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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 December 31, 1995
Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
___________________________________________________________________
(Exact name of registrant as specified in its Partnership
Agreement)
MISSOURI 43-1450818
___________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
___________________________________________________________________
(Address and principal executive office) (Zip Code)
Registrant's telephone number, including area code
(314) 515-2000
____________________________
Securities registered pursuant to Section 12(b) of the act:
Name of each exchange
Title of each class on which registered
NONE NONE
____________ ____________
Securities registered pursuant to Section 12(g) of the Act:
NONE
___________________________________________________________________
(Title of Class)
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 March 26, 1996 there were no voting securities held by non-
affiliates of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Part 1
None
ITEM 1. BUSINESS
The Jones Financial Companies, a Limited Partnership (the
"Registrant" and also referred to herein as the "Partnership") is
organized under the Revised Uniform Limited Partnership Act of the
State of Missouri. The terms "Registrant" and "Partnership" used
throughout, refer to The Jones Financial Companies, a Limited
Partnership and any or all of its consolidated subsidiaries. The
Partnership is the successor to Whitaker & Co., which was
established in 1871 and dissolved on October 1, 1943, said date
representing the organization date of Edward D. Jones & Co., L.P.
("EDJ"), the Partnership's principal subsidiary. EDJ was
reorganized on August 28, 1987, which date represents the
organization date of The Jones Financial Companies, a Limited
Partnership.
The Partnership's principal operating subsidiary, EDJ, is a
registered broker/dealer primarily serving individual investors.
EDJ derives its revenues from listed and unlisted securities,
investment banking, principal transactions, insurance products and
is a distributor of mutual fund shares. EDJ conducts business
throughout the United States and in Canada with its customers,
various brokers and dealers, clearing organizations, depositories
and banks.
The Partnership is a member firm of the New York, American,
Chicago, Toronto and Montreal exchanges, and is a registered
broker/dealer with the National Association of Securities Dealers,
Inc.
As of February 23, 1996, the Partnership was comprised of 122
general partners, 2,792 limited partners and 57 subordinated
limited partners. The Partnership employed 10,998 persons,
including 2,920 part-time employees. As of said date, the
Partnership employed 3,226 full-time investment representatives
actively engaged in sales in 3,210 offices in 49 states and Canada.
The Partnership owns 100 percent of the outstanding common stock of
EDJ Holding Company, Inc., a Missouri corporation and 100 percent
of the outstanding common stock of LHC, Inc., a Missouri
corporation. The Partnership also holds all of the partnership
equity of Edward D. Jones & Co., L.P., a Missouri limited
partnership and EDJ Leasing Co., L.P. a Missouri limited
partnership. EDJ Holding Company, Inc. and LHC, Inc. are the
general partners of Edward D. Jones & Co., L.P. and EDJ Leasing
Co., L.P., respectively. In addition, the Partnership owns 100
percent of the outstanding common stock of Conestoga Securities,
Inc., a Missouri corporation and also owns, as a limited partner,
49.5 percent of Passport Research Ltd., a Pennsylvania limited
partnership, which acts as an investment advisor to a money market
mutual fund. The Partnership owns 100% of the equity of Edward D.
Jones & Co., an Ontario limited partnership and the general partner
is Edward D. Jones & Co. Canada Holding Co. Inc., which is wholly
owned by the Partnership. The Partnership owns 100% of the equity
of Boone National Savings and Loan Association, F.A.,
`` Association'', a federally chartered stock savings and loan
association. The Partnership has an equity position in several
entities formed to act as general partners of various direct
participation programs sponsored by the Nooney Corporation as
follows: Nooney Capital Corp. (a Missouri corporation), 66-2/3% of
outstanding Class B non-voting stock; Nooney-Five Capital Corp. (a
Missouri Corporation), 100% of outstanding Class B non-voting
stock; Nooney-Six Capital Corp. (a Missouri corporation), 100% of
outstanding Class B non-voting stock; Nooney-Seven Capital Corp. (a
Missouri corporation), 100% of outstanding Class B non-voting
stock; Nooney Income Investments, Inc. (a Missouri corporation),
100% of outstanding Class B non-voting stock; Nooney Income
Investments Two, Inc. (a Missouri corporation), 100% of outstanding
Class B non-voting stock; Nooney Income Investment Three, Inc., (a
Missouri corporation), 100% of outstanding Class B non-voting
stock. The Partnership holds all of the partnership equity in a
Missouri limited partnership, EDJ
Ventures, Ltd. Conestoga Securities, Inc. is the general partner
of EDJ Ventures, Ltd. The Partnership is the sole shareholder of
Tempus Corporation, a Missouri corporation, which was formed
strictly to facilitate the issuance of certain debt securities of
the Partnership in a private transaction.
The Partnership is a limited partner of EDJ Insurance Agency of New
Jersey, L.P., a New Jersey limited partnership; EDJ Insurance
Agency of Arkansas, an Arkansas limited partnership; EDJ Insurance
Agency of Montana, a Montana limited partnership; EDJ Insurance
Agency of New Mexico, a New Mexico limited partnership; EDJ
Insurance Agency of Utah, a Utah limited partnership; and is a
general partner in EDJ Insurance Agency of California, a California
general partnership; each of which engage in general insurance
brokerage activities. Affiliates of the Partnership include EDJ
Insurance Agency of Nevada, EDJ Insurance Agency of Texas, Inc.,
EDJ Insurance Agency of Alabama, EDJ Insurance Agency of Ohio,
Inc., EDJ Insurance Agency of Florida, EDJ Insurance Agency of
Wyoming, EDJ Insurance Agency of Arizona and EDJ Insurance Agency
of Massachusetts. The Partnership holds all of the Partnership
equity of Unison Investment Trusts, L.P., d/b/a Unison Investment
Trusts, Ltd., a Missouri limited partnership, which has sponsored
unit investment trust programs. The general partner of Unison
Investment Trusts, L.P. is Unison Capital Corp., Inc., a Missouri
corporation wholly owned by the Partnership. The Partnership owns
100% of the outstanding common stock of Cornerstone Mortgage
Investment Group, Inc., a Delaware limited purpose corporation
which has issued and sold collateralized mortgage obligation bonds,
and Cornerstone Mortgage Investment Group II, Inc., a Delaware
limited purpose corporation which has structured and sold secured
mortgage bonds. The Partnership owns 100% of the outstanding stock
of CIP Management, Inc., which is the managing general partner of
CIP Management, L.P. CIP Management, L.P. is the managing general
partner of Community Investment Partners, L.P. and Community
Investment Partners II, L.P., business development companies.
Other affiliates of the Partnership include Patronus, Inc. and EDJ
Investment Advisory Services. Neither has conducted an active
business.
Revenues by Source. The following table sets forth, for the past
three years the sources of the Partnership's revenues by dollar
amounts, (all amounts in thousands):
1995 1994 1993
Commissions
Listed $ 86,589 $ 63,903 $ 70,634
Mutual Funds 227,832 202,698 269,818
O-T-C 30,929 18,985 20,786
Insurance 105,497 85,759 72,536
Other 1,105 580 596
Principal Transactions 125,762 163,050 92,471
Investment Banking 35,478 36,359 45,001
Interest & Dividends 61,684 52,143 38,084
Money-Market Fees 12,272 10,110 10,048
IRA Custodial Service Fees 7,247 5,614 4,387
Other Revenues 25,057 18,844 15,203
____________ ____________ ____________
Total Revenues $ 719,452 $ 658,045 $ 639,564
Because of the interdependence of the activities and departments of
the Partnership's investment business and the arbitrary assumptions
involved in allocating overhead, it is impractical to identify and
specify expenses applicable to each aspect of the Partnership's
operations. Furthermore, the net income of firms principally
engaged in the securities business, including the Partnership's, is
effected by interest savings as a result of customer and other
credit balances and interest earned on customer margin accounts.
Listed Brokerage Transactions. A large portion of the
Partnership's revenue is derived from customers' transactions in
which the Partnership acts as agent in the purchase and sale of
listed corporate securities. These securities include common and
preferred stocks and corporate debt securities traded on and off
the securities exchanges. Revenue from brokerage transactions is
highly influenced by the volume of business and securities prices.
Customers' transactions in securities are effected on either a cash
or a margin basis. In a margin account, the Partnership lends the
customer a portion of the purchase price up to the limits imposed
by the margin regulations of the Federal Reserve Board (Regulation
T), New York Stock Exchange (NYSE) margin requirements, or the
Partnership's internal policies, which may be more stringent than
the regulatory minimum requirements. Such loans are secured by the
securities held in customers' margin accounts. These loans provide
a source of income to the Partnership since it is able to lend to
customers at rates which are higher than the rates at which it is
able to borrow on a secured basis. The Partnership is permitted to
use as collateral for the borrowings, securities owned by margin
customers having an aggregate market value generally up to 140
percent of the debit balance in margin accounts. The Partnership
may also use funds provided by free credit balances in customers'
accounts to finance customers' margin account borrowings.
In permitting customers to purchase securities on margin, the
Partnership assumes the risk of a market decline which could reduce
the value of its collateral below a customer's indebtedness before
the collateral is sold. Under the NYSE rules, the Partnership is
required in the event of a decline in the market value of the
securities in a margin account to require the customer to deposit
additional securities or cash so that at all times the loan to the
customer is no greater than 75 percent of the value of the
securities in the account ( or to sell a sufficient amount of
securities in order to maintain this percentage). The Partnership,
however, imposes a more stringent maintenance requirement.
Variations in revenues from listed brokerage commissions between
periods is largely a function of market conditions; however, some
portion of the overall increases in recent years is due to the
growth in the number of registered representatives over these
periods.
Mutual Funds. The Partnership distributes mutual fund shares in
continuous offerings and new underwritings. As a dealer in mutual
fund shares, the Partnership receives a dealers' discount which
generally ranges from 1 percent to 5 3/4 percent of the purchase
price of the shares, depending on the terms of the dealer agreement
and the amount of the purchase. The Partnership also earns service
fees which are generally based on 15 to 25 basis points of its
customers' assets which are held by the mutual funds. The
Partnership does not manage any mutual fund, although it is a
limited partner of Passport Research, Ltd., an advisor to a money
market mutual fund.
Over-the-Counter Transactions. Partnership activities in unlisted
(over-the-counter) transactions are essentially similar to its
activities as a broker in listed securities. In connection with
customers' orders to buy or sell securities, the Partnership
charges a commission for both principal and agency transactions.
Principal Transactions. The Partnership makes a market in over-
the-counter corporate securities, municipal obligations, including
general obligations and revenue bonds, unit investment trusts and
mortgage-backed securities. The Partnership's market-making
activities are conducted with other dealers in the "wholesale"
market and "retail" market wherein the Partnership acts as a dealer
buying from and selling to its customers. In making markets in
over-the-counter securities, the Partnership exposes its capital to
the risk of fluctuation in the market value of its security
positions. It is the Partnership's policy not to trade for its own
account.
As in the case of listed brokerage transactions, revenue from over-
the-counter and principal transactions is highly influenced by the
volume of business and securities prices, as well as by the varying
number of registered representatives employed by the Partnership
over the periods indicated.
Insurance. The Partnership has executed several agency agreements
with various national insurance companies. Through its 3,006
investment representatives who hold insurance sales licenses, EDJ
is able to offer life insurance, long term care insurance, and
fixed and variable annuities to its customers.
Investment Banking. The Partnership's investment banking
activities are performed by its Syndicate and Underwriting
Departments. The principal service which the Partnership renders
as an investment banker is the underwriting and distribution of
securities either in a primary distribution on behalf of the issuer
of such securities or in a secondary distribution on behalf of a
holder of such securities. The distributions of corporate and
municipal securities are, in most cases, underwritten by a group or
syndicate of underwriters. Each underwriter has a participation in
the offering.
Unlike many larger firms against which the Partnership competes,
the Partnership does not presently engage in other investment
banking activities such as assisting in mergers and acquisitions,
arranging private placement of securities issues with institutions
or providing consulting and financial advisory services to
corporations.
The Syndicate and Underwriting Departments are responsible for the
largest portion of the Partnership's investment banking business.
In the case of an underwritten offering managed by the Partnership,
these departments may form underwriting syndicates and work closely
with the branch office system for sales of the Partnership's own
participation and with other members of the syndicate in the
pricing and negotiation of other terms. In offerings managed by
others in which the Partnership participates as a syndicate member,
these departments serve as active coordinators between the managing
underwriter and the Partnership's branch office system.
The underwriting activity of the Partnership involves substantial
risks. An underwriter 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 part of its commitment at less than the agreed
purchase price. Furthermore, the commitment of capital to
underwriting may adversely affect the Partnership's capital
position and, as such, its participation in an underwriting may be
limited by the requirement that it must at all times be in
compliance with the Securities and Exchange Commission's uniform
Net Capital rule.
The Securities Act of 1933 and other applicable laws and
regulations impose substantial potential liabilities on
underwriters for material misstatements or omissions in the
prospectus used to describe the offered securities. In addition,
there exists a potential for possible conflict of interest between
an underwriter's desire to sell its securities and its obligation
to its customers not to recommend unsuitable securities. In recent
years there has been an increasing incidence of litigation in these
areas. These lawsuits are frequently brought for the benefit of
large classes of purchasers of underwritten securities. Such
lawsuits often name underwriters as defendants and typically seek
substantial amounts in damages.
Interest and Dividends. Interest and dividend income is earned
primarily on securities held and margin account balances. Interest
is also earned by the Association on its loan portfolio.
Money Market Fees, IRA Custodial Service Fees and Other Revenues.
Other revenue sources include money market management fees, IRA
custodial services fees, accommodation transfer fees, gains from
sales of certain assets, and other product and service fees. Also
included is non-commission revenue received from mutual funds the
Partnership distributes. The Partnership has an interest in the
investment advisor to its money market fund, Daily Passport Cash
Trust. Revenue from this source has increased over the periods due
to growth in the fund, both in dollars invested and number of
accounts. In 1991 EDJ became the custodian for its IRA accounts.
Each account is charged an annual service fee for services rendered
to it by the Partnership.
The Partnership has registered an investment advisory program with
the SEC under the Investment Advisors Act of 1940. This service is
offered firmwide and involves income and estate tax planning and
analysis for clients. Revenues from this source are insignificant
and included under "Other Revenues."
Research Department. The Partnership maintains a Research
Department to provide specific investment recommendations and
market information for retail customers. The Department
supplements its own research with the services of various
independent research services. The Partnership competes with many
other securities firms with substantially larger research staffs in
its research activities.
Customer Account Administration and Operations. Operations
employees are responsible for activities relating to customers'
securities and the processing of transactions with other
broker/dealers. These activities include receipt, identification,
and delivery of funds and securities, internal financial controls,
accounting and personnel functions, office services, storage of
customer securities and the handling of margin accounts. The
Partnership processes substantially all of its own transactions.
It is important that the Partnership maintains current and accurate
books and records from both a profit viewpoint as well as for
regulatory compliance.
To expedite the processing of orders, the Partnership's branch
office system is linked to the St. Louis headquarters office
through an extensive communications network. Orders for all
securities are centralized and executed in St. Louis. The
Partnership's processing of paperwork following the execution of a
security transaction is automated, and operations are generally on
a current basis.
There is considerable fluctuation during any one year and from year
to year in the volume of transactions the Partnership processes.
The Partnership records transactions and posts its books on a daily
basis. Operations' personnel monitor day-to-day operations to
determine compliance with applicable laws, rules and regulations.
Failure to keep current and accurate books and records can render
the Partnership liable to disciplinary action by governmental and
self-regulatory organizations.
The Partnership has a computerized branch office communication
system which is principally utilized for entry of security orders,
quotations, messages between offices, research of various customer
account information and cash receipts functions.
The Partnership clears and settles virtually all of its listed
transactions through the National Securities Clearing Corporation
("NSCC"), New York, New York. NSCC effects clearing of securities
on the New York, American and Midwest Stock Exchanges.
In conjunction with clearing and settling transactions with NSCC
the Partnership holds customers' securities on deposit with the
Depository Trust Company ("DTC") in lieu of maintaining physical
custody of the certificates.
The Partnership is substantially dependent upon the operational
capacity and ability of NSCC/DTC. Any serious delays in the
processing of securities transactions encountered by NSCC/DTC may
result in delays of delivery of cash or securities to the
Partnership's customers. These services are performed for the
Partnership under contracts which may be changed or terminated at
will by either party.
Automated Data Processing, Inc., ("ADP") provides automated data
processing services for customer account activity and records.
The Partnership does not employ its own floor broker for
transactions on exchanges. The Partnership has arrangements with
other brokers to execute the Partnership's transactions in return
for a commission based on the size and type of trade. If for any
reason any of the Partnership's clearing, settling or executing
agents were to fail, the Partnership and its customers would be
subject to possible loss. While the coverages provided by the
Securities Investors Protection Corporation (SIPC) and protection
in excess of SIPC limits would be available to customers of the
Partnership, to the extent that the Partnership would not be able
to meet the obligations of the customers, such customers might
experience delays in obtaining the protections afforded them by the
SIPC and the Partnership's insurance carrier.
The Partnership believes that its internal controls and safeguards
concerning the risks of securities thefts are adequate. Although
the possibility of securities thefts is a risk of the industry, the
Partnership has not had, to date, a significant problem with such
thefts. The Partnership maintains fidelity bonding insurance
which, in the opinion of management, provides adequate coverage.
Employees. Including its general partners, the Partnership has
approximately 10,998 full and part-time employees, including 3,226
who are registered salespeople as of February 23, 1996. The
Partnership's salespersons are compensated on a commission basis
and may, in addition, be entitled to bonus compensation based on
their respective branch office profitability and the profitability
of the Partnership. The Partnership has no formal bonus plan for
its non-registered employees. The Partnership has, however, in the
past paid bonuses to its non-registered employees on an informal
basis, but there can be no assurance that such bonuses will be paid
for any given period or will be within any specific range of
amounts.
Employees of the Partnership are bonded under a blanket policy as
required by NYSE rules. The annual aggregate amount of coverage is
$40,000,000 subject to a $2,000,000 deductible provision, per
occurrence.
The Partnership maintains a training program for prospective
salespeople which includes nine weeks of concentrated instruction
and on-the-job training in a branch office. The first phase of
training is spent studying Series 7 examination materials and
preparing for and taking the examination. The first week of the
training after passing the examination is spent in a comprehensive
training program in St. Louis. The next five weeks include on-the-
job training in branch locations reviewing investments, office
procedures and sales techniques. The salesperson is then sent to a
designated location, for four weeks, to establish the EDJ office,
conduct market research and prepare for opening the office. After
the salesperson has opened a branch office, one final week is spent
in a central location to complete the initial training program.
Two and four months later, the investment representative attends
additional training classes in St. Louis, and subsequently, EDJ
offers periodic continuing training to its experienced sales force.
EDJ's basic brokerage payout is similar to its competitors. A
bonus may also be paid based on the profitability of the branch and
the profitability of the Partnership.
The Partnership considers its employee relations to be good and
believes that its compensation and employee benefits which include
medical, life, and disability insurance plans and profit sharing
and deferred compensation retirement plans, are competitive with
those offered by other firms principally engaged in the securities
business.
Competition. The Partnership is subject to intensive competition
in all phases of its business from other securities firms, many of
which are substantially larger than the Partnership in terms of
capital, brokerage volume and underwriting activities. In
addition, the Partnership encounters competition from other
organizations such as banks, insurance companies, and others
offering financial services and advice. The Partnership also
competes with a number of firms offering discount brokerage
services, usually with lower levels of service to individual
customers. In recent periods, many regulatory requirements
prohibiting non-securities firms from engaging in certain aspects
of brokerage firms' business have been eliminated and further
removal of such prohibitions is anticipated. With minor
exceptions, customers are free to transfer their business to
competing organizations at any time. There is intense
competition among securities firms for salespeople
with good sales production records. In recent periods, the
Partnership has experienced increasing efforts by competing firms
to hire away its registered representatives although the
Partnership believes that its rate of turnover of investment
representatives is not higher than that of other firms comparable
to the Partnership.
Regulation. The securities industry in the United States is
subject to extensive regulation under both federal and state laws.
The SEC is the federal agency responsible for the administration of
the federal securities laws. The Partnership's principal
subsidiary is registered as a broker-dealer and investment advisor
with the SEC. Much of the regulation of broker-dealers has been
delegated to self-regulatory organizations, principally the NASD
and national securities exchanges such as the NYSE, which has been
designated by the SEC as the Partnership's primary regulator.
These self-regulatory organizations adopt rules (which are subject
to approval by the SEC) that govern the industry and conduct
periodic examinations of the Partnership's operations. Securities
firms are also subject to regulation by state securities
administrators in those states in which they conduct business. EDJ
or an affiliate is registered as a broker-dealer in 50 states,
Puerto Rico and Canada.
Broker-dealers are subject to regulations which cover all aspects
of the securities business, including sales methods, trade
practices among broker-dealers, use and safekeeping of customers'
funds and securities, capital structure of securities firms,
record-keeping and the conduct of directors, officers and
employees. Additional legislation, changes in rules promulgated by
the SEC and self-regulatory organizations, or changes in the
interpretation or enforcement of existing laws and rules, may
directly affect the mode of operation and profitability of broker-
dealers. The SEC, self-regulatory organizations and state
securities commissions may conduct administrative proceedings which
can result in censure, fine, suspension or expulsion of a broker-
dealer, its officers or employees. The principal purpose of
regulation and discipline of broker-dealers is the protection of
customers and the securities markets, rather than protection of the
creditors and stockholders of broker-dealers. In addition, EDJ
conducts business in Canada, through a subsidiary partnership which
is regulated by the Investment Dealers Association of Canada. As a
federally chartered savings and loan, the Association is subject to
regulation by the Office of Thrift Supervision "OTS".
Uniform Net Capital Rule. As a broker-dealer and a member firm of
the NYSE, the Partnership is subject to the Uniform Net Capital
Rule (Rule) promulgated by the SEC. The Rule is designed to
measure the general financial integrity and liquidity of a broker-
dealer and the minimum Net Capital deemed necessary to meet the
broker-dealer's continuing commitments to its customers. The Rule
provides for two methods of computing Net Capital and the
Partnership has adopted what is generally referred to as the
alternative method. Minimum required Net Capital under the
alternative method is equal to 2% of the customer debit balances,
as defined. The Rule prohibits withdrawal of equity capital
whether by payment of dividends, repurchase of stock or other
means, if Net Capital would thereafter be less than 5% of customer
debit balances. 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. In computing Net Capital, various
adjustments are made to exclude assets which are not readily
convertible into cash and to provide a conservative statement of
other assets such as a company's inventories. Failure to maintain
the required Net Capital may subject a firm to suspension or
expulsion by the NYSE, the SEC and other regulatory bodies and may
ultimately require its liquidation. The Partnership has, at all
times, been in compliance with the Net Capital rules.
ITEM 2. PROPERTIES
The Partnership conducts its headquarters operations from two
locations in St. Louis County, Missouri which are comprised of 18
separate buildings containing approximately 761,700 usable square
feet. In addition, the Partnership leases approximately 12,000
square feet of office space for its Canadian headquarters
operations in Mississauga, Ontario. The Partnership also maintains
facilities in 3,195 branch locations which (as of December 31,
1995) are predominantly rented under cancelable leases.
ITEM 3. LEGAL PROCEEDINGS
In recent years there has been an increasing incidence of
litigation involving the securities industry. Such suits often
seek to benefit large classes of industry customers; many name
securities dealers as defendants along with exchanges in which they
hold membership and seek large sums as damages under federal and
state securities laws, anti-trust laws, and common law.
Various legal actions, primarily relating to the distribution of
securities, are pending against the Partnership. Certain cases are
class actions (or purported class actions) claiming substantial
damages. These actions are in various stages and the results of
such actions cannot be predicted with certainty. In the opinion of
management, after consultation with legal counsel, the ultimate
resolution of these actions is not expected to have a material
adverse impact on the Partnership's operations or financial
condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There is no market for the Limited or Subordinated Limited
Partnership interests and their assignment is prohibited.
ITEM 6. SELECTED FINANCIAL DATA
The following information sets forth, for the past five years,
selected financial data. (All amounts in thousands, except per
unit information.)
Summary Income Statement Data:
1995 1994 1993 1992 1991
Revenues $719,452 $658,045 $639,564 $553,970 $411,588
Net income 58,186 53,857 66,211 62,282 40,875
Net income per
weighted average
$1,000 equivalent
limited partnership
unit outstanding $125.01 $127.59 $194.62 $238.41 $185.92
Weighted average
$1,000 equivalent
limited partnership
units outstanding 67,345 63,165 50,381 41,160 42,616
Net income per
weighted average
$1,000 equivalent
subordinated limited
partnership unit
outstanding $225.00 $237.83 $350.32 $418.21 $322.38
Weighted average
$1,000 equivalent
subordinated limited
partnership units
outstanding 27,720 21,789 16,936 12,941 10,624
Summary Balance Sheet Data:
1995 1994 1993 1992 1991
Total assets $1,045,501 $953,359 $800,478 $653,253 $513,730
======== ======= ======= ======= =======
Long-term debt $70,127 $ 41,779 $ 33,317 $ 23,847 $ 24,769
Other liabilities,
exclusive of
subordinated
liabilities 605,080 585,057 514,386 414,110 326,229
Subordinated
liabilities 122,000 136,000 73,000 78,000 48,000
Total partnership
capital 248,294 190,523 179,775 137,296 114,732
_________ ________ ________ ________ ________
Total liabilities
and partnership
capital $1,045,501 $953,359 $800,478 $653,253 $513,730
======== ======== ======== ======== ========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table summarizes the changes in major categories of
revenues and expenses for the last two years (Dollar amounts in
thousands.)
1995 vs. 1994 1994 vs. 1993
Increase - (Decrease)
Amount Percentage Amount Percentage
Revenues
Commissions $ 80,027 22% $ (62,445) (14)%
Principal transactions (37,288) (23) 70,579 76
Investment banking (881) (2) (8,642) (19)
Interest and dividends 9,541 18 14,059 37
Other 10,008 29 4,930 17
_______ ___ __________ ___
61,407 9 18,481 3
________ ___ __________ ___
Expenses
Employee and partner
compensation and
benefits 22,964 6 (6,997) (2)
Occupancy and equipment 15,430 22 9,916 17
Communications and data
processing 4,021 8 13,724 40
Interest 2,687 9 9,616 50
Payroll and other taxes 2,373 11 3,108 17
Floor brokerage and
clearance fees (20) 0 (371) (6)
Other operating expenses 9,623 20 1,839 4
________ ___ __________ ___
57,078 9 30,835 5
________ ___ __________ ___
Net income $ 4,329 8% $ (12,354) (19)%
RESULTS OF OPERATIONS (1995 VERSUS 1994)
Revenues increased 9% ($61 million) over 1994 to $719 million.
Expenses increased by 9% ($57 million), resulting in net income of
$58 million, an increase of 8% ($4 million) over 1994.
The firm slowed its salesforce growth to focus on implementing a
redesigned sales training program during 1995. As a result, the
firm decreased its number of Investment Representatives from 3,384
at the end of 1994 to 3,188 as of December 31, 1995.
Throughout 1995, the firm's product mix shifted significantly due
to changes in the economic environment during the year. Early in
1995, investors trended towards lower margin fixed income products.
As the year progressed, the product mix shifted to higher margin
mutual funds and insurance products. Although the number of
Investment Representatives was slightly lower in 1995, an overall
increased margin on customer dollars invested, combined with an
increase in customer dollars handled caused related revenue to
increase 7% ($42 million). Interest and other revenue also
increased during 1995.
Commission revenues increased 22% ($80 million) over 1994 levels
due primarily to a 12% ($25 million) increase in mutual fund
commissions and service fees and a 42% ($35 million) increase in
Listed and OTC agency commissions. The majority of mutual fund
commission revenues (81%) were derived from equity products.
Commission revenues benefited from an active stock market and
rising securities prices in 1995.
Principal transaction revenues decreased 23% ($37 million).
Government, Municipal, and Corporate bond revenue decreased 55%
($21 million), 21% ($12 million), and 13% ($3 million),
respectively. Additionally, Collateralized Mortgage Obligation
revenue declined 7% ($2 million). Offsetting these decreases was
an increase in Over-the-Counter equity revenue of 69% ($3 million).
During the first and second quarters of 1995, investors deferred
their investment decisions and purchased certificates of deposit
and short term fixed income securities. Later in the year,
influenced by a low inflation climate and interest rates, investors
sought higher returns in equity products, shifting away from fixed
income products.
Investment Banking revenues declined $1 million due to a decline in
municipal bond originations.
Interest and dividend revenues increased 18% ($9.5 million).
Interest earned on margin balances rose 16% ($6.5 million),
primarily due to higher interest rates in 1995 compared with 1994.
Interest income from the Association contributed $2 million in
interest revenue during 1995.
Other revenues increased 29% ($10 million) over 1994. Revenues
from non-bank custodian IRA accounts increased 29% ($2 million) due
to an increased number of accounts. Additionally, revenues
generated from money market management fees and non-commission
revenue received from mutual fund and insurance products increased
38% ($4.3 million) and 20% ($2.4 million), respectively.
Expenses increased 9% ($57 million). The Partnership continues to
make the investment necessary to support a larger salesforce in
future years. Increased expenses are primarily attributable to
payroll and occupancy costs both in the St. Louis headquarters and
the branches, as well as to technology related expenditures.
Overall, compensation costs increased by 6% ($23 million).
Commissions paid to Investment Representatives increased due to
increased revenues. The Partnership's compensation structure for
its investment representatives is designed to expand or contract
substantially as a result of changes in revenues, net income and
profit margins. Similarly, a portion of the non-sales personnel
compensation, which may be paid in the form of bonuses and profit
sharing contributions, expands and contracts in the same fashion.
In 1995, due to the variability in product mix and profitability as
measured during certain periods throughout the year, variable
compensation decreased by $8 million. Compensation costs in the
St. Louis headquarters as well as the branch offices increased in
order to support changing technology and to support a larger
salesforce in the future.
RESULTS OF OPERATIONS (1994 VERSUS 1993)
Revenues increased 3% ($18.5 million) over 1993 to $658 million.
Expenses increased by 5% ($31 million) resulting in net income of
$54 million, a decrease of 19% ($12 million) over 1993.
In 1994, the Partnership increased its salesforce by 23% to 3,378
investment representatives compared with 2,745 at the end of 1993.
The growth in the salesforce contributed to a 7% increase in
dollars invested by EDJ customers which grew from $17.8 billion in
1993 to $19.1 billion in 1994. Productivity measured on an
individual investment representative basis, however, has decreased
as EDJ has increased its investment representatives. Many of the
new investment representatives are beginners in the industry who
generally achieve profitability after about 30 months. In
addition, the product mix of the firm has shifted away from mutual
funds and into Certificates of Deposit, Corporate, Government and
Municipal bonds, which has reduced the margin on customer dollars
invested compared with 1993. As the yield curve has flattened,
customers were inclined to purchase shorter term investments, which
carry lower margins compared with longer term investments and
equities. These factors combined caused an overall increase in
revenues of 3% ($18.5 million) over 1993 to $658 million.
Commission revenues decreased $62 million primarily from a $79
million (35%) decrease in mutual fund commissions offset by a $10
million increase in mutual fund service fees. Listed and over-the-
counter agency commissions decreased $8.5 million or 10% over 1993.
Insurance commissions increased 18%, with variable and fixed
annuities increasing by $12.8 million. With rising interest rates
over the year, customers increased their investments in short and
intermediate term fixed income securities.
Principal transaction revenues increased 76% ($71 million) with
government and municipal bond revenues increasing $46 million.
Revenues from collateralized mortgage obligations (CMOs) increased
123% ($15.5 million) and corporate bonds increased 38% ($6.3
million). At the same time, O-T-C principal stock sales decreased
by $1 million.
Investment banking revenues declined 19% ($8.6 million) from
substantial decreases in equity originations and syndicate equity
participations ($7.2 million). Syndicate CMOs decreased 89% ($5.5
million) with the decrease partially offset by certificate of
deposit revenue increasing 110% ($9.1 million).
Interest and dividend revenues increased 37% or $14 million.
Customers' margin loan balances increased 4% in 1994 ($17 million)
ending the year at $468 million. Customer margin loan revenue
increased 38% ($11.1 million) primarily due to the increase in
interest rates during the year. U.S. Government and agency
interest income increased 42% ($2.8 million) from $6.5 million as
the Partnership increased Investment Securities by approximately
$60 million during the year.
Other revenues increased $5 million (17%) over 1993. Revenues from
non-bank custodian IRA accounts resulted in an increase of $1.2
million in 1994.
Overall expenses increased 5% ($31 million) as the Partnership
continued to incur significant costs related to the growth of its
salesforce, which has increased approximately 23% for each of the
last three years. The Partnership incurred approximately $28
million of training, salary and other costs in order to support the
growth in the salesforce compared with $21 million in 1993.
The Partnership's compensation structure for its investment
representatives and non-sales personnel is designed to expand or
contract substantially as a result of changes in revenues, net
income and profit margins. As a result of decreased revenues and
net income in 1994, variable compensation, including bonuses and
profit sharing contributions, declined by $35 million or 44% from
1993 levels. This was offset by increases in headquarter, branch
and trainee compensation which increased to support the 23% growth
in the salesforce. Overall, compensation decreased by $7 million.
Other operating expenses are less influenced by decreasing revenues
and net income. In total, these expenses increased by $38 million,
or 21%, and were primarily related to the headquarters and
increased branch expenses necessary to support a rapidly growing
salesforce.
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.
Liquidity and Capital Resources
The Partnership's equity capital at December 31, 1995, was $248.3
million compared to $190.5 million at December 31, 1994. Overall,
equity capital increased 30%, primarily due to the issuance of
partnership interests and retention of earnings. The Partnership
issued additional limited partnership interests in October 1995 of
$39.7 million and additional subordinated limited partnership
interests of $10.8 and $5.2 million in 1995 and 1994, respectively.
At December 31, 1995, the Partnership had a $44.1 million balance
of cash and cash equivalents. Lines of credit are in place at ten
banks aggregating $570 million ($545 million through uncommitted
facilities). Actual borrowing availability is primarily based on
securities owned and customers' margin securities. The Partnership
believes that the liquidity provided by existing cash balances and
borrowing arrangements will be sufficient to meet the Partnership
capital and liquidity requirements.
A substantial portion of the Partnership's 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.
For the year ended December 31, 1995, cash and cash equivalents
increased $7.4 million. Cash flows from operating activities
provided $175 million, primarily attributable to a decrease in
securities owned, decreases in net receivables from customers,
accounts payable, and net income, adjusted for depreciation and
amortization. Investing activities used $42 million primarily for
the purchase of fixed assets. Cash flows from financing activities
used $125 million primarily to decrease bank loans, repay
subordinated liabilities and fund withdrawals and distributions
from partnership capital. Financing activities providing cash were
the issuance of long-term debt and partnership capital.
For the year ended December 31, 1994, cash and cash equivalents
increased $7.9 million. Cash flows from operating activities used
$3.6 million, primarily attributable to an increase in securities
owned, decreases in net receivables from customers and net income,
adjusted for depreciation and amortization. Investing activities
used $43 million primarily for the purchase of fixed assets. Cash
flows from financing activities provided $54 million primarily from
the issuance of subordinated and long-term debt and bank loans.
Financing activities using cash were the repayment of long-term and
subordinated debt and withdrawals and distributions from
partnership capital.
For the year ended December 31, 1993, cash and cash equivalents
decreased $8.9 million. Cash flows from operating activities
provided $41 million, primarily attributable to a decrease in
securities owned, increases in net receivables from customers and
net income, adjusted for depreciation and amortization. Investing
activities used $47 million primarily for the purchase of fixed
assets. Cash flows from financing activities used $3 million
primarily for withdrawals and distributions from partnership
capital. Financing activities providing cash were from the
issuance of partnership interests and long-term debt.
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 $250,000
or 2% of aggregate debit items arising from customer transactions.
The Net Capital rule also provides the 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 December 31, 1995, EDJ's Net
Capital of $181,965,000 was 38% of aggregate debit items and its
net capital in excess of the minimum required was $172,401,000.
Net Capital and the related capital percentage may fluctuate on a
daily basis.
There were no material changes in the Partnership's overall
financial condition during the year ended December 31, 1995,
compared with the year ended December 31, 1994. 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. The firm carried higher trading inventory levels in
1995 as compared to 1994. 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 Partnership's growth in recent years has been financed through
sales of limited partnership interests to its employees, retention
of earnings and private placements of long-term and subordinated
debt.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements Included in this Item
Page No.
Report of Independent Public Accountants ................20
Consolidated Statements of Financial Condition as of
December 31, 1995 and 1994 ..............................21
Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993 ........................23
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 ........................24
Consolidated Statements of Changes in Partnership Capital
for the years ended December 31, 1995, 1994 and 1993 ...25
Notes to Consolidated Financial Statements ..............26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Jones Financial Companies, a Limited Partnership:
We have audited the accompanying consolidated statements of
financial condition of The Jones Financial Companies, a Limited
Partnership (a Missouri limited partnership) and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements
of income, cash flows and changes in partnership capital for each
of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of The
Jones Financial Companies, a Limited Partnership and subsidiaries
as of December 31, 1995 and 1994, and the results of their
operations, their cash flows and the changes in their partnership
capital for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
February 20, 1996
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
December 31, December 31,
(Amounts in thousands) 1995 1994
Cash and cash equivalents $ 44,112 $ 36,682
Receivable from:
Customers (Note 2) 489,041 497,961
Brokers or dealers and clearing
organizations (Note 3) 22,094 16,604
Mortgages and loans (Note 4) 58,836 -
Securities Owned, at market value (Note 5):
Inventory securities 88,295 86,191
Investment securities 123,060 137,066
Equipment, property and improvements
(Note 6) 145,095 125,764
Other assets 74,968 53,091
__________ __________
$ 1,045,501 $ 953,359
=========== ==========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
December 31, December 31,
(Amounts in thousands) 1995 1994
Bank loans (Note 7) $ 32,503 $ 165,000
Payable to:
Customers (Note 2) 360,754 293,324
Brokers or dealers and clearing
organizations (Note 3) 13,025 13,225
Depositors (Note 8) 61,189 -
Securities sold but not yet purchased, at
market value (Note 5) 18,428 16,037
Accounts payable and accrued expenses 49,097 39,425
Accrued compensation and employee
benefits 70,084 58,046
Long-term debt (Note 9) 70,127 41,779
__________ ____________
675,207 626,836
Liabilities subordinated to claims
of general creditors (Note 10) 122,000 136,000
Partnership capital (Notes 11 and 13):
Limited partners 103,972 67,461
Subordinated limited partners 31,524 23,722
General partners 112,798 99,340
__________ ____________
248,294 190,523
__________ ____________
$1,045,501 $ 953,359
========== ============
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
Years Ended
(Amounts in thousands, December 31,December 31, December 31,
except per unit information) 1995 1994 1993
Revenues:
Commissions $ 451,952 $ 371,925 $ 434,370
Principal transactions 125,762 163,050 92,471
Investment banking 35,478 36,359 45,001
Interest and dividends 61,684 52,143 38,084
Other 44,576 34,568 29,638
_______ _______ _______
719,452 658,045 639,564
_______ ________ _______
Expenses:
Employee and partner
compensation and benefits
(Note 14) 405,884 382,920 389,917
Occupancy and equipment
(Notes 6 and 15) 84,895 69,465 59,549
Communications and data
processing 51,912 47,891 34,167
Interest
(Notes 7, 8, 9 and 10) 31,431 28,744 19,128
Payroll and other taxes 23,661 21,288 18,180
Floor brokerage and clearance
fees 5,750 5,770 6,141
Other operating expenses 57,733 48,110 46,271
_______ _______ _______
661,266 604,188 573,353
_______ _______ _______
Net income $ 58,186 $ 53,857 $ 66,211
========== ========== ==========
Net income allocated to:
Limited partners $ 8,419 $ 8,059 $ 9,805
Subordinated limited partners 6,237 5,182 5,933
General partners 43,530 40,616 50,473
__________ ___________ __________
$ 58,186 $ 53,857 $ 66,211
========== ========== ==========
Net income per weighted average
$1,000 equivalent partnership
units outstanding:
Limited partners $ 125.01 $ 127.59 $ 194.62
========== ========== ==========
Subordinated limited partners $ 225.00 $ 237.83 $350.32
========== ========== ==========
Weighted average $1,000 equivalent
partnership units outstanding:
Limited partners 67,345 63,165 50,381
========== ========== ==========
Subordinated limited partners 27,720 21,789 16,936
========== ========== ==========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
December 31,December 31, December 31,
(Amounts in thousands) 1995 1994 1993
CASH FLOWS PROVIDED (USED)
BY OPERATING ACTIVITIES:
Net income $ 58,186 $ 53,857 $ 66,211
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation and amortization 22,340 19,236 16,800
Decrease (increase) in net
receivable from/payable
to customers 76,350 17,539 (37,374)
(Increase) decrease in net
receivable from/payable to
brokers or dealers and
clearing organizations (5,690) 21,079 (24,493)
Increase in receivable from
mortgages and loans (3,011) - -
Decrease (increase) in securities
owned, net 14,293 (94,154) 22,789
Increase in payable to
depositors 2,464 - -
Increase (decrease) in accounts
payable and other accrued
expenses 21,382 (9,212) 6,960
Increase in other assets (11,382) (11,987) (9,715)
_______ _______ _______
Net cash provided (used) by
operating activities 174,932 (3,642) 41,178
_______ _______ _______
CASH FLOWS USED BY INVESTING ACTIVITIES:
Purchase of equipment,
property and improvements (40,199) (42,566) (47,109)
Purchase of Boone National Savings
and Loan Association, F.A.,
net of cash acquired (Note 12) (2,103) - -
__________ ________ ______
Net cash used by investing
activities (42,302) (42,566) (47,109)
__________ ________ ________
CASH FLOWS (USED) PROVIDED BY
FINANCING ACTIVITIES:
(Decrease) increase in bank
loans (135,505) 25,739 16,261
Issuance of long-term debt 30,512 44,859 11,700
Repayment of long-term debt (5,792) (36,397) (2,230)
Issuance of subordinated
liabilities - 92,000 -
Repayment of subordinated
liabilities (14,000) (29,000) (5,000)
Issuance of partnership
interests 50,523 5,167 29,195
Redemption of partnership
interests (7,565) (2,343) (1,193)
Withdrawals and distributions from
partnership capital (43,373) (45,933) (51,734)
_______ _______ _______
Net cash (used) provided by
financing activities (125,200) 54,092 (3,001)
________ _______ _______
Net increase (decrease) in cash
and cash equivalents 7,430 7,884 (8,932)
CASH AND CASH EQUIVALENTS,
beginning of year 36,682 28,798 37,730
_________ __________ __________
end of year $ 44,112 $ 36,682 $ 28,798
========== ========== ==========
Cash paid for interest $ 32,892 $ 27,291 $ 17,840
========== ========== ==========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL
YEARS ENDED DECEMBER 31, 1995, 1994 and 1993
Subordinated
Limited Limited General
Prtnship Prtnship Prtnship
(Amounts in thousands) Capital Capital Capital Total
Balance, December 31,
1992 $ 47,328 $ 14,716 $ 75,252 $ 137,296
Issuance of partnership
interests 24,763 4,432 - 29,195
Redemption of partnership
interests (1,193) - - (1,193)
Net income 9,805 5,933 50,473 66,211
Withdrawals and
distributions (9,481) (5,918) (36,335) (51,734)
__________ _______ ______ __________
Balance, December 31,
1993 71,222 19,163 89,390 179,775
Issuance of partnership
interests - 5,167 - 5,167
Redemption of partnership
interests (1,905) (438) - (2,343)
Net income 8,059 5,182 40,616 53,857
Withdrawals and
distributions (9,915) (5,352) (30,666) (45,933)
__________ __________ __________ ________
Balance, December 31,
1994 67,461 23,722 99,340 190,523
Issuance of partnership
interests 39,681 10,842 - 50,523
Redemption of partnership
interest (3,646) (3,919) - (7,565)
Net income 8,419 6,237 43,530 58,186
Withdrawals and
distributions (7,943) (5,358) (30,072) (43,373)
__________ __________ _______ __________
Balance, December 31,
1995 $ 103,972 $ 31,52 $ 112,79 $ 248,294
======== ======== ======= ========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Amounts in thousands)
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
The Partnership's Business and Basis of Accounting. The
accompanying consolidated financial statements include the accounts
of The Jones Financial Companies, a Limited Partnership, 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 under 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 listed and unlisted
securities, investment banking, principal transactions, insurance
products and is a distributor of mutual fund shares. The
Partnership conducts business throughout the United States and in
Canada with its customers, various brokers and dealers, clearing
organizations, depositories and banks.
The Partnership acquired Boone National Savings and Loan
Association, F.A. (``Association'') on July 21, 1995 (Note 12). The
Association operates primarily in Central Missouri and plans to
provide trust services to EDJ customers.
The financial statements have been prepared under the accrual basis
of accounting which requires the use of certain estimates by
management in determining the Partnership's assets, liabilities,
revenues and expenses.
Cash and Cash Equivalents. The Partnership considers all short-
term investments with original maturities of three months or less,
that are not held for sale to customers, to be cash equivalents.
Transactions. The Partnership's securities activities involve
execution, settlement and financing of various securities
transactions for customers. These transactions (and related
revenue and expense) are recorded on a settlement date basis,
generally representing the third business day following the
transaction date, which is not materially different than a trade
date basis. The Partnership may be exposed to risk of loss in the
event customers, other brokers and dealers, banks, depositories or
clearing organizations are unable to fulfill contractual
obligations. For transactions in which it extends credit to
customers, the Partnership seeks to control the risks associated
with these activities by requiring customers to maintain margin
collateral in compliance with various regulatory and internal
guidelines. The Association makes secured commercial, real estate,
and consumer loans primarily to customers in Central Missouri.
Securities Owned. Securities owned are valued at current market
prices. Unrealized gains or losses are reflected in principal
transactions revenue.
Equipment, Property and Improvements. Equipment, including
furniture and fixtures, is depreciated using straight-line and
accelerated methods over estimated useful lives of five to ten
years. Buildings are depreciated using the straight-line method
over estimated useful lives approximating thirty to thirty two
years. Amortization of property improvements is computed based on
the remaining life of the property or economic useful life of the
improvement, whichever is less. When assets are retired or
otherwise disposed of, the cost and related accumulated
depreciation or amortization are removed from the accounts, and any
resulting gain or loss is reflected in income for the period. The
cost of maintenance and repairs is charged against income as
incurred, whereas significant renewals and betterments are
capitalized.
Segregated Cash Equivalents and Securities Owned. Rule 15c3-3 of
the Securities and Exchange Commission requires deposits of cash or
securities to a special reserve bank account for the benefit of
customers if total customer related credits exceed total customer
related debits, as defined. No deposits of cash or securities were
required as of December 31, 1995 or 1994.
Income Taxes. Income taxes have not been provided for in the
consolidated financial statements since The Jones Financial
Companies, a Limited Partnership, is organized as a partnership,
and each partner is liable for its own tax payments.
NOTE 2 - RECEIVABLE FROM AND PAYABLE TO CUSTOMERS
Accounts receivable from and payable to customers include margin
balances and amounts due on uncompleted transactions. Values of
securities owned by customers and held as collateral for these
receivables are not reflected in the financial statements.
Substantially all amounts payable to customers are subject to
withdrawal upon customer request.
NOTE 3 - RECEIVABLE FROM AND PAYABLE TO BROKERS OR DEALERS
AND CLEARING ORGANIZATIONS
The components of receivable from and payable to brokers or dealers
and clearing organizations are as follows:
1995 1994
Securities failed to deliver $ 3,880 $ 3,864
Deposits paid for securities borrowed 14,742 8,604
Deposits with clearing organizations 2,369 2,448
Other 1,103 1,688
______ _______
Total receivable from brokers or dealers
and clearing organizations $ 22,094 $ 16,604
========== ==========
Securities failed to receive $ 7,889 $ 10,064
Deposits received for securities loaned 4,889 2,735
Other 247 426
_________ __________
Total payable to brokers or dealers and
clearing organizations $ 13,025 $ 13,225
========= ==========
"Fails" represent the contract value of securities that have not
been received or delivered by settlement date.
NOTE 4 - RECEIVABLE FROM MORTGAGES AND LOANS
Receivables from mortgages and loans are comprised of the
Association's mortgage loans, primarily adjustable rate, net of
discounts, deferred origination fees and the allowance for loan
losses. The carrying amounts of the receivables approximate their
fair values.
NOTE 5 - SECURITIES OWNED
Securities owned are summarized as follows (at market value):
1995 1994
____________________________________________
Securities Securities
Sold but Sold but
Securities not yet Securities not yet
Owned Purchased Owned Purchased
Inventory Securities:
Certificates of deposit $ 4,740 $ - $ 3,113 $ 246
U.S. and Canadian government
and agency obligations 9,680 13,320 18,501 11,201
State and municipal
obligations 56,514 450 42,860 726
Corporate bonds and notes 12,167 2,615 16,342 3,145
Corporate stocks 5,194 2,043 5,375 719
__________ _________ __________ _______
$ 88,295 $ 18,428 $86,191 $16,037
========= ======== ======== ========
Investment Securities:
U.S. government and
agency obligations $ 123,060 $137,066
========= ========
The Partnership attempts to reduce its exposure to market price
fluctuations of its inventory securities through the sale of
futures contracts and U.S. government securities. The amount of
the securities purchased or sold will fluctuate on a daily basis
due to changes in interest rates and market conditions. Any gain
or loss on the hedging activities is recognized in principal
NOTE 6 - EQUIPMENT, PROPERTY AND IMPROVEMENTS
Equipment, furniture and fixtures, property and improvements are
summarized as follows:
1995 1994
Land $ 13,671 $ 13,705
Buildings and improvements 92,704 76,142
Equipment 94,367 78,902
Furniture and fixtures 62,145 51,557
____________ ____________
Total equipment, property and
improvements 262,887 220,306
Accumulated depreciation and
amortization (117,792) (94,542)
____________ ____________
Equipment, property and improvements,
net $ 145,095 $ 125,764
========== ==========
NOTE 7 - BANK LOANS
The Partnership borrows from banks on a short-term basis primarily
to finance customer margin balances and inventory securities. As
of December 31, 1995, the Partnership had bank lines of credit
aggregating $570,000 of which $545,000 were through uncommitted
facilities. Actual borrowing availability is primarily based on
securities owned and customers' margin securities. At December 31,
1995 and 1994, collateral of $416,645 and $475,594, respectively,
was available to support secured bank loans of EDJ. As of December
31, 1995, the Association had a $1.5 million loan from the Federal
Home Loan Bank secured by mortgage loans. All loans outstanding
approximate their fair value.
Interest is at a fluctuating rate (weighted average rate of 5.8%
and 7.0% at December 31, 1995, and 1994, respectively) based on
short-term lending rates. The average of the aggregate short-term
bank loans outstanding was $97,527, $159,600 and $99,100 and the
average interest rate (computed on the basis of the average
aggregate loans outstanding) was 6.8%, 5.2% and 4.0% for the years
ended December 31, 1995, 1994 and 1993, respectively.
NOTE 8 - PAYABLE TO DEPOSITORS
Amounts payable to depositors is comprised of the Association's
various savings instruments offered to its customers, which include
transaction accounts and certificates of deposit with maturities
ranging from 90 days to 72 months. The carrying amounts of the
deposits approximate their fair values.
NOTE 9 - LONG-TERM DEBT
Long-term debt is comprised of the following:
1995 1994
Notes payable, secured by equipment,
interest at variable rates ranging
from 7.325% to 8.5% at December 31,
1995, due in monthly installments
of principal plus interest,
maturing from May 1, 1997 through
December 6, 2000. $ 14,274 $ 6,450
Notes payable, secured by property, interest
rates ranging from 7.59% to 8.72% at
December 31, 1995, principal and interest due
in monthly installments, maturing from
June 5, 2003 through April 5, 2008. 47,747 35,329
Notes payable, secured by the Association's
stock and a letter of credit, interest at variable
rates ranging from 5.97% to 7.325% at December
31, 1995, annual principal due plus
interest, maturing from July 24, 1998 through
June 30, 2000. 8,106 -
____________ ____________
$ 70,127 $ 41,779
========== ==========
Required annual principal payments, as of December 31, 1995, are as
follows:
Year Principal Payment
_____ ___________________
1996 $ 9,265
1997 9,019
1998 7,567
1999 7,837
2000 9,610
Thereafter 26,829
_____________
$ 70,127
=============
The Partnership has land, buildings and equipment with a carrying
value of $70,716 at December 31, 1995, which are subject to
security agreements which collateralize various notes payable.
Certain agreements contain restrictions that among other things,
require maintenance of certain financial ratios, levels of
indebtedness and limit the withdrawal of partnership capital. The
Partnership has estimated the fair value of the long-term debt to
be approximately $68,159 and $38,199 as of December 31, 1995 and
1994, respectively.
NOTE 10 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
Liabilities subordinated to the claims of general creditors consist
of:
1995 1994
Capital notes, 7.95%, due in annual
installments of $10,225, commencing on
April 15, 1998, with a final installment
of $10,200 due on April 15, 2006. $ 92,000 $ 92,000
Capital notes, 8.96%, due in annual
installments of $6,000 commencing on
May 1, 1998, with a final installment on
May 1, 2002 30,000 30,000
Capital notes, 10.6%, retired during 1995 -
14,000
____________ ____________
$ 122,000 $ 136,000
============ ============
The capital note agreements contain restrictions that among other
things, require maintenance of certain financial ratios, restrict
encumbrance of assets and creation of indebtedness and limit the
withdrawal of partnership capital. As of December 31, 1995, the
Partnership was required, under the note agreements, to maintain
minimum partnership capital of $110,000 and Net Capital as computed
in accordance with the uniform Net Capital rule of 7.5% of
aggregate debit items (See Note 13).
The subordinated liabilities are subject to cash subordination
agreements approved by the New York Stock Exchange and, therefore,
are included in the Partnership's computation of Net Capital under
the Securities and Exchange Commission's uniform Net Capital rule.
The Partnership has estimated the fair value of the subordinated
capital notes to be approximately $128,156 and $130,520 as of
December 31, 1995 and 1994, respectively.
NOTE 11 - PARTNERSHIP CAPITAL
The limited partnership capital, consisting of 98,410 and 62,375
$1,000 units at December 31, 1995 and 1994, respectively, is held
by current and former employees and general partners of the
Partnership. Each limited partner receives interest at seven and
one-half percent on the principal amount of capital contributed and
a varying percentage of the net income of the Partnership.
Interest expense includes $5,055, $4,741, and $3,781 for the years
ended December 31, 1995, 1994 and 1993, respectively, paid to
limited partners on capital contributed.
The subordinated limited partnership capital, consisting of 28,943
and 22,020 $1,000 units at December 31, 1995 and 1994,
respectively, is held by current and former general partners of the
Partnership. Each subordinated limited partner receives a varying
percentage of the net income of the Partnership. The subordinated
limited partner capital is subordinated to the limited partnership
capital.
Included in partnership capital at December 31, 1995 and 1994, are
undistributed profits of $17,477 and $14,679, respectively, to be
withdrawn by the partners.
NOTE 12 - ACQUISITION
Effective July 21, 1995, the Partnership purchased Boone National
Savings and Loan Association, F.A., in a stock purchase transaction
for approximately $8.6 million. The acquisition has been accounted
for as a purchase, and accordingly, the operating results of the
Association have been included in the Partnership's consolidated
results since the effective acquisition date. The acquisition was
funded with $5 million of long-term debt and a $3.6 million note
held by the sellers. The acquisition did not have a material
effect on the results of operations or financial position of the
Partnership in 1995. As of December 31, 1995, the total assets of
the Association were approximately $72.3 million.
NOTE 13 - 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 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 December 31, 1995, EDJ's Net Capital of $181,965 was 38% of
aggregate debit items and its Net Capital in excess of the minimum
required was $172,401. Net Capital and the related capital
percentage may fluctuate on a daily basis.
The Association is required under federal regulation to maintain
specified levels of liquidity and capital standards. The
Association has been in compliance with these regulations at all
times.
NOTE 14 - EMPLOYEE BENEFIT PLAN
The Partnership maintains a profit sharing plan covering all
eligible employees. Contributions to the plan are at the
discretion of the Partnership. However, participants may
contribute on a voluntary basis. Approximately $14,951, $13,835,
and $16,716 were provided by the Partnership for its contributions
to the plan for the years ended December 31, 1995, 1994 and 1993,
respectively. No post retirement benefits are provided.
NOTE 15 - COMMITMENTS
Furniture, fixtures, computer and communication equipment are
rented under various operating leases. Additionally, branch
offices are leased on a three to five year basis and are
cancellable at the option of the Partnership. The Partnership's
non-cancelable lease commitments greater than one year are
summarized below:
1996 $ 16,188
1997 16,342
1998 12,864
1999 5,434
2000 2,202
Thereafter 7,760
Rent expense was $44,486, $35,558, and $28,385 for the years ended
December 31, 1995, 1994 and 1993, respectively.
NOTE 16 - CONTINGENCIES
Various legal actions, primarily relating to the distribution of
securities, are pending against the Partnership. Certain cases are
class actions (or purported class actions) claiming substantial
damages. These actions are in various stages and the results of
such actions cannot be predicted with certainty. In the opinion of
management, after consultation with legal counsel, the ultimate
resolution of these actions is not expected to have a material
adverse impact on the Partnership's results of operations or
financial condition.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Jones Financial Companies, a Limited Partnership, being
organized as a partnership, does not have individuals associated
with it designated as officers or directors. As of February 23,
1996, the Partnership is comprised of 122 general partners, 2,792
limited partners and 57 subordinated limited partners. Under the
terms of the Partnership Agreement, John W. Bachmann is designated
Managing Partner and in said capacity has primary responsibility
for administering the Partnership's business, determining its
policies, controlling the management and conduct of the
Partnership's business and has the power to appoint and dismiss
general partners of the Partnership and to fix the proportion of
their respective interests in the Partnership. Subject to the
foregoing, the Partnership is managed by its 122 general partners.
The Management Committee of the Partnership is comprised of John W.
Bachmann, Douglas E. Hill, Charles R. Larimore, Richie L. Malone,
Steven Novik, Darryl L. Pope, Gary D. Reamey, Connie M.
Silverstein, Robert Virgil, Jr., and James D. Weddle. The purpose
of the Management Committee is to provide counsel and advice to the
Managing Partner in discharging his functions. Furthermore, in the
event the position of Managing Partner is vacant, the Management
Committee shall succeed to all of the powers and duties of the
managing partner.
None of the general partners are appointed for any specific term
nor are there any special arrangements or understandings pursuant
to their appointment other than as contained in the Partnership
Agreement.
No general partner is or has been individually, nor in association
with any prior business, the subject of any action under any
insolvency law or criminal proceeding or has ever been enjoined
temporarily or permanently from engaging in any business or
business practice.
A listing of the names, ages, dates of becoming a general partner
and area of responsibility for each general partner follows at
February 23, 1996:
Became
General
Name Age Partner Area of Responsibility
Warren K. Akerson 53 1974 Sales
Allan J. Anderson 53 1992 Sales Management
Charles E. Armstrong 56 1996 Sales
John W. Bachmann 57 1970 Managing Partner
Thomas M. Bartow 46 1989 Sales Training
James D. Bashor 41 1990 Regional Sales Leader
Robert J. Beck 41 1983 Municipal Trading
Roger W. Bennett 40 1995 Regional Sales Leader
John D. Beuerlein 42 1979 Sales Management
John S. Borota 55 1978 Sales Hiring
William H. Broderick, III 43 1986 On-line Marketing
and Communications
Morton L. Brown 49 1978 Managed Investments
Daniel A. Burkhardt 48 1979 Investment Banking
Jack L. Cahill 46 1980 Sales Training
Brett A. Campbell 37 1993 Sales Training
Donald H. Carter 52 1994 Regional Sales Leader
John J. Caruso 49 1988 Information Systems
Guy R. Cascella 38 1992 Sales Management
Became
General
Name Age Partner Area of Responsibility
Pamela K. Cavness 33 1995 Compliance
Craig E. Christell 39 1994 Regional Sales Leader
Richard A. Christensen, Jr.48 1978 Mutual Funds Processing
Robert J. Ciapciak 40 1988 HeadquartersAdministration
Stephen P. Clement 46 1990 Video Communications
Cheryl J. Cook-Schneider 37 1995 Compliance
Loyola A. Cronin 38 1987 Branch Operations
Stanley A. Cunningham 52 1995 Regional Sales Leader
Harry J. Daily, Jr. 49 1985 Regional Sales Leader
Paul R. Daniels 50 1995 Regional Sales Leader
Douglas E. Davis 39 1996 Regional Sales Leader
James E. Docksey 35 1995 Regional Sales Leader
Cynthia A. Doria 40 1995 Legal
Brian T. Duffy 43 1996 Regional Sales Leader
William T. Dwyer, Jr. 40 1994 Regional Sales Leader
Abe W. Dye 51 1984 Regional Sales Leader
Allen R. Eaker 49 1989 Regional Sales Leader
Norman L. Eaker 39 1984 Securities Processing
Kevin Eberle 45 1993 Regional Sales Leader
Michael J. Esser 47 1983 Sales Training
Kevin N. Flatt 47 1989 Corporate Bond Trading
Steve Fraser 40 1993 Securities Processing
Colleen A. Geraty 34 1995 Advertising
Chris A. Gilkison 42 1994 Branch Locations
Barbara G. Gilman 57 1988 Trust Marketing
Steven L. Goldberg 37 1987 Central Services
Ronald Gorgen 46 1993 Field Services
Robert L. Gregory 53 1974 Sales Hiring
Kevin C. Haarberg 41 1995 Regional Sales Leader
Patricia F. Hannum 35 1988 Marketing Services
Stephen P. Harrison 47 1990 Regional Sales Leader
James W. Harrod 60 1974 Sales Training
David L. Hayes 40 1994 Regional Sales Leader
Randy K. Haynes 40 1994 Operations
Peter R. Heisler 42 1996 Regional Sales Leader
Clifton L. Helbert 37 1996 Regional Sales Leader
John M. Hess 48 1992 Regional Sales Leader
Mary Beth Heying 38 1994 Communications
Douglas E. Hill 51 1974 Marketing
Alan J. Holmes 42 1996 Regional Sales Leader
Don R. Howard 44 1995 Regional Sales Leader
Stephen M. Hull 51 1994 Regional Sales Leader
Earl H. Hull, Jr. 50 1990 Regional Sales Leader
Glennon D. Hunn 53 1984 Information Systems
Gary R. Hunziker 55 1994 Regional Sales Leader
Thomas G. Iorio 35 1994 Regional Sales Leader
James J. Johnston 49 1995 Regional Sales Leader
Myles P. Kelly 42 1989 Accounting
Timothy J. Kirley 42 1994 Customer SegmentsMktg.
Became
General
Name Age Partner Area of Responsibility
Thomas M. Kliethemes 34 1995 Regional Sales Leader
James A. Krekeler 31 1995 Investment Banking
Frederick H. Kruse, Jr. 49 1995 CEO Boone National
Charles R. Larimore 55 1981 Branch Administration
Mark Leverenz 40 1995 Securities Processing
Michele Liebman 39 1994 Information Systems
Rhonda L. Liesenfeld 34 1996 Government Bonds Trading
Richie L. Malone 47 1979 Information Systems
Richard G. McCarty 56 1990 Regional Sales Leader
Timothy J. McCoy 35 1995 Customer Retention
Thomas Migneron 35 1993 Internal Audit
Richard G. Miller, Jr. 40 1991 Regional Sales Leader
Thomas W. Miltenberger 48 1985 Mutual Funds Marketing
Merry L. Mosbacher 37 1986 Insurance/Annuities Mktg.
Matt B. Myre 39 1988 Regional Sales Leader
Rodger W. Naugle 54 1992 Regional Sales Leader
Steven Novik 46 1983 Accounting
Cynthia Paquette 35 1993 Information Systems
George C. Picogna 38 1995 Regional Sales Leader
Darryl L. Pope 56 1971 Operations
Ray W. Raley 42 1996 Equity Marketing
Gary D. Reamey 40 1984 Canada Division
James L. Regnier 38 1994 Sales Training
Ray L. Robbins, Jr. 51 1975 Research
Wann V. Robinson 45 1992 Regional Sales Leader
Douglas Rosen 35 1993 Regional Sales Leader
Harry John Sauer, III 38 1988 Dividend Processing
Arthur C. Schlappi 41 1995 Regional Sales Leader
Thomas D. Schlosser 47 1995 Regional Sales Leader
Philip R. Schwab 47 1978 Syndicate/Equity Trading
Robert D. Seibel 61 1974 Regional Sales Leader
Festus W. Shaughnessy, III40 1988 InformationSystemsMktg.
Connie M. Silverstein 40 1988 Market Development
Alan F. Skrainka 34 1989 Research
John S. Sloop 47 1990 Sales Management
Randall L. Smith 40 1996 Regional Sales Leader
Ronald H. Smith 56 1984 Regional Sales Leader
Lawrence R. Sobol 45 1977 General Counsel
Lawrence E. Thomas 40 1983 Sales Management
Terry R. Tucker 41 1988 Information Systems
Richard G. Unnerstall 40 1989 Information Systems
Steven A. Vanvoorhis 45 1995 Regional Sales Leader
Susan S. Venn 33 1995 Accounting
Robert Virgil, Jr. 61 1994 HeadquartersAdministration
JoAnn Von Bergen 46 1986 Cash Processing
Donald E. Walter 50 1983 Compliance Director
James D. Weddle 42 1984 Sales Management
General
Name Age Partner Area of Responsibility
Vicki Westall 36 1993 Investment Banking
Thomas J. Westphal 37 1989 Customer Information
Heidi Whitfield 35 1993 Product Review
Robert D. Williams 34 1994 Regional Sales Leader
A. Thomas Woodward 49 1985 Sales Management
Price P. Woodward 33 1993 Customer Segments Mktg.
Alan T. Wright 49 1994 Investment Banking
Bradley A. Ytterberg 41 1994 Customer Segments Mktg.
Except as indicated below, each of the General Partners has been a
general partner of the Partnership for more than the preceding five
years.
Allan J. Anderson, joined the Partnership in 1984 as a registered
representative and became a general partner in 1992.
Charles E. Armstrong, joined the Partnership in 1977 as a
registered representative and became a general partner in 1996.
Roger W. Bennett, joined the Partnership in 1982 as a registered
representative and became a general partner in 1995.
Brett A. Campbell, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1993.
Donald H. Carter, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Guy Cascella, joined the Partnership in 1983 as a registered
representative and became a general partner in 1992.
Pamela K. Cavness, joined the Partnership in 1987 as an attorney
in the Compliance Department and became a general partner in 1995.
Craig E. Christell, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Cheryl Cook-Schneider, joined the Partnership in 1987 as an
attorney in the Compliance Department and became a general partner
in January 1995.
Stanley A. Cunningham, joined the Partnership in 1981 as a
registered representative and became a general partner in January
1995.
Paul R. Daniels, joined the Partnership in 1984 as a registered
representative and became a general partner in 1995.
Douglas E. Davis, joined the Partnership in 1987 as a registered
representative and became a general partner in 1996.
James E. Docksey, joined the Partnership in 1982 as a registered
representative and became a general partner in 1995.
Cynthia A. Doria, joined the Partnership in 1984 as an attorney in
the Legal Department and became a general partner in January 1995.
Terry Doyle, joined the Partnership in 1981 as a registered
representative and became a general partner in 1992.
Brian T. Duffy, joined the Partnership in 1987 as a registered
representative and became a general partner in 1996.
William T. Dwyer, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Kevin Eberle, joined the Partnership in 1985 as a registered
representative and became a general partner in 1993.
Steve Fraser, joined the Partnership in 1985 in the Operations
Department and became a general partner in January, 1993.
Colleen A. Geraty, joined the Partnership in 1987 in the
Advertising Department and became a general partner in January
1995.
Chris A. Gilkison, joined the Partnership in 1987 as a registered
representative and became a general partner in January 1994.
Ronald Gorgen, joined the Partnership in 1980 as a registered
representative and became a general partner in January 1993.
Kevin C. Haarberg, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1995.
David L. Hayes, joined the Partnership in 1977 active in hiring and
training and became a general partner in January 1994.
Randy K. Haynes, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1994.
Peter R. Heisler, joined the Partnership in 1985 as a registered
representative and became a general partner in 1996.
Clifton L. Helbert, joined the Partnership in 1989 as a registered
representative and became a general partner in 1996.
John M. Hess, joined the Partnership in 1982 as a registered
representative and became a general partner in 1992.
Mary Beth Heying, joined the Partnership in 1984 in the
Communications Department and became a general partner in January
1994.
Alan J. Holmes, joined the Partnership in 1989 as a registered
representative and became a general partner in 1996.
Don R. Howard, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1995.
Steven M. Hull, joined the Partnership in 1973 as a registered
representative and became a general partner in 1994.
Gary R. Hunziker, joined the Partnership in 1986 as a registered
representative and became a general partner in January 1994.
Thomas G. Iorio, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
James J. Johnston, joined the Partnership in 1975 as a registered
representative and became a general partner in 1995.
Timothy J. Kirley, joined the Partnership in 1983 as a registered
representative and became a general partner in 1994.
Thomas M. Kliethermes, joined the Partnership in 1987 as a
registered representative and became a general partner in 1995.
James A. Krekeler, joined the Partnership in 1988 in the Research
Department and became a general partner in January 1995.
Frederick H. Kruse, joined the Partnership in 1995 as a general
partner. Prior to this, he served as the President and Chief
Executive Officer of Boone National Savings and Loan Association,
F.A.
Mark Leverenz, joined the Partnership in 1988 in the Operations
Department and became a general partner in January 1995.
Michele M. Liebman, joined the Partnership in 1985 in the Data
Processing Department and became a general partner in January 1994.
Rhonda L. Liesenfeld, joined the Partnership in 1985 in the
corporate bond department, and became a general partner in 1996
Timothy J. McCoy, joined the Partnership in 1982 in the municipal
bond department and became a general partner in 1995.
Thomas W. Migneron, joined the Partnership in 1985 as an internal
auditor and became a general partner in January, 1993.
Rodger W. Naugle, joined the Partnership in 1981 as a registered
representative and became a general partner in 1992.
Cynthia Paquette, joined the Partnership in 1985 in the Information
Systems Department and became a general partner in January 1993.
Gregory C. Picogna, joined the Partnership in 1985 as a registered
representative and became a general partner in 1995.
Ray W. Raley, joined the Partnership in 1976 as a registered
representative and became a general partner in 1996 in the Equity
Marketing department.
James L. Regnier, joined the Partnership in 1983 as a registered
representative and became a general partner in January 1994.
Wann V. Robinson, joined the Partnership in 1985 as a registered
representative and became a general partner in 1992.
Douglas Rosen, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1993.
Arthur C. Schlappi, joined the Partnership in 1986 as a registered
representative and became a general partner in 1995.
Thomas D. Schlosser, joined the Partnership in 1978 as a registered
representative and became a general partner in 1995.
Randall L. Smith, joined the Partnership in 1980 as a registered
representative and became a general partner in 1996.
Steven A. VanVoorhis, joined the Partnership in 1976 as a
registered representative and became a general partner in 1995.
Susan S. Venn, joined the Partnership in 1986 in the Unit Trust
Area and became a general partner in 1995 in the Accounting
Department.
Robert Virgil, Jr., joined the Partnership in 1993 as a general
partner. Prior to this, he served as dean of the John M. Olin
School of Business at Washington University.
Vicki Westall, joined the Partnership in 1984 in the Product Review
Department and became a general partner in January, 1993.
Heidi Whitfield, joined the Partnership in 1982 as an equity
analyst and became a general partner in January 1993.
Robert D. Williams, joined the Partnership in 1986 as a registered
representative and became a general partner in 1994.
Price P. Woodward, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1993.
Alan T. Wright, joined the Partnership in 1985 in Investment
Banking Department and became a general partner in January 1994.
Bradley A. Ytterberg, joined the Partnership in 1984 as a
registered representative and became a general partner in 1994.
Daniel A. Burkhardt is a director of Essex County Gas Company,
Amsebury, Massachusetts; Galaxy Cablevision Management, Inc.,
Sikeston, Missouri; Mid-American Reality Investments, Inc., Omaha,
Nebraska; Southeastern Michigan Gas Enterprises Inc., Port Huron,
Michigan; St. Joseph Light & Power Co., St. Joseph, Missouri; and
Community Investment Partners, L.P. John C. Heisler, Philip R.
Schwab and John D. Beuerlein are directors of Cornerstone Mortgage
Investment Group, Inc. and Cornerstone Mortgage Investment Group
II, Inc. Ray L. Robbins, Jr. is a director of Community Investment
Partners, L.P. Robert Virgil, Jr. is a director of CPI Corp., St.
Louis, Missouri.
ITEM 11.EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the
Partnership during the three most recent years to the five general
partners receiving the greatest compensation (including respective
shares of profit participation).
Returns to General
Partner Capital
___________________
(1) (2) (3) & (4)
Net income General Partner
Deferred allocated invested Total
Compen- to General Capital at (1)(2)
Year Salaries sation Partners 12/31 (3)
John W.
Bachmann 1995 120,000 6,077 1,721,341 4,500,612 1,847,418
1994 120,000 5,55 1,681,517 4,115,163 1,807,070
1993 120,000 10,707 2,350,562 3,971,779 2,481,269
Douglas E.
Hill 1995 118,000 6,077 1,631,400 4,241,95 1,755,477
1994 118,000 5,55 1,513,365 3,703,647 1,636,918
1993 118,000 10,707 1,994,416 3,369,994 2,123,123
Ron
Larimore 1995 118,000 6,077 1,641,246 4,293,687 1,765,323
1994 118,000 5,553 1,513,365 3,703,647 1,636,918
1993 118,000 10,707 1,994,416 3,369,994 2,123,123
Richie L.
Malone 1995 118,000 6,077 1,610,391 4,293,687 1,734,468
1994 118,000 5,553 1,513,365 3,703,647 1,636,918
1993 118,000 10,707 1,899,444 3,209,518 2,028,151
Darryl W.
Pope 1995 118,000 6,077 1,629,819 4,241,956 1,753,896
1994 118,000 5,553 1,513,365 3,703,647 1,636,918
1993 118,000 10,707 1,994,416 3,369,994 2,123,123
(1)Each non-selling general partner receives a salary generally
ranging from $90,000 - $120,000 annually. Selling general
partners do not receive a specified salary, rather, they
receive the net sales commissions earned by them (none of the
five individuals listed above earned any such commissions).
Additionally, general partners who are principally engaged in
sales are entitled to office bonuses based on the profitability
of their respective branch office, on the same basis as the
office bonus program established for all investment
representative employees.
(2)Each general partner is a participant in the Partnership's
profit sharing plan which covers all eligible employees.
Contributions to the plan, which are within the discretion of
the Partnership, are made annually and have historically been
determined based on approximately twenty-four percent of the
Partnership's net income. Allocation of the Partnership's
contribution among participants is determined by each
participant's relative level of eligible earnings, including in
the case of general partners, their profit participation.
(3)Each general partner is entitled to participate in the annual
net income of the Partnership based upon the respective
percentage interest in the Partnership of each partner. These
interests in the Partnership held by each general partner
currently range from 1/10 of 1% to 4.65% in 1995, (1/10 of 1%
to 4.50% in 1994 and 1/10 of 1% to 4.95% in 1993). At the
discretion of the Managing Partner, the partnership agreement
provides that, generally, the first eight percent of net income
allocable to general partners be distributed on the basis of
individual merit or otherwise as determined by the Managing
Partner. Thereafter, the remaining net income allocable to
general partners is distributed based upon each individual's
percentage interest in the Partnership.
(4)Net income allocable to general partners is the amount
remaining after payment of interest and earnings on capital
invested to limited partners and subordinated limited partners.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Being organized as a limited partnership, management is vested in
the general partners thereof and there are no other outstanding
"voting" or "equity" securities. It is the opinion of the
Partnership that the general partnership interests are not
securities within the meaning of federal and state securities laws
primarily because each of the general partners participates in the
management and conduct of the business.
In connection with outstanding limited and subordinated limited
partnership interests (non-voting securities), 82 of the general
partners also own limited partnership interests and 26 of the
general partners also own subordinated limited partnership
interests, as noted in the table below.
As of February 23, 1996:
Name of Amount of
Beneficial Beneficial Percent of
Title of Class Owner Ownership Class
Limited Partnership All General
Interests Partners as
a Group $7,583,000 8%
Subordinated All General
Limited Partnership Partners as
Interests a Group 15,644,000 50%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of its business the Partnership has extended
credit to certain of its partners and employees in connection with
their purchase of securities. Such extensions of credit have been
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with non-affiliated persons, and did not involve more
than the normal risk of collectibility or present other unfavorable
features. The Partnership also, from time to time and in the
ordinary course of business, enters into transactions involving the
purchase or sale of securities from or to partners or employees and
members of their immediate families, as principal. Such purchases
and sales of securities on a principal basis are effected on
substantially the same terms as similar transactions with
unaffiliated third parties.
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
INDEX
(a) (1) The following financial statements are included in Part
II,Item 8:
Page No.
Report of Independent Public Accountants ................20
Consolidated Statements of Financial Condition as of
December 31, 1995 and 1994 ..............................21
Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993 ........................23
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993 ..................24
Consolidated Statements of Changes in Partnership Capital
for the years ended December 31, 1995, 1994 and 1993 ....25
Notes to Consolidated Financial Statements ..............26
All schedules are omitted because they are not
required, inapplicable, or the information is otherwise
shown in the financial statements or notes thereto.
(b) Report on Form 8-K
No reports on Form 8-K were filed in the fourth quarter of
1995.
(c) Exhibits
Reference is made to the Exhibit Index hereinafter contained.
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:
(Registrant) THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
__________________________________________________________
By (Signature and Title) /s/ John W. Bachmann
_____________________________________________
John W. Bachmann, Managing Partner
Date March 26, 1996
__________________________________________________________
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on
behalf of the registrant and in the capacity and on the date
indicated.
By (Signature and Title) /s/ John W. Bachmann
_____________________________________________
John W. Bachmann, Managing Partner
Date March 26, 1996
__________________________________________________________
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
There have been no annual reports sent to security holders covering
the registrant's last fiscal year nor have there been any proxy
statements, form of proxy or other proxy soliciting material sent
to any of registrant's security holders.
EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1995
Exhibit
Number Page Description
3.1 * Fifth Amended and Restated Limited
Partnership Agreement of Edward D. Jones &
Co., L.P., dated April 28, 1994,
incorporated herein by reference to
Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 24, 1994.
3.2 * Form of Limited Partnership Agreement of
Edward D. Jones & Co., L.P.
10.1 * Form of Cash Subordination Agreement
between the Registrant and Edward D. Jones
& Co., incorporated herein by reference to
Exhibit 10.1 to the Company's registration
statement of Form S-1 (Reg. No. 33-14955).
10.2 * Note Purchase Agreement between Tempus
Corporation and Edward D. Jones & Co.,
L.P. dated as of March 15, 1988,
incorporated herein by reference to
Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
March 25, 1988.
10.3 * Complaint for Permanent Injunction and
Other Equitable Relief and Final Judgement
of Permanent Injunction in re: SEC v.
Edward D. Jones & Co. (U.S. Dist. Ct. for
Dist. of Columbia; Civil Action No. 85-
3078), incorporated herein by reference to
Exhibit 10(I) to the Company's current
report on Form 8-K dated September 24,
1985.
10.4 * Volume Discount Agreement dated May 27,
1987, between Digital Equipment
Corporation and Edward D. Jones & Co.,
incorporated herein by reference to
Exhibit 10.13(c) to the Company's
registration statement on Form S-1 (Reg.
No. 33-14955).
10.5 * Master Lease Agreement dated as of May 29,
1987, between Digital Equipment
Corporation and Edward D. Jones & Co.,
incorporated herein by reference to
Exhibit 10.13(b) to the Company's
registration statement on Form S-1 (Reg.
No. 33-14955).
10.6 * Master Lease Agreement dated as of October
17, 1988, between Edward D. Jones & Co.,
L.P., and BancBoston Leasing, incorporated
herein by reference to Exhibit 10.1 to the
Company's Annual Report on Form 10-K for
the year ended September 30, 1988.
10.16 * Satellite Communications Agreement dated
as of September 12, 1988, between Hughes
Network Systems and Edward D. Jones & Co.,
L.P., incorporated herein by reference to
Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the year ended
September 30, 1988.
10.18 * Agreements of Lease between EDJ Leasing
Company and Edward D. Jones & Co., L.P.,
dated August 1, 1991, incorporated herein
by reference to Exhibit 10.18 to the
Company's Annual Report or Form 10-K for
the year ended September 27, 1991.
10.20 * Edward D. Jones & Co., L.P. Note Purchase
Agreement dated as of May 8, 1992,
incorporated herein by reference to
Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 26, 1992.
10.21 * Purchase and Sale Agreement by and between
EDJ Leasing Co., L.P. and the Resolution
Trust Corporation incorporated herein by
reference to Exhibit 10.21 to the
Company's Annual Report or Form 10-K for
the year ended December 31, 1992.
10.22 Master Lease Agreement between EDJ Leasing
Company and Edward D. Jones & Co., L.P.,
dated March 9, 1993, and First Amendment
to Lease dated March 9, 1994.
10.23 Purchase Agreement by and between Edward
D. Jones & Co., L.P. and Genicom
Corporation dated November 25, 1992.
10.24 Mortgage Note and Deed of Trust and
Security Agreement between EDJ Leasing
Co., L.P. and Nationwide Insurance Company
dated March 9, 1993.
10.25 Mortgage Note and Amendment to Deed of
Trust between EDJ Leasing Co., L.P. and
Nationwide Insurance Company dated March
9, 1994.
10.26 Mortgage Note; Deed of Trust and Security
Agreement; Assignment of Leases, Rents and
Profits; and Subordination and Attornment
Agreement between EDJ Leasing Co., L.P.
and Nationwide Insurance Company dated
April 6, 1994, incorporated by reference
to exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
March 25, 1994.
10.27 Note Purchase Agreement by Edward D. Jones
& Co., L.P., for $92,000,000 aggregate
principal amount of 7.95% subordinated
capital notes due April 15, 2006,
incorporated herein by reference to
Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 24, 1994.
10.28 Equipment Lease Agreement between IFA
Incorporated and Edward D. Jones &
Company, L.P., dated June 8, 1994,
incorporated herein by reference to
Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 24, 1994.
10.29 Master Lease Agreement and Addendum by and
between Edward D. Jones & Co., L.P. and
General Electric Capital Corporated dated
April 21, 1994, incorporated herein by
reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the
quarter ended June 24, 1994.
10.30 Equipment Lease by and between Edward D.
Jones & Co., L.P., and EDJ Leasing Co.,
L.P. dated April 1, 1994, incorporated
herein by reference to the Company's
Quarterly Report on Form 10-Q for the
quarter ended June 24, 1994.
10.31 $8,200,000 Promissory Note to Commerce
Bank National Association by EDJ Leasing
Co., L.P., dated April 5, 1994,
incorporated herein by reference to
Exhibit 10.5 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 24, 1994.
10.32 Agreement and Plan of Acquisition between
The Jones Financial Companies and Boone
National Savings and Loan Association,
F.A., incorporated herein by reference to
Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1994.
10.33 Credit Agreement between EDJ Leasing Co.,
L.P. and Southtrust Bank of Alabama, N.A.
dated October 26, 1994.
10.34 Master Lease Agreement between EDJ Leasing
Company and Edward D. Jones & Co., L.P.
dated October 26, 1994.
10.35 Lease Financing Line of Credit Agreement
and Term Note Agreement between EDJ
Leasing Co., L.P. and Enterprise Bank
dated December 6, 1994.
10.36 Master Lease Agreement between EDJ Leasing
Co. and Edward D. Jones & Co., L.P., dated
December 6, 1994.
10.37 Purchase Agreement by and between Edward
D. Jones & Co., L.P. and Tektronix Inc.
dated February 28, 1995.
10.38 Loan Agreement between Edward D. Jones &
Co., L.P. and Boatmen's Bank dated April
28, 1995, incorporated herein by reference
to the Company's Quarterly Report on Form
10-Q for the quarter ended March 25, 1995.
10.39 Sixth Amended and Restated Limited
Partnership Agreement of Edward D. Jones &
Co., L.P., dated May 31, 1995,
incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995.
10.40 Conforming Systems Agreement between Tri-
Tek Information Systems, Inc. and Edward
D. Jones & Co.., L.P., dated May 31, 1995,
incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995.
10.41 Mortgage Note; South Second Deed of Trust
and Security Agreement between EDJ Leasing
Co., L.P. and Nationwide Life Insurance
Company dated August 31, 1995,
incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q
for the quarter ended September 29, 1995.
10.42 Mortgage Note; North Second Deed of Trust
and Security Agreement between EDJ Leasing
Co., L.P. and Nationwide Life Insurance
Company dated August 31, 1995,
incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q
for the quarter ended September 29, 1995.
24.1 Consent of Independent Public Accountants.
25 * Delegation of Power of Attorney to
Managing Partner contained within Exhibit
3.1
27 Financial Data Schedule (provided for the
Securities and Exchange Commission only).