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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, 1996
Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, L.P., LLP
___________________________________________________________________
(Exact name of registrant as specified in its Partnership
Agreement)
MISSOURI 43-1450818
___________________________________________________________________
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) 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:
Title of each class: NONE
Name of each exchange on which registered: 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, 1997 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, L.P., LLP (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, L.P., LLP 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,
L.P., LLP.
The Partnership's principal operating subsidiary, EDJ, is a
registered broker/dealer primarily serving individual investors.
EDJ derives its revenues from the sale of listed and unlisted
securities and insurance products, investment banking, principal
transactions, 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 28, 1997, the Partnership was comprised of 138
general partners, 2,660 limited partners and 72 subordinated
limited partners. The Partnership employed 12,148 persons,
including 3,602 part-time employees. As of said date, the
Partnership employed 3,602 full-time investment representatives
actively engaged in sales in 3,525 offices in 50 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 its general
partner, Edward D. Jones & Co. Canada Holding Co. Inc.. 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., also a wholly owned
subsidiary, is the general partner of EDJ Ventures, Ltd.
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.,Unison Capital Corp., Inc., a Missouri
corporation, is wholly owned by LHC. EDJ 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.
Conestoga 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):
1996 1995 1994
Commissions
Listed $ 102,905 $ 86,589 $ 63,903
Mutual Funds 319,091 227,832 202,698
O-T-C 49,728 30,929 18,985
Insurance 139,860 105,497 85,759
Other 1,986 1,105 580
Principal Transactions 171,903 142,916 180,398
Investment Banking 15,719 18,324 19,011
Interest & Dividends 72,423 61,684 52,143
Money-Market Fees 30,187 17,437 12,665
IRA Custodial Service Fees 8,927 7,247 5,614
Other Revenues 39,036 22,663 18,927
__________ ___________ __________
Total Revenues $ 951,765 $ 722,223 $ 660,683
========== =========== ==========
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 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, U.S.
Government 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 principal and 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 agency agreements with
various national insurance companies. Through its 3,360 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. As an agent for the insurance
company, the Partnership receives commission on the purchase price
of the policy. The Partnership also earns service fees which are
generally based on its customer assets held by the insurance
companies.
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, 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. EDJ is also the
custodian for its IRA accounts, and charges customers an annual
service fee for its services.
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
associates 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 maintain 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 captured at the branch electronically, routed to St.
Louis and forwarded to the appropriate market for execution. 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 and security 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 also uses Participant
Trust Company for custody of GNMA securities and a major bank for
custody of treasury securities.
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 12,148 full and part-time employees. This also
includes 3,602 registered salespeople as of February 28, 1997. 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 three 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 three
locations in St. Louis County, Missouri which are comprised of 19
separate buildings containing approximately 948,000 gross square
feet. In addition, the Partnership leases approximately 20,000
square feet of office space for its Canadian headquarters
operations in Mississauga, Ontario. The Partnership also maintains
facilities in 3,481 branch locations which (as of December 31,
1996) are located in the U.S. and Canada and 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 are pending against the Partnership. Certain
cases claim 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:
1996 1995 1994 1993 1992
Revenues $951,765 $722,223 $660,683 $642,494 $556,869
Net income 92,888 58,186 53,857 66,211 62,282
Net income per
weighted average
$1,000 equivalent
limited partnership
unit outstanding $170.63 $125.01 $127.59 $194.62 $238.41
Weighted average
$1,000 equivalent
limited partnership
units outstanding 96,879 67,345 63,165 50,381 41,160
Net income per
weighted average
$1,000 equivalent
subordinated limited
partnership unit
outstanding $301.44 $225.00 $237.83 $350.32 $418.21
Weighted average
$1,000 equivalent
subordinated limited
partnership units
outstanding 30,543 27,720 21,789 16,936 12,941
Summary Balance Sheet Data:
1996 1995 1994 1993 1992
Total assets $1,380,416 $1,045,501 $953,359 $800,478 $653,253
========== ========= ======= ======== =======
Long-term debt $67,190 $70,127 $ 41,779 $ 33,317 $ 23,847
Other liabilities,
exclusive of
subordinated
liabilities 826,609 605,080 585,057 514,386 414,110
Subordinated
liabilities 216,500 122,000 136,000 73,000 78,000
Total partnership
capital 270,117 248,294 190,523 179,775 137,296
_________ ________ ________ ________ ________
Total liabilities
and partnership
capital $1,380,416 $1,045,501 $953,359 $800,478 $653,253
========== ======== ========= ========= ========
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.)
1996 vs. 1995 1995 vs.1994
Increase - (Decrease)
Amount Percentage Amount Percentage
Revenues
Commissions $ 161,618 36% $ 80,027 22%
Principal transactions 28,987 20 (37,482) (21)
Investment banking (2,605) (14) (687) (4)
Interest and dividends 10,739 17 9,541 18
Other 30,803 65 10,141 27
________ __ __________ ___
229,542 32 61,540 9
________ __ __________ __
Expenses
Compensation and benefits 137,713 34 22,932 6
Occupancy and equipment 20,621 24 15,430 22
Communications and data
processing 15,763 29 4,186 8
Interest 4,575 15 2,687 9
Payroll and other taxes 5,896 25 2,373 11
Floor brokerage and
clearance fees 1,334 23 (20) -
Other operating expenses 8,938 15 9,623 20
________ __ __________ __
194,840 29 57,211 9
________ __ __________ __
Net income $ 34,702 60% $ 4,329 8%
======== == ========== ==
RESULTS OF OPERATIONS (1996 VERSUS 1995)
In 1996, favorable conditions in the securities markets produced
record revenues and net income for the Partnership. Revenues of
$951.8 million increased 32% ($229.5 million) compared to 1995 with
expenses increasing to $858.9 million or 29% ($194.8 million). Net
income increased 60% to $92.9 million.
The Partnership segments its revenues between securities
transaction revenues (revenues resulting from customers' trades)
and non-transaction or other revenues. Securities transaction
revenues of $706 million increased 31% over 1995 and averaged
$212,000 per investment representative, up from $168,000 in 1995.
The primary factors influencing securities transaction revenues
were increased customer dollars handled, either buy or sell dollars
for which a commission was charged; the growth in the number of
IRs; and, the product mix which affects the gross commission
percentage. The total buy and sell dollars generating revenues
were $27.4 billion, up 33% from $20.6 million in 1995. An increase
of 11% in the number of IRs coupled with the favorable trend in
securities prices in 1996 contributed to the growth in customer buy
and sell dollars. A shift in the product mix from fixed income to
mutual fund and CDs resulted in reducing the gross revenue realized
on each $1,000 handled from $26.20 per thousand in 1995 to $25.80
in 1996.
The other major segment of the Partnership's revenues, non-
securities transaction revenues, includes revenues from service
fees, management fees, IRA fees and interest income. The
Partnership's non-transaction revenues increased $245 million or
35% over 1995. The primary drivers of non-transaction revenues are
customers' assets under control, loans to customers (margin loans),
the number of IRA accounts, and other fees. Customers' assets
under control increased 24% to $112 billion at the end of the year.
These assets provide the base for fees, including service fees and
other management fee revenues received from mutual fund and
insurance companies. Loans to customers increased to $603 million
at year end, an increase of 27% compared to 1995's year end
balances. Early in 1996, the Partnership undertook efforts to
increase the awareness of the salesforce and customers of margin
loans to meet customers' borrowing needs for a variety of purposes.
The program to increase awareness was coordinated with a 25 basis
point interest rate reduction.
Expenses increased 29% in 1996. Compensation of IRs increased due
to increased revenue and an increased number of IRs. The
Partnership has a variable compensation program for IRs which
expands and contracts as a result of changes in revenues, net
income and profit margin. Similarly, a portion of non-sales
personnel compensation may be paid in the form of bonuses and
profit sharing which expands and contracts based on net income.
Revenues, net income and the profit margin increased significantly
compared to 1995, increasing compensation for IRs and non-sales
personnel. Also, the Partnership continued to build the
infrastructure to support an increased number of IRs. Migrating
from the Partnership's mainframe technology to a new client/server
platform began in 1996. To implement new technology, the
Partnership incurred expenses for the addition of headquarters
personnel, computer hardware, software, and network infrastructure.
The Partnership expects to complete this conversion in 1997.
Focusing on changes in major revenue categories, Commission
revenues increased 36% ($161.6 million) for the period. Mutual
fund commissions rose 40% ($91.2 million) and insurance and annuity
commissions increased 35% ($36.7 million). Listed and over-the-
counter (O-T-C) agency commission revenues increased 30% ($35.1
million). Commission revenues benefited from rising securities
prices in 1996.
Principal transaction revenues increased 20% ($29.0 million) to
$171.9 million for the year. This increase was reflected in
certificate of deposit revenues (149% or $25.5 million), municipal
bond principal revenues (10% or $4.8 million) and corporate bond
principal revenues (23% or $4.5 million). Government bond
principal revenues decreased 35% ($5.9 million) and mortgage backed
product revenues declined 8% ($2.2 million).
Investment banking revenues decreased 14% ($2.6 million).
Municipal bond origination revenues declined 46% ($2.0 million).
Syndicate equity origination revenues also decreased 16% ($.5
million).
Interest and dividend income increased 17% ($10.7 million) to $72.4
million primarily from interest income earned on investments,
margin loans, and loans at the Association. During 1996, the
Partnership's short-term investments increased, which resulted in
$4.3 million in additional interest income. Also, the Association,
which was purchased in mid-1995, earned $4.0 million more in
revenue, primarily as a result of a full year of activity.
Additionally, the Partnership increased its customer loan base
which resulted in a $2.2 million increase in interest income from
customer loans.
Other Revenues increased 65% ($30.8 million) for the year. Other
revenue includes money market management fees, IRA custodial fees,
and non-commission revenue received from mutual fund and insurance
products. Revenues generated from money market management fees and
fee revenue received from mutual fund and insurance products
increased 73% ($12.7 million) and 71% ($9.0 million), respectively.
These increases are due primarily to increased assets under
control. The number of non-bank custodian IRA accounts continued
to increase, which resulted in a 23% ($1.7 million) increase in
revenue. Additionally in 1996, the Partnership realized a $7.0
million gain from the sale of the Partnership's minority investment
in a mutual fund company.
Expenses increased 29% ($194.9 million). Compensation costs
increased 34% ($137.7 million) and account for the majority of the
increased expenses. IR compensation increased 37.4% ($101.0
million), which is attributable to the variable compensation
program and an increased number of IRs. The remaining increase in
compensation relates to additional personnel necessary to support
the systems conversion and expansion of the salesforce, both in the
headquarters and the branch offices.
Occupancy and equipment expense and Communications and data
processing expenses increased 24% ($20.6 million) and 29% ($15.8
million), respectively. The Partnership continues to make an
investment in the infrastructure and technology necessary to
support the planned expansion of its salesforce in future years.
Interest expense increased $4.6 million (15%). This resulted from
the subordinated debt offering and the Association's full year of
activity.
Other operating expenses increased $9.0 million (15%) and were
primarily related to increased headquarters and branch expenses
necessary to support a growing salesforce.
RESULTS OF OPERATIONS (1995 VERSUS 1994)
Revenues increased 9% ($61.5 million) over 1994 to $722 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 21% ($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 27% ($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.
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, 1996, was $270.1
million compared to $248.3 million at December 31, 1995. Equity
capital increased 9%, primarily due to the retention of earnings.
Capital reserved for anticipated withdrawals increased $4.5 million
or 26%. These amounts were withdrawn subsequent to year end.
At December 31, 1996, the Partnership had a $64.9 million balance
of cash and cash equivalents. Lines of credit are in place at ten
banks aggregating $575 million ($500 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, 1996, cash and cash equivalents
increased $20.7 million. Cash flows from operating activities
provided $137.6 million, primarily attributable to net income
adjusted for depreciation and amortization, increased net
receivables from customers, decreased securities owned, and
increased accounts payable and other accrued expenses. Investing
activities used $107.6 million primarily for the purchase of fixed
assets and investment securities. Financing activities which
provided cash were the issuance of long-term debt, subordinated
liabilities and partnership interests. Cash flows from financing
activities used $9.3 million primarily for withdrawals and
distributions from partnership capital, to decrease bank loans and
to repay long term debt.
For the year ended December 31, 1995, cash and cash equivalents
increased $7.4 million. Cash flows from operating activities
provided $161 million, primarily attributable to net income,
adjusted for depreciation and amortization, decreased securities
owned, decreased net receivables from customers and increased
accounts payable. Investing activities used $28 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
provided $59.8 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 $106 million primarily for the purchase of fixed
assets and investment securities. Cash flows from financing
activities provided $54.1 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.
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 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, 1996, EDJ's Net
Capital of $274.7 million was 45% of aggregate debit items and its
net capital in excess of the minimum required was $262.6 million.
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, 1996,
compared with the year ended December 31, 1995. The Partnership's
consolidated statement of financial condition is comprised
primarily of cash and assets readily convertible into cash.
Securities inventories are carried at market value and are readily
marketable. Customer margin accounts are collateralized by
marketable securities. Other customer receivables and receivables
and payables with other broker/dealers normally settle on a current
basis. Liabilities, including amounts payable to customers, checks
and accounts payable and accrued expenses are sources of funds to
the Partnership. These liabilities, to the extent not utilized to
finance assets, are available to meet liquidity needs and provide
funds for short term investments, which favorably impacts
profitability.
The 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, 1996 and 1995 ..............................21
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994 ........................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, 1996, 1995 and 1994 ...25
Notes to Consolidated Financial Statements ..............26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Jones Financial Companies, L.P., LLP:
We have audited the accompanying consolidated statements of
financial condition of The Jones Financial Companies, L.P., LLP (a
Missouri Limited Partnership and a Missouri Registered Limited
Liability Partnership) and subsidiaries as of December 31, 1996 and
1995, 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, 1996. 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, L.P., LLP and subsidiaries as of
December 31, 1996 and 1995, 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, 1996, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
February 21, 1997
THE JONES FINANCIAL COMPANIES, L.P., LLP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
December 31, December 31,
(Amounts in thousands) 1996 1995
Cash and cash equivalents $ 64,858 $ 44,112
Securities purchased under agreements
to resell 145,000 -
Receivable from:
Customers (Note 2) 615,399 489,041
Brokers or dealers and clearing
organizations (Note 3) 14,978 22,094
Mortgages and loans (Note 4) 66,116 58,836
Securities Owned, at market value (Note 5):
Inventory securities 58,373 88,295
Investment securities 171,177 123,060
Equipment, property and improvements
(Note 6) 173,719 145,095
Other assets 70,796 74,968
__________ __________
$1,380,416 $ 1,045,501
========== ===========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, L.P., LLP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
December 31, December 31,
(Amounts in thousands) 1996 1995
Bank loans (Note 7) $ 2,750 $ 32,503
Payable to:
Customers (Note 2) 591,931 360,754
Brokers or dealers and clearing
organizations (Note 3) 12,999 13,025
Depositors (Note 8) 63,125 61,189
Securities sold but not yet purchased, at
market value (Note 5) 13,215 18,428
Accounts payable and accrued expenses 54,115 49,097
Accrued compensation and employee benefits 88,474 70,084
Long-term debt (Note 9) 67,190 70,127
__________ __________
893,799 675,207
__________ __________
Liabilities subordinated to claims
of general creditors (Note 10) 216,500 122,000
Partnership capital (Notes 11 and 13):
Limited partners 95,807 98,410
Subordinated limited partners 29,178 28,943
General partners 123,172 103,465
__________ __________
248,157 230,818
Partners' capital reserved for anticipated
withdrawals 21,960 17,476
__________ __________
270,117 248,294
__________ __________
$1,380,416 $1,045,501
========== ==========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, L.P., LLP
CONSOLIDATED STATEMENTS OF INCOME
Years Ended
(Amounts in thousands, December 31, December 31, December 31,
except per unit information) 1996 1995 1994
Revenues:
Commissions $ 613,570 $ 451,952 $ 371,925
Principal transactions 171,903 142,916 180,398
Investment banking 15,719 18,324 19,011
Interest and dividends 72,423 61,684 52,143
Other 78,150 47,347 37,206
_______ _______ _______
951,765 722,223 660,683
_______ _______ _______
Expenses:
Compensation and benefits
(Note 14) 543,725 406,012 383,080
Occupancy and equipment
(Notes 6 and 15) 105,516 84,895 69,465
Communications and data
processing 70,318 54,555 50,369
Interest
(Notes 2, 7, 8, 9, 10 and 11) 36,006 31,431 28,744
Payroll and other taxes 29,557 23,661 21,288
Floor brokerage and clearance fees7,084 5,750 5,770
Other operating expenses 66,671 57,733 40,616
_______ _______ _______
858,877 664,037 606,826
________ _______ _______
Net income $ 92,888 $ 58,186 $ 53,857
======== ======= =======
Net income allocated to:
Limited partners $ 16,530 $ 8,419 $ 8,059
Subordinated limited partners 9,207 6,237 5,182
General partners 67,151 43,530 40,616
________ _______ _______
$ 92,888 $ 58,186 $ 53,857
======== ======== =======
Net income per weighted average $1,000
equivalent partnership units outstanding:
Limited partners $ 170.63 $ 125.01 $ 127.59
======== ======== =======
Subordinated limited partners$ 301.44 $ 225.00 $237.83
========= ======== ========
Weighted average $1,000 equivalent
partnership units outstanding:
Limited partners 96,879 67,345 63,165
========= ======== ========
Subordinated limited partners 30,543 27,720 21,789
========= ======== ========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, L.P., LLP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
December 31,December 31, December 31,
(Amounts in thousands) 1996 1995 1994
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 92,888 $ 58,186 $ 53,857
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 30,880 22,340 19,236
Increase in securities purchased
under agreements to resell (145,000) - -
Decrease in net receivable from
customers 104,819 76,350 17,539
Decrease (increase) in net
receivable from brokers or
dealers and clearing
organizations 7,090 (5,690) 21,079
Increase in receivable from
mortgages and loans (7,280) (3,011) -
Decrease (increase) in securities
owned, net 24,709 287 (30,663)
Increase in payable to
depositors 1,936 2,464 -
Increase (decrease) in accounts
payable and other accrued
expenses 23,408 21,382 (9,212)
Other assets 4,172 (11,382) (11,987)
________ ________ ________
Net cash provided by
operating activities 137,622 160,926 59,849
________ ________ ________
CASH FLOWS USED BY INVESTING ACTIVITIES:
Purchase of equipment,
property and improvements (59,504) (40,199) (42,566)
(Purchase) maturity of investment
securities (48,117) 14,006 (63,491)
Purchase of Boone National Savings
and Loan Association, F.A.,
net of cash acquired (Note 12) - (2,103) -
________ _______ ______
Net cash used by investing
activities (107,621) (28,296) (106,057)
_________ _______ ______
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES:
(Decrease) increase in bank
loans (29,753) (135,505) 25,739
Issuance of long-term debt 7,993 30,512 44,859
Repayment of long-term debt (10,930) (5,792) (36,397)
Issuance of subordinated
liabilities 94,500 - 92,000
Repayment of subordinated
liabilities - (14,000) (29,000)
Issuance of partnership interests 3,365 50,523 5,167
Redemption of partnership
interests (5,733) (7,565) (2,343)
Withdrawals and distributions from
partnership capital (68,697) (43,373) (45,933)
Net cash (used) provided by
financing activities (9,255) (125,200) 54,092
________ ________ ________
Net increase in cash and cash
equivalents 20,746 7,430 7,884
CASH AND CASH EQUIVALENTS,
beginning of year 44,112 36,682 28,798
end of year $ 64,858 $ 44,112 $36,682
======== ======= =======
Cash paid for interest $ 33,655 $ 32,892 $ 27,291
========= ======== =========
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, L.P., LLP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL
YEARS ENDED DECEMBER 31, 1996, 1995 and 1994
Subordinated
Limited Limited General
Ptnrship Ptnrship Ptnrship
(Amounts in thousands) Capital Capital Capital Total
Balance, December 31, 1993 $ 64,280 $ 17,290 $ 80,241 $ 161,811
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(2,973) (3,479) (21,517) (27,969)
Reserved for anticipated
withdrawals (5,087) (1,702) (7,890) (14,679)
_______ ______ _______ _______
Balance, December 31, 1994 62,374 22,020 91,450 175,844
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(2,856) (3,656) (22,182) (28,694)
Reserved for anticipated
withdrawals (5,562) (2,581) (9,333) (17,476)
______ ______ ______ ______
Balance, December 31, 1995 98,410 28,943 103,465 230,818
Issuance of partnership
interests - 3,365 - 3,365
Redemption of partnership
interests (2,603) (3,130) - (5,733)
Net income 16,530 9,207 67,151 92,888
Withdrawals and distributions(5,337) (6,713) (39,171) (51,221)
Reserved for anticipated
withdrawals (11,193) (2,494) (8,273) (21,960)
_______ ______ ______ ______
Balance, December 31, 1996$ 95,807 $ 29,178 $ 123,172 $248,157
======= ====== ======= =======
The accompanying notes are an integral part of these statements.
THE JONES FINANCIAL COMPANIES, L.P., LLP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(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, L.P., LLP, 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 the sale of listed and
unlisted securities and insurance products, 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 provides
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. Where appropriate, prior years' financial
statements have been reclassified to conform with the 1996
presentation.
Securities Purchased Under Agreements to Resell. The Partnership
invests in short-term resale agreements collateralized by U.S.
government and agency securities. The market value of the
underlying collateral as determined daily, plus accrued interest
thereon, must equal or exceed 102% of the carrying amount of the
transaction. It is the Partnership's policy to have such
underlying collateral deposited in its accounts at its custodian
banks. Resale agreements are carried at the amount at which the
securities will be subsequently resold as specified in the
agreements.
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 commercial, real estate, and
other loans to individuals 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 their useful lives, which are estimated between thirty and
thirty two years. Property improvements are amortized 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 and Securities Owned. Cash and securities of
$36,063 and $0 were segregated in a special bank account for the
benefit of customers as of December 31, 1996 and 1995,
respectively, under rule 15c3-3 of the Securities and Exchange
Commission.
Income Taxes. Income taxes have not been provided for in the
consolidated financial statements since The Jones Financial
Companies, L.P., LLP, is organized as a partnership, and partners
are liable for their 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. The Partnership pays interest on
certain credit balances in customer accounts.
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:
1996 1995
Securities failed to deliver $ 4,835 $ 3,880
Deposits paid for securities borrowed 7,231 14,742
Deposits with clearing organizations 2,320 2,369
Other 592 1,103
________ _________
Total receivable from brokers or dealers
and clearing organizations $ 14,978 $ 22,094
========= ========
Securities failed to receive $ 6,156 $ 7,889
Deposits received for securities loaned 6,820 4,889
Other 23 247
Total payable to brokers or dealers and
clearing organizations $ 12,999 $ 13,025
======== ========
"Fails" represent the contract value of securities that have not
been received or delivered by settlement date.
NOTE 4 - RECEIVABLE FROM MORTGAGES AND LOANS
Receivable from mortgages and loans is comprised of the
Association's mortgage loans, primarily adjustable rate,
commercial, and other loans, 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):
1996 1995
Securities Securities
Sold but Sold but
Securities not yet Securities not yet
Owned Purchased Owned Purchased
Inventory Securities:
Certificates of deposit $ 3,783 $ - $ 4,740 $ -
U.S. and Canadian government
and agency obligations 9,796 7,450 9,680 13,320
State and municipal
obligations 31,765 72 56,514 450
Corporate bonds and notes 7,887 3,299 12,167 2,615
Corporate stocks 5,142 2,394 5,194 2,043
_________ _______ ________ ________
$ 58,373 $ 13,215 $ 88,295 $ 18,428
========= ======= ======== ========
Investment Securities:
U.S. government and agency
obligations $ 171,177 $ 123,060
========= ========
The Partnership attempts to reduce its exposure to market price
fluctuations of its inventory securities through the sale of U.S.
government securities and, to a limited extent, the sale of futures
contracts. 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 transaction revenue.
NOTE 6 - EQUIPMENT, PROPERTY AND IMPROVEMENTS
Equipment, property and improvements are summarized as follows:
1996 1995
Land $ 13,671 $ 13,671
Buildings and improvements 93,726 92,704
Equipment 139,085 94,367
Furniture and fixtures 72,322 62,145
_________ _________
Total equipment, property and
improvements 318,804 262,887
Accumulated depreciation and
amortization (145,085) (117,792)
__________ __________
Equipment, property and improvements,
net $ 173,719 $ 145,095
========== ==========
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, 1996, the Partnership had bank lines of credit
aggregating $575,000 of which $500,000 were through uncommitted
facilities. Actual borrowing availability is primarily based on
securities owned and customers' margin securities. At December 31,
1996 and 1995, collateral with a market value of $584,636 and
$416,645, respectively, was available to support secured bank loans
of EDJ. The Association had loans from The Federal Home Loan Bank
of $2,750 and $1,500 as of December 31, 1996 and 1995,
respectively, which are secured by mortgage loans. All loans
outstanding approximate their fair value.
Interest is at a fluctuating rate (weighted average rate of 5.5%
and 5.8% at December 31, 1996 and 1995, respectively) based on
short-term lending rates. The average of the aggregate short-term
bank loans outstanding was $3,025, $97,527 and $159,600 and the
average interest rate (computed on the basis of the average
aggregate loans outstanding) was 6.7%, 6.8% and 5.2% for the years
ended December 31, 1996, 1995 and 1994, 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:
1996 1995
Notes payable, secured by equipment,
interest at variable rates ranging
from 6.95% to 8.25% at December 31, 1996,
due in installments of principal plus
interest, maturing from May 1, 1997
through August 6, 2001. $17,062 $14,274
Notes payable, secured by property, interest
rates ranging from 7.59% to 8.72% at
December 31, 1996, principal and interest due
in monthly installments, maturing from
June 5, 2003 through April 5, 2008. 44,227 47,747
Notes payable, secured by the Association's
stock and a letter of credit, interest at variable
rates ranging from 5.97% to 7.6% at December
31, 1996, annual principal due plus
interest, maturing from July 24, 1998 through
June 30, 2000. 5,901 8,106
_______ _______
$67,190 $70,127
======= =======
Required annual principal payments, as of December 31, 1996, are as
follows:
Year Principal Payment
1997 $ 11,062
1998 9,610
1999 8,759
2000 10,402
2001 5,858
Thereafter 21,499
_____________
$ 67,190
=============
The Partnership has land, buildings and equipment and the
Associaton's stock, with carrying values at December 31, 1996 of
$70,442 and $8,736, respectively, 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
$68,057 and $68,159 as of December 31, 1996 and 1995, respectively.
NOTE 10 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
Liabilities subordinated to the claims of general creditors consist
of:
1996 1995
Capital notes, 8.18%, due in annual
installments of $10,500 commencing on
September 1, 2000, with a final
installment on September 1, 2008. $94,500 $ -
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
____________ ____________
$ 216,500 $ 122,000
============= ============
Required annual principal payments, as of December 31, 1996, are as
follows:
Year
1997 $ -
1998 16,225
1999 16,225
2000 26,725
2001 26,725
Thereafter 130,600
_____________
$ 216,500
=============
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, 1996, the
Partnership was required, under the note agreements, to maintain
minimum partnership capital of $165,000 and Net Capital as computed
in accordance with the uniform Net Capital rule of 7.5% of
aggregate debit items, or $45,507 (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 $222,396 and $128,156 as of
December 31, 1996 and 1995, respectively.
NOTE 11 - PARTNERSHIP CAPITAL
The limited partnership capital, consisting of 95,807 and 98,410
$1,000 units at December 31, 1996 and 1995, 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 $7,271, $5,055, and $4,741 for the years
ended December 31, 1996, 1995 and 1994, respectively, paid to
limited partners on capital contributed.
The subordinated limited partnership capital, consisting of 29,178
and 28,943 $1,000 units at December 31, 1996 and 1995,
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. Under the terms of the Partnership Agreement, general and
subordinated limit partner capital withdrawals are paid out over a
three year period.
NOTE 12 - ACQUISITION
The Partnership purchased Boone National Savings and Loan
Association, F.A., in a stock purchase transaction for
approximately $8.6 million in July, 1995. The acquisition was
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. As of December 31, 1996, the
total assets of the Association were approximately $76.7 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, 1996, EDJ's Net Capital of $274,744 was 45% of
aggregate debit items and its Net Capital in excess of the minimum
required was $262,609. 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 $23,634, $14,951,
and $13,835 were provided by the Partnership for its contributions
to the plan for the years ended December 31, 1996, 1995 and 1994,
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. Rent expense was
$55,523, $43,923, and $35,558 for the years ended December 31,
1996, 1995 and 1994, respectively. The Partnership's non-
cancelable lease commitments greater than one year are summarized
below:
1997 $ 28,435
1998 24,135
1999 18,509
2000 11,961
2001 10,020
Thereafter 7,760
NOTE 16 - CONTINGENCIES
Various legal actions are pending against the Partnership. Certain
cases claim 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, L.P., LLP, being organized as a
partnership, does not have individuals associated with it
designated as officers or directors. As of February 28, 1997, the
Partnership was comprised of 138 general partners, 2,660 limited
partners and 72 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 138 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 as of
February 28, 1997:
Became
General
Name Age Partner Area of Responsibility
Allan J. Anderson 54 1992 Sales Management
Charles E. Armstrong 57 1996 Sales
Jandy R. Arnold 37 1997 Insurance/Annuity
Operations
John W. Bachmann 58 1970 Managing Partner
Thomas M. Bartow 47 1989 Sales Training
James D. Bashor 42 1990 Regional Sales Leader
Armin C. Baumgartel 48 1997 Regional Sales Leader
Robert J. Beck 42 1983 Municipal Trading
Roger W. Bennett 41 1995 Regional Sales Leader
John D. Beuerlein 43 1979 Sales Management
John S. Borota 56 1978 Sales Hiring
Robb R. Boyd 39 1997 Regional Sales Leader
Harold J. Britton 50 1997 Regional Sales Leader
William H. Broderick, III 44 1986 On-line Marketing
and Communications
Morton L. Brown 50 1978 Managed Investments
Daniel A. Burkhardt 49 1979 Investment Banking
Jack L. Cahill 47 1980 Sales Training
Brett A. Campbell 38 1993 Sales Training
William F. Campbell 32 1997 Regional Sales Leader
Donald H. Carter 53 1994 Regional Sales Leader
John J. Caruso 50 1988 Information Systems
Guy R. Cascella 39 1992 Sales Management
Pamela K. Cavness 34 1995 Compliance
Craig E. Christell 40 1994 Regional Sales Leader
Richard A. Christensen,
Jr. 49 1978 Mutual Funds Processing
Robert J. Ciapciak 41 1988 Headquarters Administration
Stephen P. Clement 47 1990 Video Communications
Cheryl J. Cook-Schneider 38 1995 Compliance
Loyola A. Cronin 39 1987 Branch Operations
Terry E. Crow 35 1997 Edward Jones Trust Company
Stanley A. Cunningham 53 1995 Regional Sales Leader
Harry J. Daily, Jr. 50 1985 Regional Sales Leader
Paul R. Daniels 51 1995 Regional Sales Leader
Douglas E. Davis 40 1996 Regional Sales Leader
John M. Delavan 51 1997 Regional Sales Leader
James E. Docksey 36 1995 Regional Sales Leader
Cynthia A. Doria 41 1995 Legal
Brian T. Duffy 44 1996 Regional Sales Leader
William T. Dwyer, Jr. 41 1994 Regional Sales Leader
Abe W. Dye 52 1984 Regional Sales Leader
Allen R. Eaker 50 1989 Regional Sales Leader
Norman L. Eaker 40 1984 Securities Processing
Kevin Eberle 46 1993 Regional Sales Leader
Michael J. Esser 48 1983 Sales Training
Kevin N. Flatt 48 1989 Fixed Income Trading
Steve Fraser 41 1993 Securities Processing
Colleen A. Geraty 35 1995 Advertising
Chris A. Gilkison 43 1994 Branch Locations
Barbara G. Gilman 58 1988 Edward Jones Trust Company
Steven L. Goldberg 38 1987 Central Services
Ronald Gorgen 47 1993 Field Services
Robert L. Gregory 54 1974 Sales Hiring
Kevin C. Haarberg 42 1995 Regional Sales Leader
Stuart E. Hamilton 36 1997 Regional Sales Leader
Patricia F. Hannum 36 1988 Marketing Services
Paul J. Hansell 49 1997 Regional Sales Leader
Stephen P. Harrison 48 1990 Regional Sales Leader
James W. Harrod 61 1974 Sales Training
David L. Hayes 41 1994 Regional Sales Leader
Randy K. Haynes 41 1994 Operations
Peter R. Heisler 43 1996 Regional Sales Leader
Clifton L. Helbert 38 1996 Regional Sales Leader
John M. Hess 49 1992 Regional Sales Leader
Mary Beth Heying 39 1994 Communications
Douglas E. Hill 52 1974 Marketing
Thomas W. Hizar, Jr. 32 1997 Investment Banking
William H. Hochstetler 51 1997 Regional Sales Leader
Alan J. Holmes 43 1996 Regional Sales Leader
Michael R. Holmes, Sr. 38 1997 Human Resources
Don R. Howard 45 1995 Regional Sales Leader
Stephen M. Hull 52 1994 Regional Sales Leader
Earl H. Hull, Jr. 51 1990 Regional Sales Leader
Glennon D. Hunn 54 1984 Information Systems
Gary R. Hunziker 56 1994 Regional Sales Leader
Thomas G. Iorio 36 1994 Regional Sales Leader
James J. Johnston 50 1995 Regional Sales Leader
Myles P. Kelly 43 1989 Accounting
Timothy J. Kirley 43 1994 Customer Segments Marketing
Thomas M. Kliethemes 35 1995 Regional Sales Leader
Timothy J. Koehl 45 1997 Regional Sales Leader
James A. Krekeler 32 1995 Investment Banking
Frederick H. Kruse, Jr. 50 1995 Boone National Savings &
Loan
Charles R. Larimore 56 1981 Branch Administration
Mark Leverenz 41 1995 Securities Processing
Michele Liebman 40 1994 Information Systems
Rhonda L. Liesenfeld 35 1996 Government Bonds Trading
Richie L. Malone 48 1979 Information Systems
Kevin J. Mangum 36 1997 Regional Sales Leader
Richard G. McCarty 57 1990 Regional Sales Leader
Timothy J. McCoy 36 1995 Customer Retention
Thomas Migneron 36 1993 Internal Audit
Richard G. Miller, Jr. 41 1991 Regional Sales Leader
Thomas W. Miltenberger 49 1985 Mutual Funds Marketing
Merry L. Mosbacher 38 1986 Insurance/Annuities
Marketing
Rodger W. Naugle 55 1992 Regional Sales Leader
Steven Novik 47 1983 Accounting & Finance
Robert K. Nyberg 37 1997 Regional Sales Leader
Barbara H. Ostby 54 1997 Regional Sales Leader
Dave G. Otto 32 1997 Research
Curtis A. Paul 38 1997 Regional Sales Leader
George C. Picogna 39 1995 Regional Sales Leader
Darryl L. Pope 57 1971 Operations
Ray W. Raley 43 1996 Equity Marketing
Gary D. Reamey 41 1984 Canada Division
Trevor D. Reese, Jr. 40 1997 Regional Sales Leader
James L. Regnier 39 1994 Sales Training
Ray L. Robbins, Jr. 52 1975 Research
Wann V. Robinson 46 1992 Regional Sales Leader
Douglas Rosen 36 1993 Regional Sales Leader
Harry John Sauer, III 39 1988 Dividend Processing
Arthur C. Schlappi 42 1995 Regional Sales Leader
Thomas D. Schlosser 48 1995 Regional Sales Leader
Philip R. Schwab 48 1978 Syndicate/Equity Trading
Festus W. Shaughnessy, III41 1988 Information Systems
Marketing
Robert D. Shillingstad 52 1997 Regional Sales Leader
Connie M. Silverstein 41 1988 Market Development
Alan F. Skrainka 35 1989 Research
John S. Sloop 48 1990 Sales Management
Randall L. Smith 41 1996 Regional Sales Leader
Ronald H. Smith 57 1984 Regional Sales Leader
Lawrence R. Sobol 46 1977 General Counsel
Lawrence E. Thomas 41 1983 Sales Management
Terry R. Tucker 42 1988 Information Systems
Richard G. Unnerstall 41 1989 Information Systems
Steven A. Vanvoorhis 46 1995 Regional Sales Leader
Susan S. Venn 34 1995 Accounting
Robert Virgil, Jr. 62 1994 Headquarters Administration
JoAnn Von Bergen 47 1986 Cash Processing
Donald E. Walter 51 1983 Compliance Director
James D. Weddle 43 1984 Sales Management
Vicki Westall 37 1993 Investment Banking
Thomas J. Westphal 38 1989 Customer Information
Heidi Whitfield 36 1993 Product Review
Robert D. Williams 35 1994 Regional Sales Leader
Price P. Woodward 34 1993 Customer Segments Marketing
Alan T. Wright 50 1994 Investment Banking
Bradley A. Ytterberg 42 1994 Customer Segments Marketing
Judith A. Zeilmann 54 1997 Human Resources
Except as indicated below, each of the General Partners has been a
general partner of the Partnership for more than the preceding five
years.
Charles E. Armstrong, joined the Partnership in 1977 as a
registered representative and became a general partner in 1996.
Jandy R. Arnold, joined the Partnership in 1990 in the
Insurance/Annuity operations department and became a general
partner in January 1997.
Armin C. Baumgartel, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1997.
Roger W. Bennett, joined the Partnership in 1982 as a registered
representative and became a general partner in 1995.
Robert R. Boyd, joined the Partnership in 1985 as a registered
representative and became a general partner in January 1997.
Harold J. Britton, joined the Partnership in 1986 as a registered
representative and became a general partner in January 1997.
Brett A. Campbell, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1993.
William F. Campbell, joined the Partnership in 1987 as a registered
representative and became a general partner in January 1997.
Donald H. Carter, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Pamela K. Cavness, joined the Partnership in 1987 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.
Terry E. Crow, joined the Partnership in 1995 in the Edward Jones
Trust Company and became a general partner in January 1997. Prior
to this, he served as the President and Chief Executive Officer of
The Guaranty Trust Company of Missouri.
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.
John M. Delavan, joined the Partnership in 1988 as a registered
representative and became a general partner in January 1997.
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.
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.
Stuart E. Hamilton, joined the Partnership in 1983 as a registered
representative and became a general partner in January 1997.
Paul J. Hansell, joined the Partnership in 1989 as a registered
representative and became a general partner in January 1997.
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.
Thomas W. Hizar, Jr. joined the Partnership in 1993 in Investment
Banking and became a general partner in January 1997. Prior to
this, he was VP of Marketing of a real estate securities firm.
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.
William H. Hochstetler, joined the Partnership in 1980 as a
registered representative and became a general partner in January
1997.
Michael R. Holmes, Sr., joined the Partnership in 1996 as a general
partner. Prior to this, he was the Human Resource Officer for a
major information systems firm.
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.
Timothy J. Koehl, joined the Partnership in 1987 as a registered
representative and became a general partner in January 1997.
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. He has served as the President and Chief Executive
Officer of Boone National Savings and Loan Association, F.A. since
1985.
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
Information Systems 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.
Kevin J. Mangum, joined the Partnership in 1989 as a registered
representative and became a general partner in January 1997.
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.
Robert K. Nyberg, joined the Partnership in 1983 as a registered
representative and became a general partner in January 1997.
Barbara H. Ostby, joined the Partnership in 1988 as a registered
representative and became a general partner in January 1997.
David G. Otto, joined the Partnership in 1994 in the Research
Department and became a general partner in January 1997. Prior to
this, he managed a debt portfolio for a major telecommunications
company.
Curtis A. Paul, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1997.
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.
Trevor D. Reese, Jr., joined the Partnership in 1977 as a
registered representative and became a general partner in January
1997.
James L. Regnier, joined the Partnership in 1983 as a registered
representative and became a general partner in January 1994.
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.
Robert D. Shillingstad, joined the Partnership in 1984 as a
registered representative and became a general partner in January
1997.
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 and became a general
partner in 1995.
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.
Judith A. Zeilmann, joined the Partnership in 1988 in Associate
Relations and became a general partner in 1997.
John W. Bachmann is a director of Trans World Airlines, St. Louis,
Missouri. Daniel A. Burkhardt is a director of Essex County Gas
Company, Amsebury, Massachusetts; 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. Frederick H. Kruse and Steven Novik are directors of
Boone National Savings and Loan Association, F.A., Columbia, Missouri.
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;
Maritz Corp., St. Louis, Missouri; General American Life Insurance
Company, 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 Ptnr
Deferred allocated invested Total
Compen- to General Capital at (1)(2)
Year Salaries sation Partners 12/31 (3)
John W.
Bachmann 1996 120,000 7,104 2,356,162 4,719,726 2,483,266
1995 120,000 6,077 1,721,341 4,500,612 1,847,418
1994 120,000 5,553 1,681,517 4,115,163 1,807,070
Douglas E.
Hill 1996 118,000 7,104 2,426,261 4,978,341 2,551,365
1995 118,000 6,077 1,631,400 4,241,956 1,755,477
1994 118,000 5,553 1,513,365 3,703,647 1,636,918
Ron
Larimore 1996 118,000 7,104 2,414,599 4,978,341 2,539,703
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
Richie L.
Malone 1996 118,000 7,104 2,426,261 4,978,341 2,551,365
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
Darryl W.
Pope 1996 118,000 7,104 2,182,717 4,525,765 2,307,821
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
(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 .05% to 3.85% in 1996 (.1% to 4.65% in
1995 and .1% to 4.50% in 1994). 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), 96 of the general
partners also own limited partnership interests and 38 of the
general partners also own subordinated limited partnership
interests, as noted in the table below.
As of February 28, 1997:
Name of Amount of
Beneficial Beneficial Percent of
Title of Class Owner Ownership Class
Limited Partnership All General
Interests Partners as
a Group $8,567,000 9%
Subordinated All General
Limited Partnership Partners as
Interests a Group 17,733,000 48%
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, 1996 and 1995 ..............................21
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994 ........................23
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994 ..................24
Consolidated Statements of Changes in Partnership Capital
for the years ended December 31, 1996, 1995 and 1994 ....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
1996.
(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, L.P., LLP
By (Signature and Title) /s/ John W. Bachmann
John W. Bachmann, Managing Partner
Date March 26, 1997
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, 1997
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, 1996
Exhibit
Number Page Description
3.1 * Eighth Amended and Restated Limited
Partnership Agreement of The Jones
Financial Companies, L.P., LLP, dated
November 1, 1996, incorporated herein by
reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the
quarter ended September 27, 1996.
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 * 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.
10.3 * 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.
10.4 * 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.
10.5 * 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.
10.6 * 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 on Form 10-K for
the year ended December 31, 1992.
* Incorporated by reference to previously filed exhibits.
10.7 * 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, incorporated
herein by reference to the Company's
Quarterly Report on Form 10-Q for the
quarter ended March 25, 1994.
10.8 * Purchase Agreement by and between Edward
D. Jones & Co., L.P. and Genicom
Corporation dated November 25, 1992,
incorporated herein by reference to the
Company's Annual Report on Form 10-K for
the year ended December 31, 1992.
10.9 * Mortgage Note and Deed of Trust and
Security Agreement between EDJ Leasing
Co., L.P. and Nationwide Insurance Company
dated March 9, 1993, incorporated herein
by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended
March 24, 1993.
10.10 * Mortgage Note and Amendment to Deed of
Trust between EDJ Leasing Co., L.P. and
Nationwide Insurance Company dated March
9, 1994, incorporated herein by reference
to the Company's Quarterly Report on Form
10-Q for the quarter ended March 25, 1994.
10.11 * 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.
10.12 * 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.
10.13 * 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.
10.14 * 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.
10.15 * 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.
10.16 * $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.
10.17 * 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.
10.18 * Credit Agreement between EDJ Leasing Co.,
L.P. and Southtrust Bank of Alabama, N.A.
dated October 26, 1994 incorporated herein
by reference to the company's Annual
Report on Form 10-K for the year ended
December 31, 1994.
10.19 * Master Lease Agreement between EDJ Leasing
Company and Edward D. Jones & Co., L.P.
dated October 26, 1994, incorporated
herein by reference to the Company's
Annual Report on Form 10-K for the year
ended December 31, 1994.
10.20 * Lease Financing Line of Credit Agreement
and Term Note Agreement between EDJ
Leasing Co., L.P. and Enterprise Bank
dated December 6, 1994, incorporated
herein by reference to the Company's
Annual Report on Form 10-K for the year
ended December 31, 1994.
10.21 * Master Lease Agreement between EDJ Leasing
Co. and Edward D. Jones & Co., L.P., dated
December 6, 1994, incorporated herein by
reference to the Company's Annual Report
on Form 10-K for the year ended December
31, 1994.
10.22 * Purchase Agreement by and between Edward
D. Jones & Co., L.P. and Tektronix Inc.
dated February 28, 1995, incorporated
herein by reference to the company's
Annual Report on Form 10-K for the year
ended December 31, 1994.
10.23 * 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.
10.24 * Conforming Systems Agreement between Tri-
Tek Infor-mation 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.
10.25 * 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.
10.26 * 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.
10.27 * Note Purchase Agreement by Edward D. Jones
& Co., L.P. for $94,500,000 aggregate
principal amount of 8.18% subordinated
capital notes due September 1, 2008,
incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q
for the quarter ended September 27, 1996.
23.1 52 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).
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, in The
Jones Financial Companies, L.P., LLP's previously filed S-2
Registration Statement File No. 33-61049 and S-8 Registration
Statements File No. 33-35247 and No.33-62734.
ARTHUR ANDERSEN LLP
St. Louis, Missouri
March 26, 1997