UNITED STATES
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 SEPTEMBER 28, 2001 Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, L.L.L.P.
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(Exact name of registrant as specified in its charter)
MISSOURI 43-1450818
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12555 Manchester Road
St. Louis, Missouri 63131
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
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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, L.L.L.P.
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition.................................3
Consolidated Statements of Income .............................................5
Consolidated Statements of Cash Flows..........................................6
Consolidated Statements 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............................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk.....................15
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..............................................................16
Item 6. Exhibits and Reports on Form 8-K ..............................................16
Signatures.....................................................................17
2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
(Unaudited)
September 28, December 31,
(Amounts in thousands) 2001 2000
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 165,022 $ 176,356
Receivable from:
Customers 1,849,684 2,008,469
Brokers, dealers and clearing organizations 60,199 80,626
Mortgages and loans 99,644 98,946
Securities owned, at market value:
Inventory securities 126,283 118,260
Investment securities 189,604 203,741
Equipment, property and improvements 281,795 248,290
Other assets 248,353 235,697
------------ ------------
Total assets $ 3,020,584 $ 3,170,385
============ ============
The accompanying notes are an integral part of these financial statements.
3
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
(Unaudited)
September 28, December 31,
(Amounts in thousands) 2001 2000
- -------------------------------------------------------------------------------------------------------
Bank loans $ 285,768 $ 218,314
Securities sold under agreements to repurchase - 24,969
Securities loaned 134,812 140,596
Payable to:
Customers 1,229,750 1,382,088
Brokers, dealers and clearing organizations 34,168 22,268
Depositors 100,689 87,550
Securities sold, not yet purchased, at market value 13,596 18,064
Accounts payable and accrued expenses 143,553 126,119
Accrued compensation and employee benefits 192,187 232,993
Long-term debt 22,658 29,618
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2,157,181 2,282,579
------------ ------------
Liabilities subordinated to claims of general creditors 205,600 232,325
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Partnership capital 634,016 603,090
Partnership capital reserved for anticipated withdrawals 23,787 52,391
------------ ------------
Total partnership capital 657,803 655,481
------------ ------------
Total liabilities and partnership capital $ 3,020,584 $ 3,170,385
============ ============
The accompanying notes are an integral part of these financial statements
4
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
(Amounts in thousands, September 28, September 29, September 28, September 29,
except per unit information) 2001 2000 2001 2000
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Net revenue:
Commissions $ 302,744 $ 336,311 $ 947,392 $ 1,088,077
Principal transactions 94,946 64,917 256,489 202,299
Investment banking 6,167 4,071 15,814 20,624
Interest and dividends 43,368 58,416 139,538 163,641
Other 81,242 68,149 237,083 202,034
------------ ------------ ------------ ------------
Total revenue 528,467 531,864 1,596,316 1,676,675
Interest expense 16,472 22,828 51,991 63,548
------------ ------------ ------------ ------------
Net revenue 511,995 509,036 1,544,325 1,613,127
------------ ------------ ------------ ------------
Operating expenses:
Compensation and benefits 299,964 293,888 893,619 947,144
Communications and data processing 59,377 51,994 168,441 157,285
Occupancy and equipment 53,812 47,959 155,307 133,962
Payroll and other taxes 17,044 14,467 61,224 52,625
Floor brokerage and clearance fees 3,181 4,341 10,885 13,624
Other operating expenses 44,679 45,796 142,421 126,131
------------ ------------ ------------ ------------
Total operating expenses 478,057 458,445 1,431,897 1,430,771
------------ ------------ ------------ ------------
Net income $ 33,938 $ 50,591 $ 112,428 $ 182,356
============ ============ ============ ============
Net income allocated to:
Limited partners $ 5,200 $ 7,308 $ 17,349 $ 22,528
Subordinated limited partners 3,380 4,549 11,364 17,070
General partners 25,358 38,734 83,715 142,758
------------ ------------ ------------ ------------
$ 33,938 $ 50,591 $ 112,428 $ 182,356
============ ============ ============ ============
Net income per weighted average $1,000
equivalent partnership unit outstanding:
Limited partners $ 22.04 $ 39.61 $ 73.02 $ 142.19
============ ============ ============ ============
Subordinated limited partners $ 40.79 $ 70.20 $ 138.26 $ 273.93
============ ============ ============ ============
Weighted average $1,000 equivalent
partnership units outstanding:
Limited partners 235,935 162,922 237,592 150,314
============ ============ ============ ============
Subordinated limited partners 82,855 62,948 82,188 61,656
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 28, September 29,
(Amounts in thousands) 2001 2000
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Cash Flows Provided by Operating Activities:
Net income $ 112,428 $ 182,356
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 53,710 49,030
Changes in assets and liabilities:
Securities purchased under agreements to resell - 75,000
Securities sold under agreement to repurchase (24,969) (164,911)
Net receivable from customers 6,447 (526,330)
Net receivable from brokers, dealers
and clearing organizations 32,327 1,178
Receivable from mortgages and loans (698) (20,398)
Securities owned, net 1,646 (5,361)
Other assets (12,656) (46,778)
Bank loans 67,454 412,781
Securities loaned (5,784) 95,126
Payables to depositors 13,139 5,536
Accounts payable and other accrued expenses (23,372) 67,846
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Net cash provided by operating activities 219,672 125,075
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Cash Flows Used in Investing Activities:
Net purchase of equipment, property and improvements (87,215) (69,716)
------------ ------------
Net cash used in investing activities (87,215) (69,716)
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Cash Flows Used in Financing Activities:
Repayment of long-term debt (6,960) (3,654)
Repayment of subordinated debt (26,725) (26,725)
Issuance of partnership interests 12,450 114,014
Redemption of partnership interests (4,630) (3,219)
Withdrawals and distributions from
partnership capital (117,926) (151,005)
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Net cash used in financing activities (143,791) (70,589)
------------ ------------
Net decrease in cash and cash equivalents (11,334) (15,230)
Cash and Cash Equivalents, beginning of period 176,356 142,545
------------ ------------
Cash and Cash Equivalents, end of period $ 165,022 $ 127,315
============ ============
Cash paid for interest $ 54,107 $ 65,085
============ ============
The accompanying notes are an integral part of these financial statements.
6
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL
NINE MONTHS ENDED SEPTEMBER 28, 2001 AND SEPTEMBER 29, 2000
(Unaudited)
Subordinated
Limited limited General
partnership partnership partnership
(Amounts in thousands) capital capital capital Total
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Balance, December 31, 1999 $ 149,009 $ 52,463 $ 243,665 $ 445,137
Net income 22,528 17,070 142,758 182,356
Issuance of partnership interests 95,572 18,442 - 114,014
Redemption of partnership interests (2,719) (500) - (3,219)
Withdrawals and distributions (1,220) (15,283) (88,105) (104,608)
Reserved for anticipated withdrawals (21,308) (1,787) (15,252) (38,347)
------------ ------------ ------------ ------------
Balance, September 29, 2000 $ 241,862 $ 70,405 $ 283,066 $ 595,333
============ ============ ============ ============
Balance, December 31, 2000 $ 240,144 $ 70,405 $ 292,541 $ 603,090
Net income 17,349 11,364 83,715 112,428
Issuance of partnership interests - 12,450 - 12,450
Redemption of partnership interests (4,630) - - (4,630)
Withdrawals and distributions (1,306) (10,688) (53,541) (65,535)
Reserved for anticipated withdrawals (16,043) (676) (7,068) (23,787)
------------ ------------ ------------ ------------
Balance, September 28, 2001 $ 235,514 $ 82,855 $ 315,647 $ 634,016
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
7
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of The Jones Financial Companies, L.L.L.P. and all wholly owned
subsidiaries (the "Partnership"). All material intercompany balances and
transactions have been eliminated. Investments in nonconsolidated companies
which are at least 20% owned are accounted for using the equity method.
The Partnership's principal operating subsidiary, Edward D. Jones &
Co., L.P. ("EDJ"), is engaged in business as a registered broker/dealer
primarily serving individual investors. The Partnership derives its revenues
from the sale of listed and unlisted securities and insurance products,
investment banking and principal transactions and is a distributor of mutual
fund shares. The Partnership conducts business throughout the United States,
Canada and the United Kingdom with its customers, various brokers, dealers,
clearing organizations, depositories and banks.
The financial statements have been prepared using the accrual basis
of accounting which requires the use of certain estimates by management in
determining the Partnership's assets, liabilities, revenues and expenses.
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.
The results of operations for the nine months ended September 28,
2001 and September 29, 2000 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 broker/dealer, EDJ is subject to
the Net Capital provisions of Rule 15c3-1 of the Securities Exchange Act of
1934 and the capital rules of the New York Stock Exchange. Under the
alternative method permitted by the rules, EDJ must maintain minimum Net
Capital, as defined, equal to the greater of $250,000 or 2% of aggregate
debit items arising from customer
8
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
transactions. The Net Capital rule also provides that partnership capital
may not be withdrawn if resulting Net Capital would be less than 5% of
aggregate debit items. Additionally, certain withdrawals require the consent
of the SEC to the extent they exceed defined levels even though such
withdrawals would not cause Net Capital to be less than 5% of aggregate
debit items.
At September 28, 2001, EDJ's Net Capital of $339.3 million was 19%
of aggregate debit items and its Net Capital in excess of the minimum
required was $303.4 million. Net Capital as a percentage of aggregate debits
after anticipated withdrawals was 19%. Net Capital and the related capital
percentage may fluctuate on a daily basis.
The firm has other operating subsidiaries, including Boone National
Savings and Loan Association, F.A. (the "Association") and broker/dealer
subsidiaries in Canada and the United Kingdom. These wholly owned
subsidiaries are required to maintain specified levels of liquidity and
capital standards. Each subsidiary is in compliance with the applicable
regulations as of September 28, 2001.
9
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion And Anaylsis Of Financial Condition And
Results Of Operations
THE JONES FINANCIAL COMPANIES, L.L.L.P.
MANAGEMENT'S FINANCIAL DISCUSSION
QUARTER AND NINE MONTHS ENDED SEPTEMBER 28, 2001, VERSUS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 29, 2000
RESULTS OF OPERATIONS
For the third quarter of 2001, compared to the third quarter of
2000, total revenue decreased 1% ($3.4 million) to $528.5 million and net
income decreased 33% ($16.7 million) to $33.9 million. For the nine months
ended September 28, 2001, total revenue decreased 5% ($80.4 million) to $1.6
billion, and net income decreased 38% ($69.9 million) to $112.4 million. The
decrease in revenue and net income is due primarily to the impact of market
conditions which resulted in lower customer activity, lower customer asset
values, and lower net interest income.
The partnership segments its revenues between trade revenue
(revenue from buy or sell transactions on securities) and fee revenue
(sources other than trade revenues). Trade revenue comprised 63% and 62% of
total revenue for the third quarters of 2001 and 2000, respectively, and 63%
and 65% for the first nine months of 2001 and 2000, respectively. Fee
revenue sources, such as service fees, management fees, IRA fees and
interest income, represented the remaining 37% and 38% for the third
quarters of 2001 and 2000, respectively, and 37% and 35% for the first nine
months of 2001 and 2000, respectively.
Trade revenue decreased $1.0 million during the third quarter and
8% ($88.4 million) during the first nine months of 2001. Trade revenue
decreased primarily due to a decrease in customer dollars invested. Total
customer dollars invested were $12.1 billion and $37.7 billion during the
third quarter and first nine months of 2001, respectively, representing a
14% ($1.9 billion) and 22% ($10.8 billion) decrease from the comparable
prior year periods. The impact of lower customer activity was partially
offset by an increase in the margin earned on each $1,000 invested, to
$26.00 in the first nine months of 2001 from $22.10 in the first nine months
of 2000. Year over year, the composition of the product mix has shifted from
individual equities and CDs, which have lower margins, to higher margin
mutual funds, fixed income and insurance products. The number of investment
representatives ("IRs") selling increased by 1,232 (17%) from 7,045 as of
September 2000 to 8,277 as of September 2001.
10
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion And Anaylsis Of Financial Condition And
Results Of Operations
Fee revenue sources, which include service fees, revenue sharing
agreements with mutual funds and insurance companies, interest income, IRA
custodial fees and other fees, decreased 1% ($2.4 million) for the quarter
and increased 1% ($8.0 million) for the nine months ended September 28,
2001. Service fees decreased 2% ($1.4 million) for the quarter and 2% ($3.6
million) year to date as the underlying assets have been negatively impacted
by market conditions. Interest income decreased 26% ($15.0 million) for the
third quarter and 15% ($24.1 million) year to date due to the impact of rate
reductions in the current year and to a decrease in customer loans
outstanding. Customer loans were $2.1 billion at September 27, 2000 compared
to $1.8 billion at September 28, 2001. Other fee revenue sources increased
21% ($14.1 million) for the quarter and 18% ($35.7 million) for the nine
month period due primarily to growth in revenue from money market fees,
subtransfer agent services and IRA fees.
Focusing on changes in major revenue categories, commissions
revenue, including service fees, decreased 10% ($33.6 million) during the
third quarter and 13% ($140.7 million) during the first nine months of 2001.
Listed and over-the-counter (OTC) agency commissions decreased 31% ($30.0
million) for the quarter and 35% ($118.2 million) for the first nine months,
accounting for 89% and 84%, respectively, of the total decrease in
commissions revenue. Mutual fund commissions decreased 3% ($5.9 million) for
the quarter and 3% ($17.1 million) for the first nine months, accounting for
18% and 12%, respectively, of the total decrease in commissions revenue.
Principal transactions revenue increased 51% ($32.0 million) during
the third quarter and 28% ($56.1 million) during the first nine months of
2001. The increase is primarily attributable to an increase in corporate, US
government and municipal bonds, and mortgage-backed securities, offset by a
decrease in CD sales.
Other revenue, comprised of various fee revenue sources, increased
19% ($13.1 million) for the quarter and 17% ($35.0 million) for the first
nine months of 2001. Revenue received from money market and subtransfer
agent services increased 16% ($8.5 million) for the quarter and 16% ($24.8
million) for the first nine months. Additionally, the number of IRA accounts
increased, resulting in custodial fee revenue growth of 32% ($2.1 million)
for the quarter and 26% ($6.0 million) for the first nine months.
Interest expense decreased 28% ($6.4 million) during the quarter
and 18% ($11.6 million) for the nine months ended September 28, 2001, due to
a decrease in bank loans outstanding and lower interest rates. The decrease
in bank loans outstanding is a result of the decrease in customer loans
outstanding, as discussed above.
11
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion And Anaylsis Of Financial Condition And
Results Of Operations
Operating expenses increased 4.3% ($19.6 million) to $478.1 million
during the quarter, and increased 0.1% ($1.1 million) to $1.4 billion for
the nine months ended September 28, 2001. Within operating expenses,
compensation costs increased 2% ($6.1 million) for the quarter and decreased
6% ($53.5 million) for the nine month period. Sales compensation decreased
5% ($25.5 million) for the nine months ended September 28, 2001 as trade
revenue and service fees decreased 7% ($92.0 million) on a year to date
basis. Variable compensation, including bonuses and profit sharing paid to
investment representatives ("IRs"), branch office assistants and
headquarters associates, which expands and contracts in relation to
revenues, net income and profit margin, decreased 46% ($17.9 million) for
the quarter and 55% ($89.6 million) year to date due to the lower revenue
and earning levels. Offsetting these decreases in compensation expense was
an increase in payroll expense for existing personnel and additional support
personnel at both the headquarters and in the branches due to growth in the
sales force. On a full time equivalent basis, the firm had 3,732
headquarters associates and 8,503 branch staff as of September 28, 2001,
compared to 3,435 headquarters associates and 7,371 branch staff as of
September 29, 2000. The Partnership added 1,232 IRs since September 29,
2000, ending the third quarter with 8,277 IRs in the United States, Canada
and the United Kingdom.
Occupancy and equipment expenses increased 12% ($5.9 million) for
the quarter and 16% ($21.3 million) year to date. Communications and data
processing expenses increased 14% ($7.4 million) and 7% ($11.1 million) for
the quarter and nine months ended September 28, 2001. The increases are due
to the Partnership continuing to expand its headquarters and branch
locations to enable it to continue to increase its number of IRs, locations
and customers.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's equity capital at September 28, 2001, excluding the
reserve for anticipated withdrawals, was $634.0 million, compared to $603.1
million at December 31, 2000. Equity capital has increased primarily due to
retention of General Partner earnings ($23.1 million) and to an increase in
Subordinated Limited Partner capital ($12.5 million), offset by redemption
of Limited Partner interests ($4.6 million).
At September 28, 2001, the Partnership had $165 million in cash and
cash equivalents. Lines of credit are in place aggregating $1.145 billion
($1.095 billion of which is through uncommitted lines of credit). Actual
borrowing availability is based on securities owned and customers' margin
securities which serve as collateral for the loans.
12
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion And Anaylsis Of Financial Condition And
Results Of Operations
A substantial portion of the Partnerships' assets are primarily
liquid, consisting mainly of cash and assets readily convertible into cash.
These assets are financed primarily by customer credit balances, equity
capital, bank lines of credit and other payables. The Partnership has $189.6
million in U.S. agency and treasury securities (Investment Securities) which
can be sold to meet liquidity needs. The Partnership believes that the
liquidity provided by existing cash balances, borrowing arrangements, and
investment securities will be sufficient to meet the Partnership capital and
liquidity requirements.
The Partnership's growth in recent years has been financed through
sales of limited partnership interests to its employees, retention of
earnings, private placements of subordinated debt and operating leases under
which the firm rents furniture, fixtures, computers and communication
equipment.
For the nine months ended September 28, 2001, cash and cash
equivalents decreased $11.3 million. Cash provided by operating activities
was $219.7 million. Sources include net income ($112.4 million), increased
bank loans ($67.5 million), and a decrease in net receivable from brokers,
dealers and clearing organizations ($32.3 million). These sources were
partially offset by a decrease in securities sold under agreement to
repurchase ($24.9 million) and an increase in accounts payable and accrued
expenses ($23.4 million). Cash used in investing activities consisted of
$87.2 million in capital expenditures primarily attributable to the firm's
expansion of its headquarters and branch facilities due to growth in the
sales force, and to investment in information technology hardware and
software. Cash used in financing activities was $143.8 million, primarily
for partnership withdrawals ($117.9 million) and repayment of subordinated
debt ($26.7 million) partially offset by issuance of Subordinated Limited
Partner interests ($12.5 million).
As a result of its activities as a broker/dealer, EDJ, the
Partnership's principal subsidiary, is subject to the Net Capital provisions
of Rule 15c3-1 of the Securities Exchange Act of 1934 and the capital rules
of the New York Stock Exchange. Under the alternative method permitted by
the rules, EDJ must maintain minimum Net Capital, as defined, equal to the
greater of $250 or 2% of aggregate debit items arising from customer
transactions. The Net Capital Rule also provides that partnership capital
may not be withdrawn if resulting Net Capital would be less than 5% of
aggregate debit items. Additionally, certain withdrawals require the consent
of the SEC to the extent they exceed defined levels even though such
withdrawals would not cause Net Capital to be less than 5% of aggregate
debit items. At September 28, 2001, EDJ's Net Capital of $339.3 million was
19% of aggregate debit items and its Net Capital in excess of the minimum
required was $303.4 million. Net Capital as a percentage of aggregate debits
after anticipated withdrawals was 19%. Net capital and the related capital
percentage may fluctuate on a daily basis.
13
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion And Anaylsis Of Financial Condition And
Results Of Operations
There were no material changes in the Partnership's overall
financial condition during the nine months ended September 28, 2001,
compared with the nine months ended September 29, 2000. The Partnership's
consolidated statement of financial condition is comprised primarily of cash
and assets readily convertible into cash. Securities inventories are carried
at market value 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 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 EFFECTS OF INFLATION
The Partnership's net assets are primarily monetary, consisting of
cash, securities inventories and receivables less liabilities. Monetary net
assets are primarily liquid in nature and would not be significantly
affected by inflation. Inflation and future expectations of inflation
influence securities prices, as well as activity levels in the securities
markets. As a result, profitability and capital may be impacted by inflation
and inflationary expectations. Additionally, inflation's impact on the
Partnership's operating expenses may affect profitability to the extent that
additional costs are not recoverable through increased prices of services
offered by the Partnership.
FORWARD-LOOKING STATEMENTS
The Management's Financial Discussion contains forward-looking
statements within the meaning of federal securities laws. Actual results are
subject to risks and uncertainties, including both those specific to the
Partnership and those specific to the industry which could cause results to
differ materially from those contemplated. The risks and uncertainties
include, but are not limited to, general economic conditions, actions of
competitors, regulatory actions, changes in legislation and technology
changes. Undue reliance should not be placed on the forward-looking
statements, which speak only as of the date of this Quarterly Report on Form
10-Q. The Partnership does not undertake any obligation to publicly update
any forward-looking statements.
14
Part I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The SEC issued market risk disclosure requirements to enhance
disclosures of accounting policies for derivatives and other financial
instruments and to provide quantitative and qualitative disclosures about
market risk inherent in derivatives and other financial instruments. Various
levels of management within the Partnership manage the firm's risk exposure.
Position limits in trading and inventory accounts are established and
monitored on an ongoing basis. Credit risk related to various financing
activities is reduced by the industry practice of obtaining and maintaining
collateral. The Partnership monitors its exposure to counterparty risk
through the use of credit exposure information, the monitoring of collateral
values and the establishment of credit limits.
There were no significant changes in the Partnership's exposure to
interest rate risk during the quarter ended September 28, 2001.
15
Part II. OTHER INFORMATION
THE JONES FINANCIAL COMPANIES, L.L.L.P.
Item 1. Legal Proceedings
There have been no material changes in the legal proceedings previously
reported.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
16
Part II. OTHER INFORMATION
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, L.L.L.P.
(Registrant)
Dated: November 9, 2001 /s/ Steven Novik
-------------------------
Steven Novik
Chief Financial Officer
17