FORM 10-Q
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 March 26, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-9109
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RAYMOND JAMES FINANCIAL, INC.
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(Exact name of registrant as specified in its charter)
Florida No. 59-1517485
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
880 Carillon Parkway, St. Petersburg, Florida 33716
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(Address of principal executive offices) (Zip Code)
(727) 573-3800
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(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.
47,627,055 shares of Common Stock as of April 28, 1999
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
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Form 10-Q for the Quarter Ended March 26, 1999
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INDEX
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PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statement of Financial Condition as of
March 26, 1999 (unaudited) and September 25, 1998 2
Consolidated Statement of Operations (unaudited) for the
three and six month periods ended March 26, 1999 and
March 27, 1998 3
Consolidated Statement of Cash Flows (unaudited) for the
six months ended March 26, 1999 and March 27, 1998 4
Notes to Consolidated Financial Statements (unaudited) 5
Item 2. Management's Financial Discussion and Analysis 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10: PURCHASE AGREEMENT between BANK ONE CORPORATION,
as Seller, and RAYMOND JAMES FINANCIAL, INC.,
Exhibit 11: Computation of Earnings Per Share 10
Exhibit 27: Financial Data Schedule - EDGAR version only
(filed electronically)
(b) Reports on Form 8-K: Dated April 26, 1999, reporting the
agreement to purchase Roney & Co.,
a wholly-owned broker-dealer
subsidiary of Bank One Corporation
All other items required in Part II have been previously filed or
are not applicable for the quarter ended March 26, 1999.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(in thousands, except share amounts)
March 26, September 25,
1999 1998
--------- -------------
(Unaudited)
ASSETS
- ------
Cash and cash equivalents $ 285,124 $ 296,817
Assets segregated pursuant to Federal Regulations:
Cash and cash equivalents 25 1
Securities purchased under agreements to resell 1,207,132 946,723
Securities owned:
Trading and investment account securities 172,635 105,892
Available for sale securities 382,736 385,676
Receivables:
Clients, net 1,008,276 893,839
Stock borrowed 1,533,239 852,744
Brokers, dealers and clearing organizations 52,436 112,838
Other 57,565 62,722
Investment in leveraged leases 23,673 23,297
Property and equipment, net 82,019 81,372
Deferred income taxes, net 34,307 32,841
Deposits with clearing organizations 32,229 21,206
Prepaid expenses and other assets 45,421 36,769
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$4,916,817 $3,852,737
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Loans payable $ 245,556 $ 44,767
Payables:
Clients 2,317,678 2,126,699
Stock loaned 1,487,013 828,102
Brokers, dealers and clearing organizations 50,985 43,227
Trade and other 101,505 99,690
Trading account securities sold but not yet
purchased 68,572 30,841
Accrued compensation and commissions 118,637 158,539
Income taxes payable 6,234 10,974
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4,396,180 3,342,839
=========== ===========
Commitments and contingencies - -
Shareholders' equity:
Preferred stock; $.10 par value; authorized
10,000,000 shares; issued and outstanding
-0- shares - -
Common stock; $.01 par value; authorized
100,000,000 shares; issued 48,997,995 shares 490 490
Additional paid-in capital 57,730 57,777
Accumulated other comprehensive income:
Unrealized gain (loss) on securities
available for sale, net of deferred taxes (252) 114
Retained earnings 491,770 459,099
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549,738 517,480
Less: 1,750,912 and 730,118 common shares
in treasury, at cost (29,101) (7,582)
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520,637 509,898
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$4,916,817 $3,852,737
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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 Six Months Ended
-------------------- ---------------------
March 26, March 27, March 26, March 27,
1999 1998 1999 1998
Revenues: --------- --------- --------- ---------
Securities commissions and fees $185,329 $157,626 $349,589 $302,489
Investment banking 15,819 28,338 27,349 59,609
Investment advisory fees 22,750 17,583 43,227 33,998
Interest 55,653 48,606 104,829 94,796
Correspondent clearing 1,217 1,100 2,285 2,219
Net trading profits 4,445 3,035 10,491 4,909
Financial service fees 10,098 6,858 18,395 13,362
Other 3,880 4,392 7,533 8,460
-------- -------- -------- --------
Total revenues 299,191 267,538 563,698 519,842
-------- -------- -------- --------
Expenses:
Employee compensation and benefits 181,467 159,167 344,023 311,653
Communications and
information processing 13,613 10,817 24,373 20,602
Occupancy and equipment 9,387 7,916 19,245 15,434
Clearing and floor brokerage 3,367 2,767 6,127 5,796
Interest 37,675 31,268 69,517 60,687
Business development 9,590 8,042 18,718 14,621
Other 8,773 7,027 18,039 13,628
-------- -------- -------- --------
Total expenses 263,872 227,004 500,042 442,421
-------- -------- -------- --------
Income before provision for
income taxes 35,319 40,534 63,656 77,421
Provision for income taxes 13,450 15,834 24,308 29,976
-------- -------- -------- --------
Net income $ 21,869 $ 24,700 $ 39,348 $ 47,445
======== ======== ======== ========
Net income per share-basic* $ .46 $ .51 $ .82 $ .99
======== ======== ======== ========
Net income per share-diluted* $ .45 $ .50 $ .81 $ .96
======== ======== ======== ========
Cash dividends declared per
common share* $ .07 $ .06 $ .14 $ .12
======== ======== ======== ========
Weighted average common shares
outstanding-basic* 47,697 48,158 47,908 47,953
======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding
-diluted* 48,492 49,515 48,805 49,233
======== ======== ======== ========
* Gives effect to the 3-for-2 stock split paid to shareholders in April 1998.
See Notes to Consolidated Financial Statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF CASH FLOWS
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(UNAUDITED)
(in thousands)
Six Months Ended
---------------------------
March 26, March 27,
1999 1998
Cash flows from operating activities: ----------- -----------
Net income $ 39,348 $ 47,445
Adjustments to reconcile net income ---------- ----------
to net cash provided by operating
activities:
Depreciation and amortization 9,538 7,429
(Increase) decrease in assets:
Available for sale investments 2,940 (18,050)
Deposits with clearing organizations (11,023) 13
Receivables:
Clients, net (114,437) (81,634)
Stock borrowed (680,495) (471,846)
Brokers, dealers and clearing organizations 60,402 8,783
Other 5,157 (3,934)
Trading account securities, net (29,012) (100,321)
Deferred income taxes (1,466) (6,366)
Prepaid expenses and other assets (9,028) (5,179)
Increase (decrease) in liabilities:
Payables:
Clients 190,979 355,930
Stock loaned 658,911 423,096
Brokers, dealers and clearing organizations 7,758 40,137
Trade and other 1,815 2,368
Accrued compensation (39,902) (27,757)
Income taxes payable (4,740) (4,415)
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Total adjustments 47,397 118,254
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Net cash provided by operating activities 86,745 165,699
Cash flows from investing activities: ----------- -----------
Additions to property and equipment, net (10,185) (26,240)
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Cash flows from financing activities:
Borrowings from banks and financial institutions 201,077 20,000
Repayments on loans (288) (14,285)
Exercise of stock options and employee stock
purchases 5,081 6,452
Purchase of treasury stock (27,149) -
Corporate sale of put options 502 -
Cash in lieu of fractional shares (16)
Cash dividends on common stock (6,677) (5,768)
Unrealized (loss) gain on securities
available for sale, net (366) (15)
----------- -----------
Net cash provided by financing activities 172,180 6,368
----------- -----------
Net increase in cash and cash equivalents 248,740 145,827
Cash and cash equivalents at beginning of period 1,243,541 888,780
----------- -----------
Cash and cash equivalents at end of period $1,492,281 $1,034,607
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 65,673 $ 58,762
=========== ===========
Cash paid for taxes $ 44,360 $ 40,756
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See Notes to Consolidated Financial Statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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March 26, 1999
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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
The Company has committed to lend to, or guarantee other debt for, Raymond
James Tax Credit Funds, Inc. ("RJTCF") up to $25 million upon request. RJTCF,
a wholly-owned subsidiary of the Company, is a sponsor of limited partnerships
qualifying for low income housing tax credits. The borrowings are secured by
properties under development. The commitment expires in November 1999, at
which time any outstanding balances will be due and payable. At March 26,
1999, there were loans of $12,816,854 and guarantees of $1,530,800 outstanding.
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.
Immediately following the quarter end the Company entered into an
agreement to purchase Roney & Co., a wholly-owned broker-dealer subsidiary of
Bank One Corporation for approximately $70 million in cash and the assumption
of $10 million in deferred compensation liabilities. Pending regulatory
approval and other conditions of closing contained in the agreement, the
agreement is anticipated to close during the Company's third fiscal quarter.
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 March 26, 1999, management has Board authorization
to purchase up to 1,318,300 shares.
At their meeting on February 12, 1999, the Board of Directors of the
Company declared a quarterly cash dividend of $.07 per share.
Net Capital Requirements
The broker-dealer subsidiaries of the Company are subject to the
requirements of Rule 15c3-under the Securities Exchange Act of 1934. This rule
requires that aggregate indebtedness, as defined, shall 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 March 26, 1999
were as follows (dollar amounts in thousands):
Raymond James & Associates, Inc.:
---------------------------------
(alternative method elected)
Net capital as a percent of aggregate debit items 18.30%
Net capital $187,165
Required net capital $20,457
Raymond James Financial Services, Inc.:
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Ratio of aggregate indebtedness to net capital .93
Net capital $23,792
Required net capital $1,475
Comprehensive Income
Total comprehensive income for the three and six months ended March 26,
1999 and March 27, 1998 is as follows (in thousands):
Three Months Ended Six Months Ended
-------------------- --------------------
March 26, March 27, March 26, March 27,
1999 1998 1999 1998
--------- --------- --------- ---------
Net income $21,869 $24,700 $39,348 $47,445
Other comprehensive income:
Unrealized gains on securities (31) (46) (366) (15)
-------- -------- -------- --------
Total comprehensive income $21,838 $24,654 $38,982 $47,430
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MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
(Any statements containing forward looking information should be read in
conjunction with Management's Discussion and Analysis of Results of Operations
and Financial Condition in the Company's Annual Report on Form 10-K for the
year ended September 25, 1998).
Results of Operations - Three months ended March 26, 1999 compared with
- --------------------- three months ended March 27, 1998.
The record volumes in the extremely active equity markets more than offset
the Company's fall-off in investment banking activity and led to record
revenues of $299.2 million for the quarter, up 12% from $267.5 million in the
prior year. Margins declined from the prior year, however, largely due to the
lack of the aforementioned investment banking revenues. Accordingly, net
income of $21.9 million represents an 11% decline from the prior year's $24.7
million. Sequentially, the current quarter represented a substantial
improvement over the preceding quarter as some of the anomalous factors in the
December quarter were no longer present. Subsequent to quarter end the Company
entered into an agreement to purchase Roney & Co., a Detroit-based retail
brokerage firm with 320 Financial Advisors in 28 offices. See further
discussion under Commitments and Contingencies.
Securities commission revenues continued their steady increase, up 18%
over the same quarter of the prior year. The number of Financial Advisors has
increased 12% over the prior year, thus the balance of the increase reflects
productivity improvement. The Company's transaction volume was at record
levels with over one million trades processed in the quarter.
Investment banking results are 44% below the same quarter of the prior
year, directly related to the weakness in non-technology related small cap
stocks. The Company managed 6 deals with an average size of $108 million in
the quarter ended March 1999, versus 7 with an average size of $189 million in
the quarter ended March 1998. More significantly, the Company participated in
only 22 offerings during the quarter which were managed by other firms,
compared to 32 in the prior year quarter.
Assets under management exceeded $13 billion at the end of March 1999, a
19% increase over March 1998. The largest increases were in the Heritage Cash
Trust money market fund and Investment Advisory Services accounts, the
Company's program which offers the services of a variety of unaffiliated
portfolio management firms. Assets in small cap objectives have declined due
to both a decrease in market value and client liquidations.
March 26, March 27, % Increase
1999 1998 (Decrease)
Assets Under Management (000's): ----------- ----------- ----------
Eagle Asset Management, Inc. $ 5,310,000 $ 4,889,000 9%
Heritage Family of Mutual Funds 4,535,000 3,711,000 22%
Investment Advisory Services 2,515,000 1,425,000 76%
Awad Asset Management 651,000 859,000 (24%)
Carillon Asset Management 0 60,000 (100%)
Total Financial Assets Under ----------- -----------
Management $13,011,000 $10,944,000 19%
=========== ===========
Net interest income of nearly $18 million exceeds both the same quarter
prior year and the immediately preceding quarter, but has not yet reached the
record level attained in the September 1998 quarter. Customer cash and margin
debit balances increased during the quarter, but the Company used approximately
$23 million of its free cash to repurchase stock. Further, the rate earned on
free cash has declined as there were three 25 basis point reductions in short
term rates during the December quarter.
Financial service fees continue to increase with the growth in the number
of accounts which generate administrative fees for the Company such as IRA
accounts, trust accounts and Passport (wrap fee) accounts, the latter
generating transaction processing fees.
Employee compensation increased 14% over the same quarter in the prior
year, the combined result of an 18% increase in commission expense, a 14%
increase in administrative compensation and an 11% decline in incentive
compensation. The increased commission expense is directly related to the
increased securities commission revenue. Administrative expense reflects the
overall growth of backoffice and support staff required for current activity
levels, but was level with the immediately preceding quarter. Incentive
compensation expense is generally related to departmental and firm-wide
profitability.
Both data communications and occupancy costs are at a level exceeding the
prior year, reflecting the Company's growth. The expenses related to the
completion and occupancy of the third headquarters building in the late spring
of 1998 has significantly increased the Company's occupancy costs. An increase
in business volume has given rise to increased postage, printing, supplies and
telephone costs. This combined with the increased communication and
information dissemination costs associated with growth have led to the increase
in data communication expense.
Business development expense includes over $1 million in one-time expenses
such as replacement signage, business cards, stationary and marketing
materials, related to the merger of the Company's two independent contractor
broker-dealers into Raymond James Financial Services, Inc. Also included in
business development expenses are cost associated with the firm's branding
efforts, including television advertising and the stadium naming rights.
Results of Operations - Six months ended March 26, 1999 compared with six
- ----------------------- months ended March 27, 1998.
The results from the six month periods reflect the same trend as those for
the comparative quarterly results. Revenues for the six months ended March 26,
1999 were up 8% to $563,698,000, while net income declined 17% to $39,348,000,
or $0.81 per share compared to $0.96 per share.
(The underlying reasons for most of the variances to the prior year period
are substantially the same as the comparative quarterly discussion above and
the statements contained in such foregoing discussion also apply to the six
month comparison. Therefore, this section is limited to the discussion of
additional factors influencing the comparative six month results.)
Year to date net trading profits include $3.6 million in profits for the
Company's own investment account, predominately realized in the first quarter.
Despite significant increases in client balances, net interest income is
roughly flat with the prior year due to the combined effects of a dip in margin
balances early in the year, spread compression during the first quarter of the
current year, and a decline in short-term rates earned on free cash.
Segment Information
- -------------------
The company's reportable segments are: retail distribution, institutional
distribution, investment banking, asset management and other. Segment data
include charges allocating corporate overhead to each segment. Intersegment
revenues and charges are eliminated between segments. The Company has not
disclosed asset information by segment as the information is not produced
internally.
Information concerning operations in these segments of business is as
follows:
Three Months Ended Six Months Ended
-------------------- --------------------
March 26, March 27, March 26, March 27,
1999 1998 1999 1998
Revenues: (000's) --------- --------- --------- ---------
- ---------
Retail distribution $205,070 $172,080 $378,852 $337,243
Institutional distribution 41,452 38,113 83,622 74,824
Investment banking 7,955 15,288 12,800 29,289
Asset management 23,508 19,983 44,900 37,935
Other 21,206 22,066 43,524 40,551
--------- -------- --------- --------
Total $299,191 $267,530 $563,698 $519,842
========= ======== ========= ========
Pre-tax Income: (000's)
- ---------------
Retail distribution $ 24,910 $ 18,227 $ 39,266 $ 39,855
Institutional distribution 4,170 5,505 9,738 11,622
Investment banking 1,060 7,821 (86) 13,167
Asset management 5,411 4,728 9,977 9,330
Other (232) 4,253 4,761 3,447
--------- -------- --------- --------
Total $ 35,319 $ 40,534 $ 63,656 $ 77,421
========= ======== ========= ========
Financial Condition
- -------------------
The Company's total assets have increased 28% since fiscal year end,
reaching a record $4.9 billion. The rise was due to increases in matched-book
stock loan program balances, and increased customer margin loan and cash
balances. Customer cash balances are reflected as a customer payable, and the
corresponding assets are included in assets segregated pursuant to Federal
Regulations. Customer margin loan balances are included in client receivables.
Loans payable at March 26, 1999 includes $140 million related to short-
term borrowings under existing lines of credit in order to accommodate customer
settlement activity, and $60 million to finance customer borrowing in a
Regulation G subsidiary, which provides loans collateralized by restricted or
control shares of public companies.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities for the six months was
$86,745,000. The primary source of this increase was the aforementioned
increased customer cash balances, net of increased margin loans, which does not
give rise to cash available for use in normal operations due to regulatory
segregation requirements.
Investing and financing activities provided a net additional $161,995,000
over the last six months . The source of the additional cash was the short
term borrowings from banks under existing credit lines. The primary uses were
purchases of treasury stock, purchases of property and equipment and the
payment of cash dividends.
The Company has two committed lines of credit. The parent company has an
unsecured $50 million line for general corporate purposes. In addition, a $60
million line was established to finance Raymond James Credit Corporation, a
Regulation G subsidiary which provides loans collateralized by restricted or
control shares of public companies. The latter line is fully utilized and is
included in loans payable. In addition, Raymond James & Associates, Inc. has
uncommitted lines of credit aggregating $360 million.
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).
Year 2000
- ---------
The widespread use of computer programs that rely on two-digit date
programs to perform computations and decision-making functions may cause
computer systems to malfunction in the year 2000 and lead to significant
business delays and disruptions in the U.S. and internationally.
The Company has revised all critical information technology (IT) internal
computer code that it has identified as requiring modification for Year 2000
compliance, and has begun full integration testing of the revised code; testing
will continue during the third quarter of fiscal 1999. All of the Company's
securities transactions are processed on software provided by Securities
Industry Software (SIS), a subsidiary of Automatic Data Processing, Inc., and
the Company is closely monitoring the progress of SIS in revising its software.
Based on information received to date, the Company believes that SIS will
complete revision and testing of its software on a timely basis. The Company
is also monitoring information received from third-party vendors regarding
their progress in modification of other software used by the Company, as well
as the progress of other industry suppliers, in addressing this issue.
With respect to non-IT systems, primarily those located at its
headquarters campus and those provided by its telecommunications and satellite
service providers, the Company has completed the inventory of all systems and
has begun the process of confirming the compliance status of its vendors. Most
of these vendors are major national or international companies which have been
addressing the Year 2000 issue for some time. The Company expects to complete
this process of third-party review by August of 1999.
With the exception of those discussed below, all of the Company's
subsidiaries are substantially dependent upon the Company's Year 2000
compliance program. Raymond James Bank, Raymond James Trust Company and
Heritage Asset Management, Inc. have received revised computer software from
the third-party vendors on whom they are dependent and have begun the testing
process, which they anticipate will be completed by July of 1999. Eagle Asset
Management, Inc. has installed a new portfolio management system which has been
designed to be Year 2000 compliant and expects to complete system testing by
July of 1999.
The Company has begun the process of developing contingency plans and will
continue this process during the balance of the year.
The securities industry conducted a series of industry-wide tests for Year
2000 compliance during the spring of 1999; the Company participated in all
tests and did not experience any material problems relating to its year 2000
code and data revisions. In general, representatives of the securities
industry were satisfied that the tests confirmed substantial success in dealing
with the year 2000 issue. The testing process did identify a number of minor
communications problems, most of them unrelated to year 2000 issues; these
problems were identified and successfully resolved during the course of the
testing.
The Company estimates that its costs for these efforts during this fiscal
year will be approximately $2,500,000, and an additional $800,000 will be spent
during fiscal 2000. Because many of the Company's basic operating systems are
provided by third party vendors, as indicated above, the Company's costs for
Year 2000 remediation have been substantially less than the costs incurred by
companies which have developed and maintain all their own operating systems.
The impact of this problem on the securities industry will be material,
however, since virtually every aspect of the sale of securities and the
processing of transactions will be affected. Due to the enormous task facing
the securities industry, the interdependent nature of securities transactions,
and reliance on third parties such as utilities, and telecommunications
providers, the Company may be adversely affected by this problem in the Year
2000 depending on whether it and the entities with whom it does business
address this issue successfully.
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, communications and occupancy, which
may not be readily recoverable through charges for services provided by the
Company.
RAYMOND JAMES FINANCIAL, INC.
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
----------------------- ----------------------
March 26, March 27, March 26, March 27,
1999 1998 1999 1998
---------- --------- --------- ---------
Net income $21,869 $24,700 $39,348 $47,445
======= ======= ======= =======
Weighted average common
shares outstanding during
the period (2) 47,697 48,158 47,908 47,953
Additional shares assuming
exercise of stock
options and warrants (1)(2) 795 1,357 897 1,280
======= ======= ======= =======
Weighted average diluted common
shares (2) 48,492 49,515 48,805 49,233
======= ======= ======= =======
Net income per share-basic (2) $ .46 $ .51 $ .82 $ .99
======= ======= ======= =======
Net income per share-diluted(2)$ .45 $ .50 $ .81 $ .96
======= ======= ======= =======
(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.
(2) Gives effect to the 3-for-2 stock split paid to shareholders on April
2, 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.
RAYMOND JAMES FINANCIAL, INC.
-----------------------------
(Registrant)
Date: May 7, 1999 /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