available for sale (456)
----------- ---------
Net cash used in (provided by) financing activities (4,895) (978)
=========== ==========
Net decrease in cash and cash equivalents 81,137 20,999
Cash and cash equivalents at beginning of period 199,419 153,557
---------- ----------
Cash and cash equivalents at end of period $280,556 $174,556
========== =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 11,875 $ 6,555
Cash paid for taxes $ 3,148 $ 5,720
See Notes to Consolidated Financial Statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 30, 1994
Basis of Consolidation
The consolidated financial statements include the accounts of
Raymond James Financial, Inc. and its consolidated subsidiaries (the
"Company"). All material intercompany balances and transactions have
been eliminated in consolidation. These statements reflect all
adjustments which are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods presented.
All such adjustments made are of a normal recurring nature. The
nature of the Company's business is such that the results of any
interim period are not necessarily indicative of results for a full
year.
Commitments and Contingencies
At December 30, 1994 Raymond James & Associates, Inc. had
$10,650,887 of government securities held as deposits by the Options
Clearing Corporation, an amount sufficient to cover unsettled options
at that date.
In connection with certain limited partnerships syndicated by
Raymond James & Associates, Inc., the Company is contingently liable
as guarantor of certain loans totalling $385,000 at December 30, 1994.
In connection with the early payoff of its $5.8 million loan to
Cumberland Healthcare Fund, L.P. I-A, the Company has a commitment to
relend up to $5 million upon request. No use of this facility is
currently anticipated.
The Company is a defendant or co-defendant in various lawsuits
incidental to its securities business. The Company is contesting the
allegations in these cases and believes that there are meritorious
defenses in each of these lawsuits. In view of the number and
diversity of claims against the Company, the number of jurisdictions
in which litigation is pending and the inherent difficulty of
predicting the outcome of litigation and other claims, the Company
cannot state with certainty what the eventual outcome of pending
litigation or other claims will be. In the opinion of management,
based on discussions with counsel, the outcome of these matters will
not result in a material adverse effect on the financial position or
results of operations.
Capital Transactions
The Company's Board of Directors has, from time to time, adopted
resolutions authorizing the Company to repurchase its common stock for
the funding of its incentive stock option and stock purchase plans and
other corporate purposes. As of December 30, 1994, management has
Board authorization to purchase up to 665,000 shares.
The Board of Directors of the Company increased the quarterly
cash dividend from $.08 to $.09 per share for fiscal 1995.
Net Capital Requirements
The broker-dealer subsidiaries of the Company are subject to the
requirements of Rule 15c3-1 under the Securities Exchange Act of 1934.
This rule requires that aggregate indebtedness, as defined, not exceed
fifteen times net capital, as defined. Rule 15c3-1 also provides for
an "alternative net capital requirement" which, if elected, requires
that net capital be equal to the greater of $250,000 or two percent of
aggregate debit items computed in applying the formula for
determination of reserve requirements. The New York Stock Exchange
may require a member organization to reduce its business if its net
capital is less than four percent of aggregate debit items and may
prohibit a member firm from expanding its business and declaring cash
dividends if its net capital is less than five percent of aggregate
debit items. The net capital positions of the Company's broker-dealer
subsidiaries at December 30, 1994 were as follows:
Raymond James & Associates, Inc.:
(alternative method elected)
Net capital as a percent of aggregate debit items 15.00%
Net capital $60,075,000
Required net capital $ 7,906,000
Investment Management & Research, Inc.:
Ratio of aggregate indebtedness to net capital .99
Net capital $4,228,000
Required net capital $ 278,000
Robert Thomas Securities, Inc.:
Ratio of aggregate indebtedness to net capital 2.23
Net capital $1,551,000
Required net capital $ 250,000
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
General
The lackluster financial markets continued during the most recent
quarter ended December 30, 1994. Rising interest rates and directionless
equity markets contributed to investor trepidation, leading to decreased
activity levels in several of the Company's primary revenue sources.
Results of Operations - Three months ended December 30, 1994 compared with
three months ended December 31, 1993.
Total revenues declined 14%, from $134,413,000 to $115,712,000, while
net income fell 41%, from $13,278,000 to $7,891,000.
Securities commission revenues decreased 15%, despite an increase in the
number of account executives. Contributing to the reduced productivity was a
33% decline in mutual fund sales.
Investment banking is one of the areas which has been severely impacted
by the recent market conditions. While merger and acquisition activity
continued at a reasonable pace, public offering volumes have declined
dramatically both in the corporate and municipal marketplaces.
Investment advisory fees rose slightly, in approximate proportion to the
increase in assets under management as follows:
December 31, December 31, % Increase
1994 1993 (Decrease)
------------ ------------ -----------
Assets Under Management (000's):
Eagle Asset Management, Inc. $ 6,035,000 $ 5,895,000 2.4%
Heritage Family of Mutual Funds 1,399,000 1,386,000 0.9%
Investment Advisory Services 750,000 684,000 9.6%
Awad and Associates 204,000 177,000 15.3%
Focus Investment Advisors 48,000 73,000 (34.2)%
Carillon Asset Management 88,000 57,000 54.4%
------------- ------------- ----------
Total $ 8,524,000 $ 8,272,000 3.0%
============= ============= ==========
Principal trading profits suffered from slower transaction volumes,
particularly in over-the-counter equities. This area was also impacted
negatively by the decline in new issue activity.
Net interest income achieved a quarterly record of $7.3 million. Higher
interest rates have led to increased earnings on the Company's capital,
largely invested in fixed income securities either as inventories or short-
term investments. Additionally, both customer margin loan and credit
interest balances reached all-time highs.
The decrease in employee compensation expense reflects the declines in
commission expense and in the numerous incentive compensation arrangements
which are a function of departmental, subsidiary and overall firm
profitability.
The increase in data communications is primarily a result of the costs
associated with the rollout of new account executive workstations throughout
the Raymond James & Associates branch offices.
The significant increase in occupancy and equipment costs was due to
increased retail branch office space and the purchase of additional computer
equipment, which is depreciated over very short periods for financial
reporting purposes.
Other expense declined due to reduced legal and bad debt expenses.
Financial Condition
The Company's balance sheet has decreased slightly since fiscal year
end, the result of decreased stock loan/borrow activity, net of increased
customer credit interest and margin loan balances. Additionally, customer
cash deposits rose dramatically as a result of balances transferred from
money market funds at the end of December to avoid state intangible taxes.
During the quarter, the Company repurchased 233,000 shares of its common
stock, thus increasing the number of shares held in treasury.
Liquidity and Capital Resources
Net cash provided by operating activities for the quarter was
$81,688,000. The increase in balances was the primary source of cash.
Investing and financing activities used $8,442,000 of cash during the
quarter, primarily due to fixed asset purchases, cash dividends paid and
repurchases of the Company's common stock.
The Company has long-term debt in the amount of $13,204,602 in the form
of a mortgage on the first of its two current headquarters buildings. The
second building was constructed using internally generated funds.
The Company's broker-dealer subsidiaries are subject to requirements of
the Securities and Exchange Commission relating to liquidity and capital
standards (see Notes to Consolidated Financial Statements).
Effects of Inflation
The Company's assets are primarily liquid in nature, and are not
significantly affected by inflation. Management believes that the changes in
replacement cost of property and equipment would not materially affect
operating results. However, the rate of inflation affects the Company's
expenses, including employee compensation, data communications and occupancy,
which may not be readily recoverable through charges for services provided by
the Company.
EXHIBIT 11
RAYMOND JAMES FINANCIAL, INC.
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
Three Months Ended
December 31, December 30,
1994 1993
------------- -------------
Net income $ 7,891 $ 13,278
============= =============
Average number of common shares and equivalents
outstanding during the period 20,472 21,346
Additional shares assuming
exercise of stock options (1) 241 244
Average number of common shares used ------------ -------------
to calculate earnings per share 20,713 21,590
============ =============
Net income per share $ .38 $ .62
============ =============
(1) Represents the number of shares of common stock issuable on the
exercise of dilutive employee stock options less the number of shares
of common stock which could have been purchased with the proceeds from
the exercise of such options. These purchases were assumed to have
been made at the average market price of the common stock during the
period, or that part of the period for which the option was
outstanding.
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.
RAYMOND JAMES FINANCIAL, INC.
(Registrant)
Date: February 5 , 1995 /s/ THOMAS A. JAMES
Thomas A. James
Chairman and Chief
Executive Officer
/s/ JEFFREY P. JULIEN
Jeffrey P. Julien
Vice President - Finance
and Chief Financial
Officer