<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-K/A-1
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-8186
DAIN RAUSCHER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 41-1228350
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation of organization)
DAIN RAUSCHER PLAZA, 60 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402-4422
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 371-2711
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
<S> <C>
Common Stock, par value $.125 per share New York Stock Exchange, Inc.
</TABLE>
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
As of March 3, 1998, 12,332,322 shares of common stock were outstanding,
and the aggregate market value of the common shares (based upon the closing
price at March 3, 1998, on the New York Stock Exchange) of Dain Rauscher
Corporation, held by non-affiliates was approximately $500,359,174.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of Registrant to be filed within 120 days of
December 31, 1997 are incorporated in Part III of this report.
- --------------------------------------------------------------------------------
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K:
(a) Documents filed as part of this Report:
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Financial statements:
Reference is made to the table of contents to financial
statements and financial statement schedule hereinafter
contained. . . . . . . . . . . . . . . . . . . . . . . . . . . 45*
2. Financial statement schedules:
Reference is made to the table of contents to financial
statements and financial statement schedule hereinafter
contained for all other financial statement schedule. . . . . 45*
</TABLE>
*Refers to page number in original Form 10-K filing for the year ended December
31, 1997.
<PAGE>
<TABLE>
<CAPTION>
3. Exhibits:
ITEM NO. ITEM METHOD OF FILING
-------- ------ ----------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the Company. Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8 dated
May 13, 1997, File No. 333-26947.
3.2 Amended and Restated Bylaws of the Company. Incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q dated September 30, 1996.
4.1 Rights Agreement dated April 30, 1997. Incorporated by reference to the Company's Registration
Statement on Form 8 dated May 1, 1997.
4.2 Credit Agreement dated June 27, 1997. Incorporated by reference to Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q dated June 30, 1997.
4.3 First Amendment to Credit Agreement dated Filed herewith.**
December 22, 1997.
10.1* 1986 Stock Option Plan, as amended on April 24, 1987, Incorporated by reference to Exhibit 10(b) to the Company's
May 9, 1990, March 3, 1993 and April 27, 1993. Current Report on Form 8-K dated July 15, 1993.
10.2 Form of Indemnity Agreement with Directors and Incorporated by reference to Exhibit 10(c) to the Company's
Officers of the Company. Annual Report on Form 10-K for the year ended December 31,
1990.
10.3* Form of Non-Employee Director Retirement Compensation Incorporated by reference to Exhibit 10(g) to the Company's
Agreement. Annual Report on Form 10-K for the year ended December 31,
1992.
10.4* IFG Executive Deferred Compensation Plan dated Incorporated by reference to Exhibit 10(a) to the Company's
March 31, 1993. Current Report on Form 8-K dated July 15, 1993.
10.5 Trust Agreement for IFG Executive Deferred Incorporated by reference to Exhibit 10.5 to the Company's
Compensation Plan dated February 11, 1994. Annual Report on Form 10-K dated December 31, 1994.
10.7* 1996 Stock Incentive Plan. Incorporated by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q dated March 31, 1996.
10.8* Offer of Employment and Amended Offer of Employment Filed herewith.**
Agreements between the Company and William A.
Johnstone dated May 28, 1996, and October 9, 1997,
respectively.
11 Computation of net earnings per share. Filed herewith.**
21 List of subsidiaries. Filed herewith.**
23 Independent Auditors' consent. Filed herewith.
24 Power of Attorney Filed herewith.
27 Financial Data Schedule. Filed herewith.**
99 Cautionary Statements for Purposes of the Filed herewith.**
"Safe Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995.
</TABLE>
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of this report.
** Refers to original Form 10-K filing for year ended December 31, 1997.
<PAGE>
REPORT FOR EMPLOYEE STOCK OWNERSHIP PLAN:
The financial statements required by Form 11-K is hereby furnished as
permitted by Rule 15d-21:
Schedules included:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' report. . . . . . . . . . . . . . . . . . . . . . . . 5
Statement of net assets available for plan benefits as of
December 31, 1997 and 1996. . . . . . . . . . . . . . . . . . . . . . . . 6
Statement of changes in net assets available for plan benefits
for the years ended December 31, 1997 and 1996. . . . . . . . . . . . . . 7
Notes to financial statements . . . . . . . . . . . . . . . . . . . . . . . 8
Schedule 1 - Schedule of assets held for investment purposes. . . . . . . .15
Schedule 2 - Reportable transaction for the year ended
December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Exhibit 23 - Independent auditors' consent. . . . . . . . . . . . . . . . .19
Exhibit 24 - Power of Attorney. . . . . . . . . . . . . . . . . . . . . . .20
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Dain Rauscher Benefits Committee
Dain Rauscher Corporation:
We have audited the accompanying statements of net assets available for plan
benefits of the Dain Rauscher Retirement Plan (the Plan), formerly known as the
IFG Stock Bonus Plan, as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan'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.
As discussed in note 1 to the financial statements, the Plan was merged on
January 1, 1997 with the IFG Profit Sharing Plan. On January 1, 1997, the IFG
Profit Sharing Plan's net assets were transferred to the Plan.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Dain
Rauscher Retirement Plan as of December 31, 1997 and 1996, and the changes in
net assets available for plan benefits for the years then ended in conformity
with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
are presented for purposes of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in our audit of the
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 19, 1998
<PAGE>
DAIN RAUSCHER RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1996
-------------------------
<S> <C> <C>
Investments, stated at current market value:
Cash equivalents . . . . . . . . . . . . . . 1,378,934 557,683
Dain Rauscher Corporation common stock . . . 249,753,435 144,065,930
Mutual funds
American Balanced Fund . . . . . . . . . . 39,702,520 0
MFS Emerging Growth Fund . . . . . . . . . 38,812,212 0
Templeton Foreign Fund . . . . . . . . . . 37,383,841 0
Fidelity Advisor Growth Opportunities
Fund . . . . . . . . . . . . . . . . . . 34,775,235 0
Norwest Stable Return Fund . . . . . . . . 31,823,459 0
Putnam Fund for Growth and Income . . . . 31,188,834 0
Pioneer Capital Growth Fund. . . . . . . . 16,724,923 0
IAI Regional Fund. . . . . . . . . . . . . 11,009,564 0
Bond Fund of America . . . . . . . . . . . 6,544,410 0
Participant loans. . . . . . . . . . . . . . 8,445,859 3,478,284
----------- -----------
Total assets held by Plan Trustee. . . . . . 507,543,226 148,101,897
----------- -----------
----------- -----------
Contributions receivable:
Employer . . . . . . . . . . . . . . . . . . 13,318,799 401,108
Employer match . . . . . . . . . . . . . . . 595,961 0
Employee . . . . . . . . . . . . . . . . . . 0 48,415
Accrued interest and dividends receivable. . . . 6,039 1,659
Miscellaneous accounts payable . . . . . . . . . 0 (47,863)
----------- -----------
Net assets available for plan benefits . . . $521,464,025 $148,505,216
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
DAIN RAUSCHER RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1997 1996
-------------------------------------------
<S> <C> <C>
Net assets available for plan benefits, beginning of year. . . . . . $ 148,505,216 $114,858,882
------------ ------------
Investment income:
Interest and dividend income . . . . . . . . . . . . . . . . . . 18,153,989 2,625,636
Net realized and unrealized gains on securities . . . . . . . . 146,118,004 41,969,741
Diversifications and transfers . . . . . . . . . . . . . . . . . . . 0 (3,124,470)
Transfers from IFG Profit Sharing Plan (note 1). . . . . . . . . . . 221,623,611 0
Contributions:
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,858,477 5,320,212
Employer profit sharing. . . . . . . . . . . . . . . . . . . . . 13,318,799 0
Employer match . . . . . . . . . . . . . . . . . . . . . . . . . 3,812,165 3,071,273
Rollovers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 743,272 0
------------ ------------
Total additions . . . . . . . . . . . . . . . . . . . . . . . . 418,628,317 49,862,392
------------ ------------
Deductions:
Distributions to participants . . . . . . . . . . . . . . . . . 45,290,404 16,140,943
Trustee and manager fees . . . . . . . . . . . . . . . . . . . . 379,104 75,115
------------ ------------
Total deductions . . . . . . . . . . . . . . . . . . . . 45,669,508 16,216,058
------------ ------------
Increase in net assets available for plan benefits . . . 372,958,809 33,646,334
------------ ------------
Net assets available for plan benefits, end of year . . . . . . . . $ 521,464,025 $ 148,505,216
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
DAIN RAUSCHER RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Effective January 1, 1997, the IFG Profit Sharing Plan was merged into the
IFG Stock Bonus Plan. As a result, after the close of business for the
1996 Plan Year, the IFG Profit Sharing Plan had no assets or liabilities.
The financial statements present only the IFG Stock Bonus Plan amounts for
December 31, 1996 and the Plan Year then ended. All assets and liabilities
of the IFG Profit Sharing Plan were included in the assets and liabilities
for the IFG Stock Bonus Plan effective January 1, 1997. The combined plan
was renamed the IFG Retirement Plan. In February 1997, the plan's sponsor
changed its name to Interra Financial Incorporated ("Interra") and the IFG
Retirement Plan was renamed the Interra Retirement Plan. On January 2,
1998, Interra changed its name to Dain Rauscher Corporation ("Dain
Rauscher") and the Interra Retirement Plan was renamed the Dain Rauscher
Retirement Plan ("the Plan").
CONTRIBUTIONS
Employee contributions are recorded when payroll deductions are made for
the Plan participants.
DISTRIBUTIONS
Amounts payable to participants who have elected to withdraw from the Plan
are recorded when funds are paid from the Plan.
INVESTMENTS
The investments of the Plan are stated at their current market values at
December 31, 1997 and 1996, as determined by the Trustee. First Trust
National Association was Trustee as of December 31, 1996. Effective
January 1, 1997 Norwest Bank Minnesota, N.A. (the Trustee) became Trustee
for the Plan. Purchases and sales of securities are reflected on a
trade-date basis. Dividend income and interest income are recorded as
earned on an accrual basis. The investments of the Plan are held by the
Trustee.
EXPENSES
All fund fees are paid out of the fund for which they are incurred.
Administrative costs and expenses are paid by the Plan. Dain Rauscher has
negotiated a rebate of some of the fund fees which are used to pay Plan
expenses. Any rebates, once offset by plan expenses, are allocated back to
Plan participants based on the participant's total account balance in
proportion to the total Plan assets.
USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of net assets
available for Plan benefits and disclosure of contingent assets and
liabilities as of the date of the financial statements and changes in net
assets available for Plan benefits for the reporting period. Actual
results could differ significantly from those estimates.
2. PLAN DESCRIPTION
ELIGIBILITY
The Plan is a defined contribution plan which provides retirement benefits
to eligible participants. Effective January 1, 1995, employees of Dain
Rauscher or its participating subsidiaries were able to make pre-tax
contributions to the Plan the January 1 or July 1 after completing six
months of service consisting of at least 750 hours of service and if they
are at least 21 years of age. Participants will be eligible to receive
company
<PAGE>
contributions beginning the January 1 or July 1 following one year of
service consisting of at least 1,000 hours of service and if they are at
least 21 years of age. Effective April 1, 1998, employees of Dain Rauscher
or its participating subsidiaries may make pre-tax contributions to the
Plan upon hire and the attainment of age 21. The eligibility rules for
company contributions remain unchanged.
CONTRIBUTIONS
For the year ended December 31, 1996 participants were eligible to
contribute 1 to 12 percent of recognized compensation to either the IFG
Profit Sharing Plan or the IFG Stock Bonus Plan. However, total
participant pretax contributions to the IFG Profit Sharing Plan and the IFG
Stock Bonus Plan could not exceed 12 percent of recognized compensation.
Effective January 1, 1997 participants may contribute 1 to 12 percent of
recognized compensation to the Plan. The participant receives a 40 percent
employer match on pretax contributions up to 5 percent of pay. Matching
contributions are limited to $3,000 annually. For the year ended December
31, 1996 all matching contributions were paid to the participants' accounts
under the IFG Stock Bonus Plan. For the year ended December 31, 1997 all
matching contributions are paid to the participants' Dain Rauscher Stock
Fund under the Plan. Recognized compensation is defined in the Plan and
generally consists of salary, commissions and other regular compensation
paid to a participant during the Plan year, subject to certain aggregate
limitations under federal regulations.
Dain Rauscher makes an annual profit sharing contribution of at least 3
percent of recognized compensation to eligible employees. Any additional
contribution, if made, is optional and made at the discretion of the Board
of Directors for each of Dain Rauscher's participating employers. To be
eligible to share in the annual employer profit sharing contributions, a
eligible participant must be credited with at least 1,000 hours of service
for the plan year (or a ratable portion of 1,000 hours of service if a
former participant was rehired during the same plan year) and be an
employee on the last day of the Plan year.
Employee and employer contributions are limited to the extent necessary to
comply with sections 401 and 415 of the Internal Revenue Code.
VESTING
Employee contributions are always fully vested. Participants vest in
employer contributions after they have attained five years of service at
which time they become 100 percent vested. Special rules apply for rehired
employees. Employer contributions will also become fully vested if, while
employed, the participant dies, reaches age 55 or retires because of total
and permanent disability. In addition, employer contributions will become
fully vested if the Plan is terminated, there is a "change in control" as
defined in the Plan, or if there is a complete discontinuance of
contributions to the Plan.
LOANS
Participants are eligible to borrow up to 50 percent, not to exceed
$50,000, of certain account balances. Loans are allowed for any reason.
For the year ended December 31, 1996 participants could elect a loan term
of between one year and four and one-half years for all loans other than
home purchase for which a 10 or 15-year term could be elected. Effective
January 1, 1997 participants could elect a loan term of between one year
and five years for all loans other than home purchase for which a 10 or
15-year term may be elected. All loans are charged an interest rate equal
to the prime rate plus one percent on the first working day of the quarter
in which the loan was originated. All loans are repaid through monthly
payroll deductions.
INVESTMENTS
For the year ended December 31, 1996 participants were able to invest their
assets in the IFG Stock Bonus Plan in Dain Rauscher Corporation common
stock. For the year ended December 31, 1996 participants were able to
invest their assets in the IFG Profit Sharing Plan in any of six available
funds. The fund options included two domestic equity funds, an
international equity fund, a small cap equity fund, an intermediate bond
fund, and a money market fund. Effective January 1, 1997, participants may
invest their plan accounts in any of ten
(Continued)
<PAGE>
available options. The investment options include an employer stock fund,
two domestic equity funds, an international equity fund, two mid cap equity
funds, a small cap equity fund, a balanced fund, an intermediate bond fund,
and a stable return fund.
DIVERSIFICATIONS
For the year ended December 31, 1996 eligible participants could elect to
direct the sale of their stock holdings in the IFG Stock Bonus Plan with
the proceeds being transferred to the IFG Profit Sharing Plan for
investment as directed by the participant. Effective January 1, 1997
eligible participants may elect to direct the sale of their holdings in the
Dain Rauscher Stock Fund with the proceeds being transferred to any of the
other Plan options as directed by the participant.
DISTRIBUTIONS
Generally, participants are eligible for distribution of their vested
account balances after separation of service. Participants may request
in-service distributions for financial hardship purposes as defined in the
Plan. Distributions are limited to the vested balances of certain accounts
within the Plan. In addition, eligible participants may request a special
distribution of certain accounts from the Plan between age 50 and 60,
subject to minimum service requirements. Any participant age 60 or over
may request a full or partial distribution from the Plan. All
distributions from the Plan are made in cash, except for the Dain Rauscher
Stock Fund which is paid in shares of Dain Rauscher common stock, plus cash
for any fractional shares
DIVIDEND PASS-THROUGH
The Dain Rauscher Stock Fund is an Employee Stock Ownership Plan which has
elected dividend pass-through to participants. Dividends received by the
Plan on shares of Dain Rauscher Corporation common stock are distributed
from the Plan to participants as ordinary income.
3. CONTRIBUTIONS
Amounts contributed by each employer and its employees were as follows for
the years ended December 31, 1997 and 1996, respectively (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------------------------------------------------
AMOUNT CONTRIBUTED BY AMOUNT CONTRIBUTED BY
-------------------------------------------------
EMPLOYEE EMPLOYER EMPLOYEE EMPLOYER
-------------------------------------------------
<S> <C> <C> <C> <C>
Dain Bosworth Incorporated . . . . . . . . . . . . $ 9,524 $11,056 $3,406 $2,084
Rauscher Pierce Refsnes, Inc . . . . . . . . . . . 3,968 4,777 1,499 795
Interra Clearing Services Inc (formerly known as
Regional Operations Group.) . . . . . . . . . . 803 776 306 122
Dain Rauscher Corporation (formerly known as
Interra Financial Incorporated.). . . . . . . . 387 342 80 41
Interra Advisory Services Inc. (formerly known as
IFG Asset Management Services, Inc.). . . . . . 176 180 29 29
------- ------- ------ ------
$14,858 $17,131 $5,320 $3,071
------- ------- ------ ------
------- ------- ------ ------
</TABLE>
The 1996 employer contribution consists of a match of $3,071,000, of which
$1,136,000 was based on participant pretax contributions to the IFG Profit
Sharing Plan. The 1997 employer contributions include a match of
$3,812,165 on participant pretax contributions to the Plan and a profit
sharing contribution of $13,318,799. Employer matching contributions have
been reduced by forfeitures of $876,165 and $447,000 for the years ended
December 31, 1997 and 1996, respectively. For the year ending December 31,
1997 employer profit sharing contributions have been reduced by forfeitures
of $1,412,262.
Any forfeited employer contributions are utilized to reduce any
corresponding future employer contributions unless the participant returns
to employment before a specified date as defined by the Plan.
(Continued)
<PAGE>
DAIN RAUSCHER RETIREMENT PLAN
4. STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND
<TABLE>
<CAPTION>
FIDELITY
ADVISOR
NORWEST AMERICAN PUTNAM FUND GROWTH
STABLE BOND FUND OF BALANCED FOR GROWTH OPPORTUNITIES TEMPLETON IAI REGIONAL MFS EMERGING
RETURN FUND AMERICA FUND & INCOME FUND FOREIGN FUND FUND GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997:
Cash equivalents $ 11,105 $ 1,648 $ 60,202 $ 226,619 $ (30,702) $ 91,440 $ 7,667 $ (213,028)
Dain Rauscher common stock 0 0 0 0 0 0 0 0
Mutual funds 31,823,459 6,544,410 39,702,520 31,188,834 34,775,235 37,383,841 11,009,564 38,812,212
Participant loans 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
31,834,564 6,546,058 39,762,722 31,415,453 34,744,533 37,475,281 11,017,231 38,599,184
- ----------------------------------------------------------------------------------------------------------------------------------
Employer contribution
receivable 790,821 223,165 2,191,000 1,144,890 1,400,669 1,603,891 310,047 1,819,269
Accrued interest and
dividends receivable 73 15 91 72 80 86 25 89
- ----------------------------------------------------------------------------------------------------------------------------------
790,894 223,180 2,191,091 1,144,962 1,400,749 1,603,977 310,072 1,819,358
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets available for plan
benefits-end of year $32,625,458 $6,769,238 $41,953,813 $32,560,415 $36,145,282 $39,079,258 $11,327,303 $40,418,542
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PIONEER CAPITAL DAIN RAUSCHER
GROWTH FUND STOCK FUND LOAN FUND TOTAL
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1997:
Cash equivalents $ 9,090 $ 1,117,949 $ 96,944 $ 1,378,934
Dain Rauscher common stock 0 249,753,435 0 249,753,435
Mutual funds 16,724,923 0 247,964,998
Participant loans 0 0 8,445,859 8,445,859
- ----------------------------------------------------------------------------------------------------------------
16,734,013 250,871,384 8,542,803 507,543,226
- ----------------------------------------------------------------------------------------------------------------
Employer contribution
receivable 799,457 3,631,551 0 13,914,760
Accrued interest and
dividends receivable 38 5,470 0 6,039
- ----------------------------------------------------------------------------------------------------------------
799,495 3,637,021 0 13,920,799
- ----------------------------------------------------------------------------------------------------------------
Net assets available for plan
benefits-end of year $17,533,508 $254,508,405 $8,542,803 $521,464,025
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
<PAGE>
DAIN RAUSCHER RETIREMENT PLAN
4. STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND
<TABLE>
<CAPTION>
FIDELITY ADVISOR
PUTNAM FUND GROWTH
NORWEST STABLE BOND FUND OF AMERICAN FOR GROWTH & OPPORTUNITIES TEMPLETON
RETURN FUND AMERICA BALANCED FUND INCOME FUND FOREIGN FUND
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997:
Net assets available for plan
benefits-beginning of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
Additions:
Interest and dividend income 2,387 379,118 3,706,931 3,855,235 2,166,059 4,146,951
Net realized and unrealized
gain on securities 1,730,386 158,648 4,038,985 1,045,360 5,132,039 (1,333,377)
Diversification and transfers 33,641,050 6,396,283 38,485,183 26,950,695 27,980,871 35,149,935
Contributions:
Employee 630,055 253,745 2,637,407 1,332,714 1,563,898 2,141,013
Employer profit sharing 790,821 223,165 2,191,000 1,144,890 1,400,669 1,603,891
Employer match 0 0 0 0 0 0
Rollovers 161,495 136,539 33,569 57,749 43,932 152,898
Loan repayments 107,357 16,069 261,853 99,843 134,175 176,230
- -------------------------------------------------------------------------------------------------------------------------------
Total additions 37,063,551 7,563,567 51,354,928 34,486,486 38,421,643 42,037,541
- -------------------------------------------------------------------------------------------------------------------------------
Deductions:
Distributions to participants 4,095,730 744,391 8,980,615 1,723,874 1,992,297 2,628,739
Trustee and management fees 120,353 3,537 23,000 17,155 19,128 20,536
New loans 222,010 46,401 397,500 185,042 264,936 309,008
- -------------------------------------------------------------------------------------------------------------------------------
Total deductions 4,438,093 794,329 9,401,115 1,926,071 2,276,361 2,958,283
- -------------------------------------------------------------------------------------------------------------------------------
Net assets available for plan
benefits-end of year $32,625,458 $6,769,238 $41,953,813 $32,560,415 $36,145,282 $39,079,258
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
IAI REGIONAL MFS EMERGING PIONEER CAPITAL DAIN RAUSCHER
FUND GROWTH FUND GROWTH FUND STOCK FUND LOAN FUND TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997:
Net assets available for plan
benefits-beginning of year $ 0 $ 0 $ 0 $145,026,932 $ 3,478,284 $148,505,216
- -----------------------------------------------------------------------------------------------------------------------------
Additions:
Interest and dividend income 1,243,835 362,032 1,675,607 18,888 596,946 18,153,989
Net realized and unrealized
gain on securities 506,327 5,821,376 805,676 128,212,584 0 146,118,004
Diversification and transfers 9,588,937 32,028,729 14,793,973 (6,316,381) 2,924,336 221,623,611
Contributions:
Employee 371,833 2,420,820 1,045,975 2,461,017 0 14,858,477
Employer profit sharing 310,047 1,819,269 799,455 3,035,592 0 13,318,799
Employer match 0 0 0 3,812,165 0 3,812,165
Rollovers 10,913 80,122 66,055 0 0 743,272
Loan repayments 32,332 188,117 86,540 1,714,335 (2,816,851) 0
- -----------------------------------------------------------------------------------------------------------------------------
Total additions 12,064,224 42,720,465 19,273,281 132,938,200 704,431 418,628,317
- -----------------------------------------------------------------------------------------------------------------------------
Deductions:
Distributions to participants 687,528 1,917,511 1,571,554 20,648,812 299,353 45,290,404
Trustee and management fees 5,876 21,784 9,363 138,372 0 379,104
New loans 43,517 362,628 158,856 2,669,543 (4,659,441) 0
- -----------------------------------------------------------------------------------------------------------------------------
Total deductions 736,921 2,301,923 1,739,773 23,456,727 (4,360,088) 45,669,508
- -----------------------------------------------------------------------------------------------------------------------------
Net assets available for plan
benefits-end of year $ 11,327,303 $40,418,542 $17,533,508 $254,508,405 $ 8,542,803 $521,464,025
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
<PAGE>
5. ADMINISTRATION
For the Plan year ended December 31, 1997 the Plan was administered by a
five member committee appointed by Dain Rauscher's Board of Directors, all
of whom are employees of Dain Rauscher or its participating subsidiaries.
6. INVESTMENTS
The following investments, stated at fair value, represent 5 percent or
more of the Plan's net assets available for plan benefits at December 31,
1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
1997 1996
--------------------------------------------------------------------
<S> <C> <C>
Dain Rauscher Corporation common stock $249,753 $144,066
American Balanced Fund 39,703 0
MFS Emerging Growth Fund 38,812 0
Templeton Foreign 37,384 0
Fidelity Advisor Growth Opportunities Fund 34,775 0
Norwest Stable Return Fund 31,823 0
Putnam Fund for Growth and Income 31,189 0
</TABLE>
7. FEDERAL INCOME TAX STATUS
The Plan administrator received a favorable determination letter dated
September 26, 1995, from the United States Treasury Department stating that
the Plan constitutes a qualified plan under Section 401(a) and the
4975(e)(7) of the Internal Revenue Code (the Code) and that the trust
created under the Plan is therefore exempt from federal income taxes under
the provisions of Section 501(a).
The Plan administrator believes that the Plan and its related trust
continue to qualify under the provisions of Section 401(a), 4975(e)(7), and
501(a) of the Code and are exempt from federal income taxes.
Participants are not taxed currently on their pretax contributions, on the
employers' contributions to the Plan, or on income earned by the Plan.
Dividends paid to participants on Dain Rauscher common stock allocated to
their Dain Rauscher Stock Fund are subject to tax in the year received.
Distributions are generally subject to federal income tax at the time of
distribution if they are not rolled to an Individual Retirement Account or
other qualified plan.
(Continued)
<PAGE>
8. RECONCILIATION TO FORM 5500
Net assets available for plan benefits in the accompanying financial
statements differ from Form 5500 as filed with the Internal Revenue
Service, as follows (in thousands):
<TABLE>
<CAPTION>
December 31
-------------------
1997 1996
-----------------------------------------------------------------------------
<S> <C> <C>
Net assets available for plan benefits per Form 5500 $521,464 $147,523
Adjustment for distributions payable 0 982
-----------------------------------------------------------------------------
Net assets available for plan benefits per
accompanying financial statements $521,464 $148,505
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
9. PARTY-IN-INTEREST TRANSACTIONS
Norwest Bank Minnesota, N.A. is a party-in-interest with respect to the
Plan. In the opinion of the Plan administrator, transactions between the
Plan and the aforementioned party-in-interest are exempt from being
considered as "prohibited transactions" under ERISA Section 408(b).
(Continued)
<PAGE>
SCHEDULE 1
DAIN RAUSCHER RETIREMENT PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST MARKET VALUE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents:
NWCTF Short Term Investment Fund * 125,477 $ 125,477 $ 125,477
Cash 1,253,457 1,253,457 1,253,457
- -----------------------------------------------------------------------------------------------------------
Total cash equivalents 1,378,934 1,378,934
- -----------------------------------------------------------------------------------------------------------
Dain Rauscher Corporation common stock 3,619,615 39,525,451 249,753,435
- -----------------------------------------------------------------------------------------------------------
Mutual Funds:
American Balanced Fund 2,532,048 37,631,577 39,702,520
MFS Emerging Growth Fund Class A 1,072,753 34,082,315 38,812,212
Templeton Foreign Fund 3,757,170 39,357,482 37,383,841
Fidelity Advisor Growth Opportunities Fund Class T 819,205 30,373,195 34,775,235
Norwest Stable Return Fund* 1,267,412 30,622,565 31,823,459
Putnam Fund for Growth & Income Class A 1,596,153 30,209,152 31,188,834
Pioneer Capital Growth Fund Class A 796,804 16,372,445 16,724,923
IAI Regional Fund 450,473 9,951,047 11,009,564
Bond Fund of America 467,457 6,432,081 6,544,410
- -----------------------------------------------------------------------------------------------------------
Total mutual funds 235,031,860 247,964,998
- -----------------------------------------------------------------------------------------------------------
275,936,245 499,097,367
- -----------------------------------------------------------------------------------------------------------
Participant Loans (interest rates of 7% to 12%) 8,445,859 8,445,859
- -----------------------------------------------------------------------------------------------------------
Total investments $284,382,104 $507,543,226
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The data in this schedule is based upon information which has been certified as
complete and accurate by Norwest Bank, Minnesota N.A.
*Represents party-in-interest
See accompanying independent auditors' report.
<PAGE>
SCHEDULE 2
DAIN RAUSCHER RETIREMENT PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT FOR TRANSACTIONS)
<TABLE>
<CAPTION>
FAIR VALUE OF
DESCRIPTION NUMBER OF PURCHASE SELLING ASSET AS OF DATE
PARTY INVOLVED OF TRANSACTION TRANSACTIONS PRICE PRICE OF TRANSACTION NET GAIN
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Norwest Bank Purchases of NWCTF
Minnesota, NA (1) Short Term 265 $142,134 $142,134
Investment Fund --
Norwest Bank Sales of NWCTF
Minnesota, NA (1) Short Term 216 $110,999 $110,999 $543
Investment Fund
Norwest Bank Purchases of Dain
Minnesota, NA (1) Rauscher
Corporation Common 10 $1,088 $1,088 --
Stock (2) (3)
Norwest Bank Sales of Dain
Minnesota, NA (1) Rauscher
Corporation Common 21 $3,453 $3,453 $2,821
Stock (2) (3)
Norwest Bank Purchases of
Minnesota, NA (1) Putnam Fd Growth & 120 $38,731 $38,731 --
Income Class A
Norwest Bank Sales of Putnam Fd
Minnesota, NA (1) Growth & Income 107 $9,113 $9,113 $591
Class A
Norwest Bank Purchases of Bond
Minnesota, NA (1) Fd Amer Inc 108 $8,534 $8,534 --
Norwest Bank Sales of Bond Fd
Minnesota, NA (1) Amer Inc 70 $2,126 $2,126 $24
Norwest Bank Purchases of
Minnesota, NA (1) American Balanced 82 $55,397 $55,397 --
Fd Inc Com
Norwest Bank Sales of American
Minnesota, NA (1) Balanced Fd Inc Com 144 $18,751 $18,751 $986
Norwest Bank Purchases of IAI
Minnesota, NA (1) Regl Fd Com 87 $3,450 $3,450 --
Norwest Bank Sales of IAI Regl
Minnesota, NA (1) Fd Com 97 $19,389 $19,389 $2,428
Norwest Bank Purchases of
Minnesota, NA (1) Templeton FDS Inc 99 $48,333 $48,333 --
Foreign Fd
Norwest Bank Sales of
Minnesota, NA (1) Templeton FDS 132 $9,540 $9,540 $565
Inc Foreign Fd
(Continued)
<PAGE>
SCHEDULE 2
DAIN RAUSCHER RETIREMENT PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT FOR TRANSACTIONS)
<CAPTION>
FAIR VALUE OF
DESCRIPTION NUMBER OF PURCHASE SELLING ASSET AS OF DATE
PARTY INVOLVED OF TRANSACTION TRANSACTIONS PRICE PRICE OF TRANSACTION NET GAIN
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Norwest Bank Purchases of MFS Ser
Minnesota, NA (1) TR II Emerging Growth 124 $39,470 $39,470 --
Fd CL A
Norwest Bank Sales of MFS Ser TR
Minnesota, NA (1) II Emerging Growth Fd 101 $5,983 $5,983 $595
CL A
Norwest Bank Purchases of
Minnesota, NA (1) Pioneer Growth TR Cap 101 $20,040 $20,040 --
Growth Fd CL A
Norwest Bank Sales of Pioneer
Minnesota, NA (1) Growth TR Cap Growth 114 $4,049 $4,049 $382
Fd CL A
Norwest Bank Purchases of Fidelity
Minnesota, NA (1) Advisor Ser II Growth 119 $35,269 $35,269 --
Opportunities
Port CL T
Norwest Bank Sales of Fidelity
Minnesota, NA (1) Advisor Ser II 98 $5,389 $5,389 $494
Growth Opportunities
Port CL T
</TABLE>
The data in this schedule is based upon information which has been certified as
complete and accurate by Norwest Bank, Minnesota, N.A.
(1) Known to be a party-in-interest.
(2) Purchases and sales include both public market and intra-plan purchases.
(3) Formerly known as Interra Financial Incorporated.
See accompanying independent auditors' report.
<PAGE>
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.
DAIN RAUSCHER CORPORATION
By David J. Parrin
------------------------------------
David J. Parrin
Senior Vice President and Controller
Dated: June 26, 1998
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE
INDICATED:
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C> <C>
IRVING WEISER Chairman of the Board, President,
------------------------------- Chief Executive Officer and Director
Irving Weiser (Principal Executive Officer)
JOHN C. APPEL Vice Chairman, Chief Financial Officer
------------------------------- and Director (Principal Financial Officer)
John C. Appel
DAVID J. PARRIN Senior Vice President, Controller
------------------------------- (Principal Accounting Officer)
David J. Parrin
KENNETH J. WESSELS Senior Executive Vice President
------------------------------- and Director
Kenneth J. Wessels
J. EVANS ATTWELL Director
-------------------------------
J. Evans Attwell
SUSAN S. BOREN Director
-------------------------------
Susan S. Boren
F. GREGORY FITZ-GERALD Director By David J. Parrin
------------------------------- ---------------------------------
F. Gregory Fitz-Gerald David J. Parrin
WALTER F. MONDALE Director Pro Se and as Attorney-in-Fact
------------------------------- Dated: June 26, 1998
Walter F. Mondale
C.A. RUNDELL, JR. Director
-------------------------------
C.A. Rundell, Jr.
ROBERT L. RYAN Director
-------------------------------
Robert L. Ryan
ARTHUR R. SCHULZE, JR. Director
-------------------------------
Arthur R. Schulze, Jr.
</TABLE>
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Dain Rauscher Corporation:
We consent to the incorporation by reference in Registration Statement No.
333-53851, Registration Statement No. 333-03113, Registration Statement No.
333-20487, Registration Statement No. 33-58069, Registration Statement No.
33-54223, Registration Statement No. 33-54907, Registration Statement No.
33-59426, Registration Statement No. 33-39182, Registration Statement No.
33-25979, post-effective amendment No. 1 to Registration Statement No.
333-53851, post-effective amendment No. 1 to Registration Statement No.
33-13068, post-effective amendment No. 2 to Registration Statement No. 33-10243,
post-effective amendment No. 2 to Registration Statement No. 33-10242,
post-effective amendment No. 4 to Registration Statement No. 2-90634,
post-effective amendment No. 8 to Registration Statement No. 2-61514,
post-effective amendment No. 11 to Registration Statement No. 2-57759,
post-effective amendment No. 15 to Registration Statement No. 2-53289,
post-effective amendment No. 16 to Registration Statement No. 2-51150 and
Registration Statement No. 1-08186 of Dain Rauscher Corporation, and
subsidiaries of our report dated February 5, 1998, relating to the consolidated
balance sheets of Dain Rauscher Corporation (formerly Interra Financial
Incorporated) and subsidiaries as of December 31, 1997 and 1996, and the
consolidated statements of operations, shareholders' equity and cash flows and
the related financial statement schedule for each of the years in the three-year
period ended December 31, 1997, which report appears in the December 31, 1997
Annual Report on Form 10-K of Dain Rauscher Corporation.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 26, 1998
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
THE UNDERSIGNED HEREBY CONSTITUTE AND APPOINT IRVING WEISER, JOHN C. APPEL
AND DAVID J. PARRIN AND EACH OF THEM HIS TRUE AND LAWFUL ATTORNEYS-IN-FACT AND
AGENTS, WITH FULL POWERS OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS
NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN AMMENDMENTS TO THE
ANNUAL REPORT ON FORM 10-K OF DAIN RAUSCHER CORPORATION FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1997, AND TO FILE THE SAME WITH ALL EXHIBITS THERETO, AND
OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, EACH ACTING ALONE,
FULL POWER AND AUTHORITY TO DO AND PERFORM TO ALL INTENTS AND PURPOSES AS HE
MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING ALL THAT SAID ATTORNEYS-IN-FACT
AND AGENTS, EACH ACTING ALONE, OR HIS SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO
BE DONE BY VIRTUE THEREOF.
SIGNATURE DATE
--------- ----
JOHN C. APPEL MAY 6, 1998
---------------------------- --------------------------
JOHN C. APPEL
J. EVANS ATTWELL MAY 6, 1998
---------------------------- --------------------------
J. EVANS ATTWELL
SUSAN S. BOREN MAY 6, 1998
---------------------------- --------------------------
SUSAN S. BOREN
F. GREGORY FITZ-GERALD MAY 6, 1998
---------------------------- --------------------------
F. GREGORY FITZ-GERALD
WALTER F. MONDALE MAY 6, 1998
---------------------------- --------------------------
WALTER F. MONDALE
DAVID J. PARRIN MAY 6, 1998
---------------------------- --------------------------
DAVID J. PARRIN
C.A. RUNDELL, JR. MAY 6, 1998
---------------------------- --------------------------
C.A. RUNDELL, JR.
ROBERT L. RYAN MAY 6, 1998
---------------------------- --------------------------
ROBERT L. RYAN
ARTHUR R. SCHULZE, JR. MAY 6, 1998
---------------------------- --------------------------
ARTHUR R. SCHULZE, JR.
IRVING WEISER MAY 6, 1998
---------------------------- --------------------------
IRVING WEISER
KENNETH J. WESSELS MAY 6, 1998
---------------------------- --------------------------
KENNETH J. WESSELS
