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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended February 29, 2000 Commission file number 1-8527
A.G. EDWARDS, INC.
State of Incorporation: DELAWARE I.R.S. Employer Identification No.:
43-1288229
ONE NORTH JEFFERSON AVENUE
ST. LOUIS, MISSOURI 63103
Registrant's telephone number, including area code: (314) 955-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
RIGHTS TO PURCHASE COMMON STOCK NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
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 .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
The aggregate market value of voting stock held by non-affiliates was
approximately $3.2 billion at May 1, 2000.
At May 1, 2000, there were 84,635,658 shares of A.G. Edwards, Inc. Common Stock,
$1 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the A.G. Edwards, Inc. Annual Report Fiscal Year 2000 (the "2000
Annual Report to Stockholders") are incorporated by reference into Parts I, II
and IV hereof. Portions of the Company's Proxy Statement filed with the SEC in
connection with the Company's Annual Meeting of Stockholders to be held June 22,
2000 (the "Company's 2000 Proxy Statement") are incorporated by reference into
Part III hereof. Other documents incorporated by reference in this report are
listed in the Exhibit Index beginning on page 14 of this Form 10-K.
1
PART I
ITEM 1. BUSINESS.
(a) General Development of Business
A.G. Edwards, Inc., a Delaware corporation, is a holding company incorporated in
1983 whose principal subsidiary, A.G. Edwards & Sons, Inc. (Edwards), is
successor to a partnership founded in 1887. A.G. Edwards, Inc. and its directly
owned and indirectly owned subsidiaries (collectively referred to as the
Company) provide securities and commodities brokerage, asset management,
insurance, trust, investment banking and other related financial services to
individual, corporate, governmental and institutional clients.
Edwards' business, primarily with individual clients, is conducted through one
of the largest retail branch office networks (based upon number of offices and
financial consultants) in the United States. At February 29, 2000, Edwards had
670 offices (up from 639 at the end of the prior fiscal year) in 49 states and
the District of Columbia, and 15,451 full-time employees (up from 13,953),
including 6,823 financial consultants (up from 6,528) providing services for
approximately 2,740,000 clients (up from 2,340,000). No single client accounts
for a significant portion of Edwards' business. Edwards is a member of all
major securities exchanges in the United States, the National Association of
Securities Dealers, Inc. (NASD) and the Securities Investor Protection
Corporation (SIPC). Additionally, Edwards has memberships on several commodity
exchanges and is registered with the Commodity Futures Trading Commission (CFTC)
as a futures commission merchant (FCM).
AGE Commodity Clearing Corp. (Clearing), a commodity clearing subsidiary, is
registered with the CFTC as a FCM and operates exclusively as a commodity
clearing company for Edwards. Clearing is a member of all major U.S.
commodities exchanges and the National Futures Association (NFA). The five A.G.
Edwards trust companies (collectively referred to as the Trust Companies),
including a federally chartered savings bank, provide investment advisory,
portfolio management and trust services. Gull-AGE Capital Group, Inc. serves as
general partner of 99 real estate partnerships in connection with 30 limited
partnerships sold by Edwards from 1982 through 1985. A.G. Edwards Capital, Inc.
serves as general partner to two tandem private equity partnerships formed to
invest in a portfolio of venture capital and buy-out funds and direct
investments.
(b) Financial Information About Industry Segments
Information regarding industry segments is set forth in Note 1 (Summary of
Significant Accounting Policies) of the Notes to Consolidated Financial
Statements under the caption "Basis of Financial Information" appearing on page
28 of the 2000 Annual Report to Stockholders. Such information is hereby
incorporated by reference.
2
(c) Narrative Description of Business
Commissions, principal transactions, investment banking, and asset management
and service fees were the principal sources of consolidated revenue for the last
three fiscal years. The total amount of revenue contributed by these services,
including the amount of total revenue by class of products or services that
accounted for 10% or more of consolidated revenues, are set forth on pages 22
and 23 of the 2000 Annual Report to Stockholders under the caption "Ten-Year
Financial Summary." Such information is hereby incorporated by reference.
COMMISSIONS
Commission revenue represents the most significant source of revenue for the
Company, accounting for more than 50% of total revenue during the last five
years. The following briefly describes the Company's sources of commission
revenue.
Listed and Over-the-Counter Securities. A significant portion of the Company's
revenue is derived from commissions generated on securities transactions
executed by Edwards, as a broker, in common and preferred stocks and debt
instruments on exchanges or in the over-the-counter markets. Edwards' brokerage
clients are primarily individual investors; however, resources continue to be
directed to further the development of its institutional business. Edwards'
commission rates for brokerage transactions vary with the size and complexity of
the transactions, among other factors.
Options. Edwards acts as broker in the purchase and sale of option contracts to
buy or sell securities, primarily common stocks and stock indexes. Edwards
holds memberships for trading on principal option exchanges.
Mutual Funds. Edwards distributes mutual fund shares in continuous offerings of
open-end funds. Income from the sale of mutual funds is derived primarily from
the standard dealer's discount which varies as a percentage of the client's
purchase price depending upon the size of the transaction and terms of the
selling agreement. Revenues derived from mutual fund sales continue to be a
significant portion of overall revenues. Edwards does not sponsor its own
mutual fund products.
Commodities and Financial Futures. Edwards acts as broker in the purchase and
sale of commodity futures contracts, financial futures contracts and options on
commodity and financial futures contracts. These contracts cover agricultural
products, precious metals, currency, interest rate and stock index futures.
Substantially all of Edwards' clients' futures transactions are executed and
cleared through Clearing. Nearly all transactions in futures contracts are
executed with a relatively low margin deposit, usually 3% to 12% of the total
contract amount. Consequently, the risk to the client and resulting credit risk
assumed by Edwards is substantial, generally greater than on securities
transactions. To limit its exposure, Edwards requires its clients to meet
minimum net worth requirements and other established credit standards, in
addition to the margin deposits. Regulations of some commodity exchanges limit
the allowable upward or downward price fluctuations for each commodity on a
given day. These restrictions on price fluctuations may preclude purchases or
sales necessary to limit losses or realize gains.
3
As a member of the clearing associations of the principal commodity exchanges,
Clearing has potentially significant financial exposure in the event other
members default on their obligations to the clearing houses of such exchanges.
Insurance. As agent for several life insurance companies, Edwards distributes
life insurance and tax-deferred annuities. Edwards also provides financial
planning services to assist individuals in structuring financial portfolios to
achieve their financial goals. In addition, A.G. Edwards Life Insurance Company
is licensed to issue life insurance policies under the laws of Missouri, but has
not issued any to date.
PRINCIPAL TRANSACTIONS
Client transactions in the equity and fixed income over-the-counter markets may
be effected by Edwards acting as principal as well as agent. Principal
transactions, including market making, require maintaining inventories of
securities to satisfy customer order flow. These securities are valued in the
Company's financial statements at fair value and unrealized gains or losses are
included in the results of operations. Securities fluctuations may be sudden
and sharp as a result of changes in market conditions. To the extent Edwards
can correctly anticipate such changes, risks may be reduced by varying inventory
levels or by use of hedging strategies.
INVESTMENT BANKING
Edwards is an underwriter of corporate and municipal securities, certificates of
deposit, as well as corporate and municipal unit investment trusts and closed-
end mutual funds. Edwards' municipal underwriting activities include areas of
specialization in kindergarten through 12th grade schools, sports and
entertainment, municipal finance, housing, higher education, health care, and
public utilities. Corporate finance activities are focused on five major areas:
industrial growth, real estate, financial services, emerging growth, consumer
products and energy. As an underwriter, usually in conjunction with other
broker-dealers and financial institutions, Edwards purchases securities for
resale to its clients. Edwards acts as a consultant to corporations and
municipal entities in planning their capital needs and determining the most
advantageous means for raising capital. It also advises clients in merger and
acquisition activities and acts as agent in private placements.
Underwriting involves risk. As an underwriter, Edwards may incur losses if it
is unable to resell the securities it is committed to purchase or if it is
forced to liquidate all or a part of its commitment at less than the purchase
price. Under federal and state securities laws, an underwriter is exposed to
substantial potential liability for material misstatements or omissions of fact
in the prospectus used to describe the securities being offered. Generally,
issuers agree to indemnify underwriters against such liabilities, but otherwise,
underwriters are not specifically insured. In addition, the commitment of
capital to underwriting may reduce Edwards' regulatory net capital position and,
consequently, its underwriting participation may be limited by the requirement
that it must at all times be in compliance with the net capital rules
administered by the Securities and Exchange Commission (SEC).
4
Although it is generally more profitable to manage or co-manage an underwriting,
as opposed to being a participant, managers generally commit to underwriting a
greater portion of the offering than the other members of the underwriting group
and consequently, managers assume a greater risk.
ASSET MANAGEMENT AND SERVICE FEES
Asset management and service fees consist primarily of revenues earned for
providing support and services in connection with assets under third-party
management, including mutual funds, and revenues from assets under management by
Edwards. These revenues include fees based on the amount of client assets under
management and transaction-related fees, as well as fees related to the
administration of custodial and other specialty accounts.
Edwards, through the Trust Companies, provides its clients with personal, ERISA
and custodial trust services.
Clients desiring professional money management are offered three types of
account portfolio services. Edwards, acting as investment manager, offers
portfolio management strategies based on the client's investment objectives.
Edwards' investment consulting service offers the Private Advisor Service, which
provides clients with third-party investment management, performance
measurement, management search and related consulting services. The PathwaysSM,
Spectrum, Fund Navigator and Fund Advisor investment advisory programs are
personalized, fee-based asset allocation programs that utilize load and no-load
mutual fund investments. Clients select from established asset allocation
models, or customize their own, based on their investment objectives, risk
tolerance and time horizon. Under the new Client Choice program, clients can
execute transactions and receive ongoing personalized advice from their
financial consultant for an annual fee based on the value of their assets held
at Edwards.
Edwards offers the UltraAsset Account, Total Asset Account(R) and the Cash
Convenience Account, which combine a full-service brokerage account with a money
market fund. These programs provide for the automatic investment of customer
free credit balances in one of several money market funds. Interest is not paid
on free credit balances held in client accounts. In addition, the UltraAsset
and Total Asset Accounts allow clients access to their margin securities and
money market shares through the use of debit cards and checking account services
provided by a major bank. The UltraAsset Account offers additional advanced
features and special investment portfolio reports.
Edwards provides custodial services to its clients for the various types of
self-directed individual retirement accounts provided for under the Internal
Revenue Code.
MARGIN FINANCING
Securities transactions are executed on a cash or margin basis. In margin
transactions, Edwards extends credit to its clients for a portion of the
purchase price, with the clients' securities held as collateral. The amount of
credit is limited by the initial margin regulations issued by the Board of
Governors of the Federal Reserve System. The current prescribed minimum initial
margin for equity securities is equal to 50% of the value of equity securities
purchased.
5
The regulations of the various exchanges require minimum maintenance
margins, which are below the initial margin. Edwards' maintenance requirements
generally exceed the exchanges' requirements. Such requirements are intended to
reduce the risk that a market decline will reduce the value of the collateral
below that of the client's indebtedness before the collateral can be liquidated.
A substantial portion of the Company's assets and obligations result from
transactions with clients who have provided financial instruments as collateral.
The Company manages its risk associated with these transactions through position
and credit limits, and the continuous monitoring of collateral. Additional
information regarding risks associated with client transactions is set forth in
Note 10 (Financial Instruments) of the Notes to Consolidated Financial
Statements under the caption "Off-Balance Sheet Risk and Concentration of Credit
Risk" appearing on page 32 of the 2000 Annual Report to Stockholders. Such
information is hereby incorporated by reference.
A client, borrowing in a margin account, is charged an interest rate based on
the broker call loan rate plus up to an additional 2 1/2% depending on the
amount of the client's borrowings during each interest period. Interest earned
on these balances represents an important source of revenue for Edwards.
Although borrowings from banks, either unsecured or secured by the clients'
collateral securities, are an available source of funds to carry client margin
accounts, the Company's stockholders' equity, cash received from loans of the
clients' collateral securities to other brokers and, to the extent permitted by
regulations, customer free credit balances provide most of the funds required.
PRIVATE CLIENT SERVICES
Edwards' Private Client Services group assists individuals and businesses meet a
wide range of financial and investment needs. Individual investors can receive
tailored asset allocation, tax- and risk-reduction strategies, portfolio reviews
of stocks, bonds and mutual funds (including concentrated equity strategies) and
comprehensive estate planning recommendations. Closely-held and publicly-traded
business clients can access services for risk management, employee benefit
programs (retirement plans and key employee compensation), capital formation and
management and ownership succession.
CPI Qualified Plan Consultants, Inc., acquired in fiscal 2000, provides third-
party administration services for employee benefit plans to closely held
businesses and corporations.
INVESTMENT ACTIVITIES
The Company's investment activities include, among other things, making
investments in equity and equity-related securities in connection with merger,
acquisition and private investment transactions, either for the accounts of
private investment funds in which the Company participates or, to a lesser
extent, for its own account. These activities include venture capital
investments and investments in portfolio and operating companies. The fair
value of these investments is subject to a high degree of volatility and may be
susceptible to significant fluctuation in the near term.
6
RESEARCH
Edwards provides both technical market analysis and fundamental analysis of
numerous industries and individual securities for use by its financial
consultants and clients. In addition, reviews and analysis of general economic
conditions, along with asset allocation recommendations, are also available.
These services are provided by Edwards' research analysts, economists and market
strategists. Revenues from research activities are derived principally through
resulting transactions on an agency or principal basis.
COMPETITION
All aspects of the Company's business are highly competitive. Edwards competes
with numerous broker-dealers, including on-line services, some of whom possess
greater financial resources than the Company. Edwards competes for clients on
the basis of price, quality of service, financial resources and reputation.
There is constant competition to attract and retain personnel within the
securities industry. Competition for the investment dollar and for clients has
increased from other sources, such as commercial banks, savings institutions,
mutual fund management companies, investment advisory companies as well as from
other companies offering insurance, real estate and other investment
opportunities. Recent regulatory actions, which reduced certain restrictions on
bank affiliates engaging in securities activities, increased competition from
commercial banks and their affiliates for securities underwriting activities and
other brokerage services.
In addition to competition from firms traditionally engaged in the financial
services business, there has been increased competition in recent years from
other sources, such as commercial banks, insurance companies, online service
providers, sponsors of mutual funds and other companies offering financial
services both in the U.S. and globally. The financial services industry also
has experienced consolidation and convergence in recent years, as financial
institutions involved in a broad range of financial services industries have
merged. This convergence trend is expected to continue and could result in the
Company's competitors gaining greater capital and other resources, such as a
broader range of products and services and geographic diversity. In November
1999, the Gramm-Leach-Bliley Act was enacted, effectively repealing certain
sections of the 1933 Glass-Steagall Act. Its passage allows commercial banks,
securities firms and insurance firms to affiliate, which may accelerate
consolidation and lead to increased competition in markets which traditionally
have been dominated by investment banks and retail securities firms.
REGULATION
Edwards, as a broker-dealer and FCM, is subject to various federal and state
laws which specifically regulate its activities as a broker-dealer in securities
and commodities, as an investment advisor and as an insurance agent. Clearing,
as a FCM, is regulated as a broker in commodities. Edwards and Clearing are
also subject to various regulatory requirements imposed by the securities and
commodities exchanges and the NASD. The primary purpose of these requirements
is to enhance the protection of customer assets. Under certain circumstances,
these rules may limit the ability of the Company to make withdrawals of capital
from Edwards and Clearing. These laws and regulatory requirements generally
7
subject Edwards and Clearing to standards of solvency with respect to capital
requirements, financial reporting requirements, approval of qualifications of
personnel engaged in various aspects of its business, record keeping and
business practices, the handling of their clients' funds resulting from
securities and commodities transactions and the extension of credit to clients
on margin transactions. Infractions of these rules and regulations may include
suspension of individual employees or their supervisors, termination of
employees, limitations on certain aspects of Edwards' and Clearing's regulated
businesses, as well as censures and fines, or proceedings of a civil or
criminal nature which could result in a temporary or permanent suspension of a
part or all of Edwards' and Clearing's activities. Information regarding
regulatory minimum net capital is set forth in Note 5 of the Notes to
Consolidated Financial Statements under the caption "Net Capital Requirements"
appearing on pages 30 and 31 of the 2000 Annual Report to Stockholders. Such
information is hereby incorporated by reference.
A.G. Edwards & Sons (U.K.) Limited is registered under the laws of the United
Kingdom and is regulated as a securities broker-dealer by the Securities and
Futures Authority. Additionally, the four state-chartered trust companies are
separately regulated by banking or trust laws of the states in which they are
incorporated or do business. A.G. Edwards Trust Company FSB, a federal savings
bank, is regulated by the Office of Thrift Supervision (OTS), the Federal
Deposit Insurance Corporation (FDIC) and by the SEC as an investment advisor.
A.G. Edwards Life Insurance Company is regulated by the insurance laws of the
State of Missouri. The Ceres Investment Company, a commodity pool operator and
general partner of three commodity pools sponsored by Edwards, is regulated by
the CFTC and the NFA.
ITEM 2. PROPERTIES.
The Company's headquarters are located at One North Jefferson Avenue, St. Louis,
Missouri. It consists of several buildings owned by the Company which contain
approximately 1,600,000 square feet of general office space, as well as
underground and surface parking and a five story parking garage. The buildings
are located on approximately 20 acres of land owned by the Company.
The Company owns approximately 22 acres of land adjacent to its
headquarters and is using this property principally for additional employee
parking areas. In addition, the Company owns four additional office buildings
which are used for information technology facilities, contingency planning
facilities and trust company office. The Company is currently expanding its
headquarters with the construction of an additional office building, an
additional parking garage and a learning center.
The remainder of the Company's branch offices occupy leased premises. Aggregate
annual rental for branch office premises for the year ended February 29, 2000,
was $55,577,000.
ITEM 3. LEGAL PROCEEDINGS.
(a) Litigation
The Company is a defendant in lawsuits and arbitrations, in some of which
plaintiffs claim substantial amounts, relating primarily to its
securities and commodities business. While results of litigation cannot
be predicted with certainty, management, after consultation with
counsel, believes that resolution of all such litigation will have no
material adverse effect on the consolidated financial statements of the
Company.
8
(b) Proceedings Terminated during the Fourth Quarter of the Fiscal Year
Covered by This Report.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended February 29, 2000.
9
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the executive officers of the Company as of
May 1, 2000. Executive officers are appointed by the Board of Directors to hold
office until their successors are appointed and qualified.
Year First
Appointed
Executive
Name Age Office & Title Officer of the
Company
Benjamin F. Edwards III 68 Chairman of the Board, 1983
President and Chief
Executive Officer of the
Company. Chairman of the
Board, President and Chief
Executive Officer of
Edwards. Employee of
Edwards for 43 years.
Director of Edwards since
1967.
Mary V. Atkin 45 Corporate Vice President 1999
of Edwards. Director of the
Information Technology
Division of Edwards since 1999.
Manager of Corporate
Communications of Edwards
prior to 1999. Employee
of Edwards for 22 years.
Director of Edwards since
1993.
Robert L. Bagby 56 Vice Chairman of the Board 1991
of the Company. Vice
Chairman of the Board,
Executive Vice President
and Director of the Branch
Division of Edwards.
Employee of Edwards for 25
years. Director of
Edwards since 1979.
Donnis L. Casey 52 Corporate Vice President 1996
of Edwards. Director of
the Staff Division of
Edwards since 1996.
Assistant Director of the
Staff Division of Edwards
prior to 1996. Employee
of Edwards for 33 years.
Director of Edwards since
1993.
10
Year First
Appointed
Executive
Name Age Office & Title Officer of the
Company
Benjamin F. Edwards IV 44 Vice Chairman of the Board 1996
of the Company since 1999.
Vice Chairman of the Board
of Edwards since 1999.
Executive Vice President
and Director of the Sales
and Marketing Division of
Edwards since 1997.
Director of the Investment
Banking Division of
Edwards from 1999 to 2000.
Regional Manager of
Edwards from 1995 to 1997.
Employee of Edwards for 22
years. Director of
Edwards since 1994.
Alfred E. Goldman 66 Corporate Vice President, 1991
Director of Market
Analysis of Edwards.
Employee of Edwards for 40
years. Director of
Edwards since 1967.
Douglas L. Kelly 51 Vice President and 1994
Secretary of the Company.
Corporate Vice President,
Secretary, and Director of
Law and Compliance of
Edwards. Employee of
Edwards for 6 years.
Director of Edwards since
1994.
Ronald J. Kessler 52 Corporate Vice President 1996
of Edwards. Director of
the Operations Division
since 1998. Assistant
Director of Operations
from 1988 to 1998.
Employee of Edwards for 32
years. Director of
Edwards since 1989.
Thomas H. Martin Jr. 40 Assistant Treasurer of the 1999
Company since 1999. Vice
President of Edwards.
Controller of the Company
and Edwards since 1999.
Accounting Manager prior
to 1999. Employee of
Edwards for 19 years.
11
Paul F. Pautler 55 Senior Vice President of 2000
Edwards. Director of
Investment Banking since
March 2000. Director of
Corporate Finance since
1999. Managing Director
of Mergers and
Acquisitions 1997 to 1999.
Employee of Edwards for 3
years. Partner at the law
firm of Thompson Coburn
LLC for 16 years prior to
joining Edwards. Director
of Edwards since
March 2000.
Joseph G. Porter 39 Assistant Treasurer of the 1999
Company since 1999.
Senior Vice President and
Assistant Director of
Administration of Edwards.
Principal Accounting
Officer of the Company and
Edwards since 1999.
Accounting Manager prior
to 1999. Employee of
Edwards for 17 years.
Robert L. Proost 62 Vice President, Chief 1990
Financial Officer and
Treasurer of the Company.
Corporate Vice President,
Treasurer, Chief Financial
Officer, and Director of
the Administration
Division of Edwards.
Employee of Edwards for 12
years. Director of
Edwards since 1989.
Benjamin F. Edwards III and Benjamin F. Edwards IV are father and son.
12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The information required by this item is contained in the 2000 Annual Report to
Stockholders on page 44 under the caption "Quarterly Financial Information" and
on page 45 under the caption "Shareholder Information." Such information is
hereby incorporated by reference. The approximate number of equity security
holders of record includes customers who hold the Company's stock in their
accounts on the books of Edwards.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is contained on pages 22 and 23 of the
2000 Annual Report to Stockholders under the caption "Ten-Year Financial
Summary." Such information is hereby incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information required by this item is contained on pages 17 through 21 of the
2000 Annual Report to Stockholders under the caption "Management's Financial
Discussion." Such information is hereby incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.
The information required by this item is contained in Management's Financial
Discussion under the caption "Risk Management" on page 20 and 21 of the 2000
Annual Report to Stockholders. Such information is hereby incorporated by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is contained in the Consolidated Financial
Statements and Notes thereto, together with the Independent Auditors' Report
thereon of Deloitte & Touche LLP dated April 20, 2000, and under the caption
"Quarterly Financial Information" on pages 24 through 33 and page 44,
respectively, of the 2000 Annual Report to Stockholders. Such information is
hereby incorporated by reference.
Additional Information:
Edwards maintains a Stockbrokers Blanket Bond insuring various loss
contingencies. Under the terms of the current policy, Edwards is responsible
for the first $1,000,000 of each such occurrence.
13
The securities held by Edwards for client accounts are protected up to $500,000,
including up to $100,000 for cash claims, by SIPC. In addition to the SIPC
coverage, securities and cash held in client accounts are provided additional
protection up to the full value of the accounts (as determined by SIPC) by a
commercial insurance company. Neither SIPC protection nor the additional
protection applies to fluctuations in the market value of securities.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this item is included under the caption "Election of
Directors - Nominees for Directors" on pages 4 through 7 of the Company's 2000
Proxy Statement and in Part I of this Form 10-K on pages 9 through 11 under the
caption "Executive Officers of the Company." Such information is hereby
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is included under the captions "Director
Compensation," "Executive Compensation" and "Performance Graph" on pages 8
through 19 of the Company's 2000 Proxy Statement. Such information is hereby
incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required by this item is contained on pages 9 and 10 of the
Company's 2000 Proxy Statement under the caption "Ownership of the Company's
Common Stock." Such information is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is contained on page 20 of the Company's
2000 Proxy Statement under the caption "Certain Transactions." Such information
is hereby incorporated by reference.
14
PART IV
ITEM 14. FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES,
EXHIBITS AND REPORTS ON FORM 8-K.
PAGE
INDEX NUMBER
(a) 1. Financial Statements
Independent Auditors' Report (X)
Consolidated balance sheets (X)
Consolidated statements of earnings (X)
Consolidated statements of stockholders' equity (X)
Consolidated statements of cash flows (X)
Notes to consolidated financial statements (X)
(X) The consolidated financial statements, together with the Independent
Auditors' Report thereon of Deloitte & Touche LLP included on pages 24
through 33 of the Company's 2000 Annual Report to Stockholders, are hereby
incorporated by reference.
2. Financial Statement Schedules
All schedules are omitted due to the absence of conditions under which
they are required or because the required information is provided in the
consolidated financial statements or notes thereto.
3. Exhibits*
Some of the following exhibits were previously filed as exhibits to other
reports or registration statements filed by the Registrant and are incorporated
by reference as indicated below.
3(i) Certificate of Incorporation filed as Exhibit 3(i) to the
Registrant's Form 10-K for the fiscal year ended February 28,
1993.
3(ii) By-laws filed as Exhibit 3(ii) to the Registrant's Form 10-K
for the fiscal year ended February 28, 1994.
4(i) Reference is made to Articles IV, V, X, XII, XIII and XV of
the Certificate of Incorporation filed as Exhibit 3(i) to this
Form 10-K.
4(ii) Reference is made to Article II, Article III Sections 1 and
15, Article IV Sections 1 and 3, Article VI and Article VII
Sections 1-3 of the By-laws filed as Exhibit 3(ii) to this
Form 10-K.
4(iii) Rights Agreement dated as of December 30, 1988 between A.G.
Edwards, Inc. and Boatmen's Trust Company as Rights Agent filed
as Exhibit 4 to the Registrant's Form 8-K Report dated
December 30, 1988.
15
4(iv) Amendment No. 1 to the Rights Agreement dated December 30,
1988, between A.G. Edwards, Inc. and Boatmen's Trust Company as
Rights Agent, dated May 24, 1991 filed as Exhibit 4.4 to
Registrant's Form 10-K for the fiscal year ended February 29,
1992.
4(v) Amendment No. 2 to the Rights Agreement dated December 30,
1988, between A.G. Edwards, Inc. and Boatmen's Trust Company as
Rights Agent, dated June 22, 1995 filed with the Registrant's
Form 8-A/A on August 17, 1995.
4(vi) Amendment No. 3 to the Rights Agreement dated December 30,
1988, between A.G. Edwards, Inc. and Boatmen's Trust Company as
Rights Agent, dated July 11, 1997, filed as Exhibit 4.6 to
Registrant's Form 10-K for the fiscal year ended February 28,
1998.
10 A.G. Edwards, Inc. 1988 Incentive Stock Plan (as amended and
restated) filed as Exhibit 10 to Registrant's second quarter 1999
Form 10-Q, filed on October 14, 1999.
11 Computation of per share earnings is set forth in Note 8
(Stockholders' Equity) of the Notes to Consolidated Financial
Statements under the caption "Earnings Per Share" appearing on
page 31 of the 2000 Annual Report to Stockholders and
incorporated herein by reference.
13 The 2000 Annual Report to Stockholders. Except for those
portions of pages expressly incorporated by reference, the
2000 Annual Report to Stockholders is not deemed filed as part of
this Annual Report on Form 10-K.
21 Registrant's Subsidiaries.
23 Independent Auditors' Consent.
24 Power of Attorney.
27 Financial Data Schedule. This Financial Data Schedule is only
required to be submitted with the Registrant's Annual Report on
Form 10-K as filed electronically to the SEC's EDGAR database.
*Numbers correspond to document numbers in Exhibit Table of Item 601 of
Regulation S-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the year ended
February 29, 2000.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
A.G. EDWARDS, INC.
(Registrant)
Date: May 18, 2000 By /s/ Benjamin F. Edwards III
Benjamin F. Edwards III,
Chairman of the Board
17
POWER OF ATTORNEY EXHIBIT 24
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Benjamin F. Edwards III, and Robert L. Proost and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign this Report, any and all amendments to this
Report, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or either of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Benjamin F. Edwards III Chairman of the Board, May 18, 2000
Benjamin F. Edwards III President and Director
(Chief Executive Officer)
/s/ Robert L. Proost Treasurer and Director May 18, 2000
Robert L. Proost (Principal Financial Officer)
/s/ Robert L. Bagby Vice Chairman of the Board May 18, 2000
Robert L. Bagby and Director
/s/ Benjamin F. Edwards IV Vice Chairman of the Board May 18, 2000
Benjamin F. Edwards IV and Director
/s/ Dr. E. Eugene Carter Director May 18, 2000
Dr. E. Eugene Carter
/s/ Charmaine S. Chapman Director May 18, 2000
Charmaine S. Chapman
Director May 18, 2000
Dr. Louis Fernandez
/s/ Samuel C. Hutchinson Jr. Director May 18, 2000
Samuel C. Hutchinson Jr.
/s/ Ronald J. Kessler Director May 18, 2000
Ronald J. Kessler
/s/ Thomas H. Martin Jr. Controller May 18, 2000
Thomas H. Martin Jr.
/s/ Joseph G. Porter Principal Accounting Officer May 18, 2000
Joseph G. Porter
18
EXHIBIT INDEX
Exhibit Description
13 2000 Annual Report to Stockholders.
21 Registrant's Subsidiaries.
23 Independent Auditors' Consent.
24 Power of Attorney. Included on Signature Page 17.
19