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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 28, 1998 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. [ ]
The aggregate market value of voting stock held by non-affiliates was
approximately $4.3 billion at April 30, 1998.
At April 30, 1998, there were 95,593,006 shares of A.G. Edwards, Inc. Common
Stock, $1 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
February 28, 1998 (the "1998 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 18, 1998 (the "Company's 1998 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) in
the United States. At February 28, 1998, Edwards had 594 offices (up from 569
at the end of the prior fiscal year) in 49 states and the District of Columbia,
and 12,967 full-time employees (up from 12,031), including 6,289 investment
brokers (up from 6,070) providing services for approximately 2,060,000 clients
(up from 1,880,000). 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.
AGE Commodity Clearing Corp. (Clearing), a commodity clearing subsidiary, is
registered with the CFTC as a futures commission merchant (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 four A.G. Edwards Trust companies provide investment advisory,
portfolio management and trust services. Gull-AGE Capital Group, Inc. serves as
general partner of 59 real estate partnerships in connection with 24 limited
partnerships sold by Edwards from 1982 through 1985.
(b) Financial Information About Industry Segments
The Company operates in one principal line of business, that of providing
investment services. Because the Company's services use the same distribution
personnel and facilities, and the same support services, it is impractical to
identify the assets, expenses and profitability of any one class of service.
(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 its consolidated revenues, are set forth on pages
2
22 and 23 of the 1998 Annual Report to Stockholders under the caption "Ten-Year
Financial Summary." Such information is hereby incorporated by reference.
The Company markets and distributes its products and services to its clients in
49 states and the District of Columbia through its branch office network, 6,289
investment brokers and 6,678 support employees.
COMMISSIONS
Commission revenue represents the most significant source of revenue for the
Company, accounting for more than 50% of total revenue in four of 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 affected 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. 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 A.G. Edwards Trust Companies, provides its clients with
personal, ERISA and custodial trust services. Through four separate state
charters, the A.G. Edwards Trust Companies are able to provide trust services
to clients in most states.
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.
Through Asset Performance Monitor(R), Edwards provides its clients access to
third-party investment management, performance measurement, management search
and related consulting services. The Pathways(SM), Spectrum, Fund Navigator and
Fund Advisor 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.
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 as provided 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 client's 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. The regulations of the various exchanges require minimum maintenance
5
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 9 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
1998 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 helps 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.
RESEARCH
Edwards provides both technical market analysis and fundamental analysis of
numerous industries and individual securities for use by its investment brokers
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.
6
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, the quality of its services, financial resources and
reputation within the clients' communities. 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, legislative proposals, calling for further reductions on
restrictions for brokerage service and underwriting activities, may also lead to
increased competition from commercial banks and their affiliates.
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 A.G. Edwards, Inc. to make withdrawals of
capital from Edwards and Clearing. These laws and regulatory requirements
generally 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 even 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 page 30 of the 1998 Annual Report to Stockholders. Such
information is hereby incorporated by reference.
Under the Market Reform Act of 1990 and the Futures Trading Practices Act of
1992, the SEC and CFTC, respectively, adopted regulations requiring certain
registered broker-dealers and FCMs to maintain, preserve and periodically
describe and report their risk management policies and certain other information
concerning affiliates whose activities are reasonably likely to have a material
impact on the financial or operating condition of the broker-dealer or FCM.
Edwards and Clearing are each subject to one or both of these laws and related
regulations.
7
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 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 four commodity pools sponsored by Edwards, is
regulated by the CFTC and the NFA.
OTHER MATTERS
Information concerning the Company's year 2000 compliance efforts is contained
in the Management's Discussion and Analysis under Item 7 of this Form 10-K.
Such information is hereby incorporated by reference.
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 1,500,000 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 630,000 square feet of land owned by the Company.
The Company also owns approximately 407,000 square feet of land adjacent to its
headquarters and is using this property principally for additional employee
parking areas. The Company completed construction of an additional headquarters
building in February 1998 at a total cost of approximately $43 million. Also,
the Company owns two of its branch office buildings and two additional office
buildings which serve as a data processing and contingency planning facility.
The remainder of the Company's branch offices occupy leased premises. Aggregate
annual rental for branch office premises for the year ended February 28, 1998,
was $41,859,000.
ITEM 3. LEGAL PROCEEDINGS.
(a) Litigation
The Company is a defendant in numerous 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.
(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 28, 1998.
8
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the executive officers of the Company as of
May 1, 1998. Executive officers are appointed by the Board of Directors to hold
office until their successors are appointed and qualified.
Year First
Appointed Executive
Officer of the
Name Age Office & Title Company
Benjamin F. Edwards III 66 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 41 years.
Director of Edwards since 1967.
Robert G. Avis 66 Vice Chairman of the Board of 1984
the Company. Vice Chairman of the
Board, Executive Vice President of
Edwards, Director of the Investment
Banking Division since 1989 and
Director of the Sales and Marketing
Division of Edwards from 1984 to
1997. Employee of Edwards for 32
years. Director of Edwards since 1970.
Robert L. Bagby 54 Vice Chairman of the Board of 1991
the Company. Vice Chairman of
the Board, Executive Vice President,
and since 1995, Director of the
Branch Division of Edwards.
Assistant Director of the Branch
Division of Edwards prior to 1995.
Employee of Edwards for 23 years.
Director of Edwards since 1979.
9
Year First
Appointed Executive
Officer of the
Name Age Office & Title Company
Donnis L. Casey 50 Corporate Vice President of Edwards. 1996
Director of the Staff Division of
Edwards since 1996. Assistant
Director of the Staff Division prior
to 1996. Employee of Edwards for
31 years. Director of Edwards since 1993.
Benjamin F. Edwards IV 42 Executive Vice President of Edwards. 1996
Director of the Sales and Marketing
Division since 1997. Regional
Officer of Edwards from 1995 to
1997. Assistant Branch Manager of
Edwards from 1991 to 1995.
Employee of Edwards for 20 years.
Director of Edwards since 1994.
Alfred E. Goldman 64 Corporate Vice President, Technical 1991
Market Analysis of Edwards.
Employee of Edwards for 38 years.
Director of Edwards since 1967.
Douglas L. Kelly 49 Secretary of the Company. 1994
Corporate Vice President, Secretary
of Edwards. Director of Law and
Compliance of Edwards since
1994. Partner at the law firm of
Peper, Martin, Jensen, Maichel and Hetlage
prior to joining the Company.
Employee of Edwards for 4 years.
Director of Edwards since 1994.
Ronald J. Kessler 50 Corporate Vice President of Edwards. 1996
Director of Operations since
January 1998. Assistant Director of
Operations prior to January 1998.
Employee of Edwards for 30 years.
Director of Edwards since 1989.
10
Year First
Appointed Executive
Officer of the
Name Age Office & Title Company
Eugene J. King 66 Vice President, Controller and 1983
Assistant Treasurer of the Company.
Senior Vice President, Assistant
Treasurer and Controller of Edwards.
Employee of Edwards for 27 years.
Director of Edwards since 1988.
Robert L. Proost 60 Vice President and Treasurer of the 1990
Company. Corporate Vice President,
Treasurer, Assistant Secretary and
Director of Administration of Edwards.
Employee of Edwards for 10 years.
Director of Edwards since 1989.
Benjamin F. Edwards III and Benjamin F. Edwards IV are father and son.
Benjamin F. Edwards III and Robert G. Avis are stepbrothers.
11
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 1998 Annual Report to
Stockholders on page 43 under the caption "Quarterly Financial Information" and
on page 44 under the caption "Stockholder 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
1998 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 18 through 21 of the
1998 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 does not yet apply to the Company as its
market capitalization at January 28, 1997, was less than $2.5 billion.
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 23, 1998, and under the caption
"Quarterly Financial Information" on pages 24 through 33 and page 43 of the 1998
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.
12
The securities held by Edwards for client accounts are protected up to $500,000,
including up to $100,000 for cash claims, by the Securities Investor Protection
Corporation (SIPC). In addition to the SIPC coverage, securities 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 6 of the Company's
1998 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" and "Executive Compensation" on pages 7 through 16 of the
Company's 1998 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 7 and 8 of the
Company's 1998 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 17 of the Company's
1998 Proxy Statement under the caption "Certain Transactions." Such information
is hereby incorporated by reference.
13
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 1998 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.
14
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,
1998, between A.G. Edwards, Inc. and Boatmen's Trust Company as
Rights Agent, dated July 11, 1997, filed as Exhibit 4.6 to this
Form 10-K.
10(i) A.G. Edwards, Inc. 1988 Incentive Stock Plan (as amended and
restated) filed as Exhibit 10.2 to Registrant's Form 10-K for the
fiscal year ended February 29, 1992.
10(ii) Certificate of Amendment dated April 27, 1993 to A.G.
Edwards, Inc. 1988 Incentive Stock Plan (Exhibit 10(i)) filed as
Exhibit 10(iii) to Registrant's Form 10-K for the fiscal year
ended February 28, 1994.
11 Computation of per share earnings may be clearly determined from
the consolidated financial statements and notes thereto contained
on pages 24 through 33 in the Company's Annual Report to
Stockholders for the fiscal year ended February 28, 1998 and
incorporated herein by reference.
13 Annual Report to Stockholders for the fiscal year ended
February 28, 1998. Except for those portions of pages expressly
incorporated by reference, the 1998 Annual Report to Stockholders
is not deemed filed as part of this Annual Report on Form 10-K.
21 Subsidiaries of the Registrant.
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 28, 1998.
15
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 21, 1998 By /s/ Benjamin F. Edwards III
Benjamin F. Edwards III,
Chairman of the Board
16
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 21, 1998
Benjamin F. Edwards III President and Director
(Chief Executive Officer)
/s/ Robert L. Proost Treasurer May 21, 1998
Robert L. Proost (Principal Financial Officer)
/s/ Eugene J. King Vice President May 21, 1998
Eugene J. King (Principal Accounting Officer)
/s/ Robert G. Avis Vice Chairman of the Board May 21, 1998
Robert G. Avis and Director
/s/ Robert L. Bagby Vice Chairman of the Board May 21, 1998
Robert L. Bagby and Director
/s/ Dr. E. Eugene Carter Director May 21, 1998
Dr. E. Eugene Carter
Director May 21, 1998
Charmain S. Chapman
/s/ Benjamin F. Edwards IV Director May 21, 1998
Benjamin F. Edwards IV
/s/ Dr. Louis Fernandez Director May 21, 1998
Dr. Louis Fernandez
/s/ Samuel C. Hutchinson Jr. Director May 21, 1998
Samuel C. Hutchinson Jr.
17
EXHIBIT INDEX
Exhibit Description
4.6 Amendment No. 3 to the Rights Agreement (available on
request)
13 1998 Annual Report to Stockholders.
21 Subsidiaries of the Registrant.
23 Independent Auditors' Consent.
24 Power of Attorney. Included on Signature Page 17.
18