SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
______________________________________________________________________
(Exact name of registrant as specified in its charter)
MISSOURI 43-1450818
______________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 851-2000
__________________
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 the filing date, there are no voting
securities held by non-affiliates of the Registrant.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Financial Condition 3
Consolidated Statement of Income 5
Consolidated Statement of Cash Flows 6
Consolidated Statement of Changes in Partnership Capital 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II.OTHER INFORMATION
Item 1. Legal Proceedings 12
Signatures 13
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ASSETS
March 31, December 31,
(Amounts in thousands) 1995 1994
Cash and cash equivalents $ 33,420 $ 36,682
Receivable from:
Customers 459,236 497,961
Brokers or dealers and clearing
organization deposits 23,045 16,604
Securities owned, at market value:
Trading securities 74,685 91,308
Investment securities 130,058 137,066
Office equipment, property and improvements,
at cost, net of accumulated depreciation
and amortization of $99,574 in 1995 and
$81,895 in 1994 130,378 125,764
Other assets 44,655 47,974
_________ _________
$ 895,477 $953,359
======== ========
The accompanying notes are an integral part of these financial
statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
March 31, December 31,
(Amounts in thousands) 1995 1994
Bank loans $ 160,800 $165,000
Payable to:
Customers 254,234 293,324
Brokers or dealers and clearing
organizations 8,457 13,225
Securities sold but not yet purchased,
at market value 21,028 16,037
Accounts payable and accrued expenses 44,759 39,425
Accrued compensation and employee benefits 45,793 58,046
Long-term debt 41,674 41,779
_________ _________
576,745 626,836
Liabilities subordinated to claims
of general creditors 129,000 136,000
Partnership capital 189,732 190,523
_________ _________
$ 895,477 $953,359
======== ========
The accompanying notes are an integral part of these financial
statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended
(Amounts in thousands, March 31, March 25
except per unit information) 1995 1994
Revenues:
Commissions $ 87,655 $112,718
Principal transactions 40,713 24,406
Investment banking 9,822 7,129
Interest and dividends 13,521 9,065
Other 8,728 8,095
_________ _________
160,439 161,413
_________ _________
Expenses:
Employee and partner compensation
and benefits 90,254 96,607
Occupancy and equipment 19,326 17,028
Communications and data processing 13,063 10,122
Interest 7,928 5,335
Payroll and other taxes 7,186 6,519
Floor brokerage and clearance fees 1,407 1,385
Other operating expenses 12,335 10,682
_________ _________
151,499 147,678
_________ _________
Net income $ 8,940 $ 13,735
========= =========
Net income allocated to:
Limited partners $ 1,311 $ 2,077
Subordinated limited partners 967 1,360
General partners 6,662 10,298
_________ _________
$ 8,940 $ 13,735
========= =========
Net income per weighted average $1,000
equivalent partnership unit outstanding:
Limited partners $ 21.13 $ 32.66
========= =========
Subordinated limited partners $ 36.32 $ 62.82
========= =========
Weighted average $1,000 equivalent
partnership units outstanding:
Limited partners $ 62,024 $ 63,854
========= =========
Subordinated limited partners $ 26,625 $ 21,469
========= =========
The accompanying notes are an integral part of these financial
statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31, March 25,
(Amounts in thousands) 1995 1994
Cash Flows Provided (Used) by Operating
Activities:
Net income $ 8,940 $ 13,735
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Depreciation and amortization 5,000 4,862
Increase in net receivable from/payable to
customers (365) (38,762)
(Increase) decrease in net receivable from/
payable to brokers or dealers and clearing
organizations (11,209) 9,544
Decrease in securities owned, net 28,622 10,952
Decrease in accounts payable, and other
accrued expenses (6,919) (15,009)
Decrease in other assets 3,319 1,579
_________ _________
Net cash provided (used) by operating
activities 27,388 (13,099)
_________ _________
Cash Flows Used by Investing Activities:
Purchase of equipment, property and
improvements (9,614) (16,655)
_________ _________
Cash Flows (Used) Provided by Financing
Activities:
(Decrease) increase in bank loans (4,200) 56,553
Issuance of long-term debt - 3,569
Repayment of long-term debt (105) (227)
Repayment of subordinated debt (7,000) (14,000)
Issuance of partnership interests 4,651 4,436
Redemption of partnership interests (621) (813)
Withdrawals and distributions from
partnership capital (13,761) (16,782)
_________ _________
Net cash (used) provided by financing
activities (21,036) 32,736
_________ _________
Net (decrease) increase in cash and cash
equivalents (3,262) 2,982
Cash and Cash Equivalents, beginning of period 36,682 28,798
_________ _________
Cash and Cash Equivalents, end of period $ 33,420 $ 31,780
======== =========
Interest payments for the periods were $4,907 and $2,877.
The accompanying notes are an integral part of these financial
statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
THREE MONTHS ENDED MARCH 31, 1995, AND MARCH 25, 1994
(Unaudited)
Subordinated
Limited limited General
partnership partnership partnership
(Amounts in thousands) capital capital capital Total
Balance, December 31, 1993 $ 71,222 $ 19,163 $ 89,390 $179,775
Issuance of partnership
interests - 4,349 - 4,349
Redemption of partnership
interests (526) (200) - (726)
Net income 2,077 1,360 10,298 13,735
Withdrawals and
distributions (6,941) (1,812) (8,029) (16,782)
________ ________ ________ ________
Balance, March 25, 1994 $ 65,832 $ 22,860 $ 91,659 $180,351
Balance, December 31, 1994 $ 67,461 $ 23,722 $ 99,340 $190,523
Issuance of partnership
interests - 4,651 - 4,651
Redemption of partnership
interests (621) - - (621)
Net income 1,311 967 6,662 8,940
Withdrawals and
distributions (5,083) (1,688) (6,990) (13,761)
________ ________ ________ _______
Balance, March 31, 1995 $ 63,068 $ 27,652 $ 99,012 $189,732
The accompanying notes are an integral part of these financial
statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of The Jones Financial Companies, A Limited Partnership and
all wholly owned subsidiaries (The "Partnership"), including the
Partnership's principal subsidiary, Edward D. Jones & Co., L.P.,
("EDJ"), a registered broker/dealer.
The financial information included herein is unaudited. However,
in the opinion of management, such information includes all
adjustments, consisting solely of normal recurring accruals, which are
necessary for a fair presentation of the results of interim
operations.
Certain 1994 amounts have been reclassified to conform to 1995
financial statement presentation.
The results of operations for the three months ended March 31,
1995, are not necessarily indicative of the results to be expected for
the full year.
NET CAPITAL REQUIREMENTS
As a result of its activities as a registered broker/dealer, EDJ
is subject to the Net Capital requirements of the Securities and
Exchange Commission and the New York Stock Exchange. Under the
alternative method permitted by the rules, EDJ is required to maintain
minimum Net Capital of 2% of aggregate debit items arising from
customer transactions. The Net Capital rules also provide that EDJ
may not expand its business nor may partnership capital be withdrawn
if resulting Net Capital would be less than 5% of aggregate debit
items. At March 31, 1995, EDJ's Net Capital of $157.8 million was 34%
of aggregate debit items and its Net Capital in excess of the minimum
required was $148.7 million.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
MANAGEMENT'S FINANCIAL DISCUSSION
OPERATIONS
QUARTER ENDED MARCH 31, 1995, VERSUS
QUARTER ENDED MARCH 25, 1994
The Partnership has experienced significant growth in its
salesforce in recent years, averaging 23% over the last three years.
The Partnership anticipates limited or no change in the salesforce
growth in 1995. The number of investment representatives increased
14% to 3,252 as of March 31, 1995, from 2,856 as of March 25, 1994.
With the flattening of the yield curve during the past year, the
product mix has shifted away from mutual funds and to shorter term
fixed income products including corporate bonds, government bonds,
municipal bonds, and certificates of deposit which carry lower margins
compared with longer term investments and equities. Lower margins
have not been offset by the growth in the salesforce. Overall
revenues decreased slightly from the level attained in the first
quarter of 1994.
Total revenues decreased 1% ($1.0 million) to $160.4 million
compared to the quarter ended March 25, 1994. Expenses increased 3%
($3.8 million) to $151 million. As a result, net income decreased by
$4.8 million to $8.9 million.
Commission revenues decreased 22% ($25.1 million). Mutual fund
commissions declined 36% ($24.2 million) and were the major
contributor to the decrease. Annuity revenues decreased 9% ($1.6
million). Listed and over-the-counter (O-T-C) agency equity
commission revenues increased 4% ($.9 million). As the yield curve
flattened, investors were attracted to shorter term fixed income
products rather than to mutual funds.
Principal transaction revenues increased 67% ($16.3 million) to
$40.7 million for the period. Government bond principal revenue
increased 330% ($6.1 million) and municipal bond principal revenue
increased 27% ($2.9 million). Corporate bond principal revenues
increased 54% ($2.2 million).
Investment banking revenues increased 38% ($2.7 million) to $9.8
million for the period. Certificate of deposit revenues increased
substantially 185% ($3.9 million). With uncertainty as to the
direction of interest rates, investors were attracted to certificates
of deposit. Higher interest rates throughout the quarter reduced debt
and equity origination revenues 42% ($1.5 million).
Interest and dividend income increased 49% ($4.5 million) to
$13.5 million due to a 41% ($2.9 million) increase in interest income
earned on margin balances as a result of higher interest rates. U.S.
Government and agency interest income increased 85% ($1.2 million)
from larger investment security positions purchased by the Partnership
with subordinated debt proceeds from the second quarter of 1994.
Compensation costs decreased 7% ($6.4 million) compared to the
same period last year. Commissions decreased due to lower revenues.
Sales bonuses, sales incentives and profit sharing provisions were
lower due to lower profit margins and net income. Salaries and wages
earned by non-sales personnel were higher during the period due to
increases in personnel necessary to support an increased sales force.
Of the Partnership's remaining expenses, the most significant
changes were seen in occupancy, equipment, communications and data
processing expenses in order to support an expanding number of offices
and branch network.
LIQUIDITY AND CAPITAL ADEQUACY
The Partnership's equity capital at March 31, 1995, was $189.7
million compared to $180.4 million as of March 25, 1994. General
partnership capital increased $7.4 million due to retention of
earnings and to an increase in distributable profits. Subordinated
limited partnership capital increased $5.5 million due to capital
contributions. Limited partnership capital decreased $2.8 million
primarily due to withdrawals and distributions of earnings.
At March 31, 1995, the Partnership had $33.4 million in cash and
cash equivalents. Lines of credit are in place at ten banks
aggregating $615 million ($570 million of which are through
uncommitted lines of credit). Actual borrowing availability is
primarily based on securities owned and customers' margin securities.
Subordinated debt has decreased by $7 million due to the maturity
of one of the Partnership's issues. The Partnership believes that the
liquidity provided by existing cash balances and borrowing
arrangements will be sufficient to meet the Partnership capital and
liquidity requirements.
CASH FLOWS
Cash and cash equivalents decreased $3.3 million from December
31, 1994 to March 25, 1995. Cash flows provided were primarily from
net income, depreciation, decreases in securities owned, decrease in
other assets and the issuance of partnership interests. Cash was
primarily used to fund increased receivables from brokers and dealers,
reduce accounts payable, purchase fixed assets, repay bank loans,
long-term debt, and subordinated debt, and to fund withdrawals and
distributions.
There were no material changes in the partnership's overall
financial condition during the three months ended March 31, 1995,
compared with the three months ended March 25, 1994. The
Partnership's balance sheet is comprised primarily of cash and assets
readily convertible into cash. Securities inventories are carried at
market values and are readily marketable. Customer margin accounts
are collateralized by marketable securities. Other customer
receivables and receivables and payables with other broker/dealers
normally settle on a current basis. Liabilities, including amounts
payable to customers, checks and accounts payable and accrued expenses
are non-interest bearing sources of funds to the Partnership. These
liabilities, to the extent not utilized to finance assets, are
available to meet liquidity needs and provide funds for short term
investments, which favorably impacts profitability.
The Partnership's growth in recent years has been financed
through sales of limited partnership interests to its employees,
retention of earnings, and private placements of long-term and
subordinated debt.
The Partnership's principal subsidiary, Edward D. Jones & Co.,
L.P., ("EDJ") as a securities broker/dealer, is subject to the
Securities and Exchange Commission regulations requiring EDJ to
maintain certain liquidity and capital standards. EDJ has been in
compliance with these regulations at all times.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
Item 1: Legal Proceedings
There have been no material changes in the legal proceedings
previously reported.
Item 5: Other Information
For purposes of complying with the amendments to the rules
governing Form S-8 under the Securities Act of 1933, the registrant
hereby undertakes as follows, which undertaking shall be incorporated
by reference into it, Registration Statement of Form S-8 (File No. 33-
35247):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefor, unenforceable. In the event that claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Reference is made to the Exhibit Index contained hereinafter..
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended March 31,
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.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
(Registrant)
Dated: May 12, 1995 /s/ John W. Bachmann
_____________________
John W. Bachmann
Managing Partner
Dated: May 12, 1994 /s/ Steven Novik
_____________________
Steven Novik
Chief Financial Officer
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.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
(Registrant)
Dated: May 12, 1995 _____________________
John W. Bachmann
Managing Partner
Dated: May 12, 1994 _____________________
Steven Novik
Chief Financial Officer
EXHIBIT INDEX
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
For the quarter ended March 25, 1995
Exhibit No. Description Page
10.1 Loan Agreement between Edward D. Jones
& Co., L.P. and Boatmen's Bank dated
April 28, 1995.