SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K/A
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 1, 1999
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JWGenesis Financial Corp.
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(Exact name of Registrant as Specified in Charter)
Florida 001-14205 65-0811010
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(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation or
Organization)
980 North Federal Highway, Suite 210
Boca Raton, Florida 33432
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:(561) 338-2600
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 1, 1999, JWGenesis Financial Corp. (the "Company") consummated
the previously announced sale of its subsidiary JWGenesis Clearing Corp.,
an Iowa corporation ("JWG Clearing"), pursuant to the Stock Purchase Agreement
dated April 16, 1999 (the "Agreement") with Fiserv, Inc. ("Fiserv") and its
wholly owned subsidiary Fiserv Clearing, Inc. ("Fiserv Clearing"). The Company
received $59 million in cash for the sale. The Company realized approximately
$25 million of pre-tax gain on the sale and will record on its books an
additional $15 million of deferred pre-tax gain that will be recognized over
the ten-year period described in the next paragraph. JWG Clearing functioned
primarily as the Company's securities clearing, execution, and back office
services unit, and only those operations comprised JWG Clearing at the time
the sale was consummated. All other activities previously conducted by JWG
Clearing were transferred to other operating subsidiaries of the Company
before the sale.
In connection with the sale, (i) the Company and its subsidiary JW
Genesis Financial Services, Inc. ("JWFGS") entered into a Transition
Services Agreement pursuant to which they will continue to provide certain
assistance and services to JWG Clearing and Fiserv Clearing, and will permit
JWG Clearing and Fiserv Clearing to use certain facilities during a
transition period for a monthly fee approximating the Company's costs; (ii)
the Company and JWGFS agreed not to compete for ten years in the securities
clearing and execution business and not to solicit personnel of JWG Clearing
or Fiserv and its affiliates; and (iii) the Company and JWGFS agreed,
subject to certain limitations and exclusions (primarily related to the
Company's independent contractor registered representatives, possible future
acquisitions, and a one-year phase-in period), to use and cause their
subsidiaries and affiliates to use the clearing services of designated
Fiserv affiliates for at least 90% of their securities brokerage
transactions, and, in the case of the Company's independent contractor
registered representatives, to impose a surcharge on certain such
transactions that are not cleared through a Fiserv affiliate, during the 10-
year period following the sale. The Company and its affiliates have the
right, however, to be released from the above obligations to use Fiserv
affiliates or to impose a surcharge by repaying to Fiserv a portion of the
sales price based on a prescribed formula that takes into account the price
paid in the sale and the amount of clearing services business then being
generated by the Company or its affiliate seeking the release. In such
event, the amount of deferred gain to the Company from the sale would be
reduced.
$19 million of the sales price was based on the estimated stockholder's
equity of JWG Clearing as of May 31, 1999 and is subject to final
confirmation by the parties by July 16, 1999 and possible adjustment to that
portion of the sales price. The Company does not believe the amount of such
possible adjustment to be significant.
As a result of the sale and the above agreements, the Company ceased
providing clearing services, both to third party correspondents (such as
broker dealers, banks, and other financial institutions) and for its own
securities brokerage transactions. In deciding to proceed with the sale and
to cease providing clearing services, management concluded that for the
Company to remain competitive in the clearing services business would
require (i) large capital expenditures and resource concentration to
maintain the technology and infrastructure necessary to service the
securities clearing requirements of the more desirable clients, (ii) higher
levels of capital to satisfy increasing regulatory capital requirements
resulting from margin transactions in certain securities that experience
rapid increases in trading prices, and (iii) a significant amount of
management time and other Company resources to meet the challenge of
increasing competition in the securities clearing business, including from
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firms with substantially greater financial resources. In addition, the
Company's future profit margins on its clearing business would likely
decline as competitive pricing pressures increase.
While the Company's clearing services operations have been profitable
historically, management believes the sale of JWG Clearing in these
circumstances was in the long-term best interests of the Company. Not only
is the impact on the Company's future profitability from its remaining
overall operations not expected to be material beyond the near-term, but the
net proceeds from the sale provide a substantial infusion of capital that
can be used to fund expanded levels of operations in the Company's other
business units. The interim reinvestment of such net proceeds, pending
longer term capital applications, will also offset in part earnings that
might have continued to be realized from the Company's clearing service
business before the factors described above began to significantly erode
such earnings. Most importantly, however, the sale permits the Company to
focus more management time and other resources on its retail brokerage and
investment banking businesses, as well as to use the newly available capital
to pursue possible new opportunities that management believes have greater
potential to enhance value for all shareholders.
A copy of the Stock Purchase Agreement is included as Exhibit 2 to the
Company's Current Report on Form 8-K filed with the Commission on April 30,
1999 to announce the transaction, which was consummated consistent
therewith. Copies of the Transition Services Agreement and form of Fully
Disclosed Correspondent Services Agreement (the latter having been entered
into with Fiserv Correspondent Services, Inc. by four of the Company's
securities brokerage subsidiaries for the receipt of securities clearing
services from Fiserv affiliates for the next ten years) are included herewith
as Exhibits 10(a) and 10(b). Such Exhibits are incorporated by reference
into this Item 2 and the foregoing descriptions are qualified in its entirety
by reference to such Exhibits.
CERTAIN STATEMENTS INCLUDED IN THIS FORM 8-K, INCLUDING WITHOUT
LIMITATION STATEMENTS CONTAINING THE WORDS "BELIEVES," "ANTICIPATES,"
"INTENDS," "EXPECTS" AND WORDS OF SIMILAR IMPORT, CONSTITUTE "FORWARD-
LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG
OTHERS, THE FOLLOWING: THE IMPACT OF GENERAL ECONOMIC CONDITIONS ON THE
CAPITAL MARKETS; CHANGES IN OR AMENDMENTS TO REGULATORY AUTHORITIES' CAPITAL
REQUIREMENTS OR OTHER REGULATIONS APPLICABLE TO THE COMPANY OR ITS
SUBSIDIARIES; FLUCTUATIONS IN INTEREST RATES; INCREASED LEVELS OF
COMPETITION; AND OTHER FACTORS REFERRED TO IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, UNDER "ITEM 1.
BUSINESS - CERTAIN MATTERS REGARDING FORWARD LOOKING STATEMENTS," WHICH IS
INCORPORATED HEREIN BY THIS REFERENCE. GIVEN SUCH UNCERTAINTIES, UNDUE
RELIANCE SHOULD NOT BE PLACED ON SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ANY SUCH FACTORS OR TO PUBLICLY
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ANNOUNCE THE RESULTS OF ANY REVISIONS TO ANY OF THE FORWARD-LOOKING
STATEMENTS INCLUDED HEREIN TO REFLECT FUTURE EVENTS OR DEVELOPMENTS.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Not applicable.
(b) The Company determined that the following pro forma financial
statements are required as a resulf of the transaction described in Item 2. Each
of these statements was previously filed with the Commission as part of the
Registrant's Post-Effective Amendment on Form S-3 to Form S-1, Commission File
No. 333-75447, and are incorporated herein by reference:
Pro Forma Statement of Operations for the period ended December 31,
1998
Pro Forma Statement of Operations for the three months ended
March 31, 1999
Pro Forma Balance Sheet at March 31, 1999
Notes to Pro Forma Financial Information
(c) Exhibits
10(a) Transition Services Agreement, dated April 16, 1999 by and
among the Company, JWGFS, JWG Clearing, and Fiserv.*
10(b) Form of Fully Disclosed Correspondent Agreement dated June 1,
1999.*
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*Previously filed
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Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
JWGENESIS FINANCIAL CORP.
By: /s/ Gregg S. Glaser
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Gregg S. Glaser
Chief Financial Officer
Dated: August 10, 1999
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