UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 25, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from....................to.....................
Commission file number 0-15105
SCOTT & STRINGFELLOW FINANCIAL, INC.
(Exact name of Registrant as specified in its charter)
Virginia 54-1315256
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
909 East Main Street Richmond, Virginia 23219
(Address of principal executive offices) (zip code)
(804) 643-1811
(Registrant's telephone number, including area code)
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 ....
On November 4, 1998, there were 3,505,196 shares of Scott & Stringfellow
Financial, Inc. Common Stock, par value $.10, issued and outstanding.
SCOTT & STRINGFELLOW FINANCIAL, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition -
September 25, 1998 (unaudited) and June 26, 1998 3
Consolidated Statements of Income (unaudited) -
Quarterly periods ended September 25, 1998
and September 26, 1997 4
Consolidated Statements of Cash Flows (unaudited) -
Quarterly periods ended September 25, 1998
and September 26, 1997 5
Notes to Consolidated Financial Statements 6
SIGNATURES 7
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCOTT & STRINGFELLOW FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
September 25, June 26,
1998 1998
ASSETS
Cash and cash equivalents $ 4,477,077 $ 3,218,034
Cash segregated under Federal regulations 5,019 5,397
Receivable from brokers, dealers and
clearing organizations 3,780,254 8,342,188
Receivable from customers 131,034,188 123,667,772
Trading and investment securities,
at market value 10,585,158 12,470,571
Exchange memberships, at adjusted cost 838,100 838,100
Equipment and leasehold improvements,
less depreciation and amortization 5,015,298 4,993,196
Deferred income taxes 1,703,429 1,703,429
Other assets 11,055,227 12,754,076
Total Assets $ 168,493,750 $ 167,992,763
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Drafts payable $ 3,341,352 $ 0
Short term bank loans 7,200,000 18,900,000
Payable to brokers, dealers and clearing
organizations 7,519,960 6,134,290
Payable to customers 95,867,293 89,810,049
Securities sold, but not yet purchased,
at market value 1,608,214 2,550,751
Accounts payable, accrued compensation
and other liabilities 17,344,341 16,311,773
Total Liabilities 132,881,160 133,706,863
Stockholders' Equity
Common stock, $0.10 par value; Authorized
10,000,000 shares; Issued and outstanding
3,481,541 and 3,277,657 shares 348,155 327,767
Additional paid-in capital 17,272,408 15,430,595
Retained earnings 20,010,259 20,251,287
Less: subscriptions receivable -2,018,232 -1,723,749
Total Stockholders' Equity 35,612,590 34,285,900
Total Liabilities and Stockholders' Equity $ 168,493,750 $ 167,992,763
See notes to consolidated financial statements.
SCOTT & STRINGFELLOW FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Quarters Ended September 25, 1998 and September 26, 1997
(Unaudited)
September 25, September 26,
1998 1997
REVENUES
Commissions $ 13,363,363 $ 13,092,403
Principal transactions 2,952,811 3,937,695
Investment banking 2,015,213 3,284,357
Interest and dividends 2,882,349 2,266,577
Advisory and administrative service fees 2,672,686 2,692,741
Other -56,877 170,418
Total Revenues 23,829,545 25,444,191
EXPENSES
Employee compensation and benefits 14,564,914 16,331,921
Communications 1,261,153 1,033,227
Occupancy and equipment 1,424,218 1,225,729
Advertising and sales promotion 699,151 565,008
Postage, stationery and supplies 794,052 646,918
Brokerage, clearing and exchange fees 467,640 454,765
Data processing 520,391 455,752
Interest 1,153,111 915,322
Other operating expenses 1,508,332 1,241,085
Total Expenses 22,392,962 22,869,727
Income before income taxes 1,436,583 2,574,464
Income taxes 629,400 949,000
NET INCOME $ 807,183 $ 1,625,464
Earnings per share, basic $0.24 $0.51
Earnings per share, diluted $0.23 $0.48
Dividends declared per share $0.30 $0.09
Weighted average common shares outstanding 3,334,894 3,170,201
Weighted average common shares and dilutive
potential common shares outstanding 3,561,136 3,363,933
See notes to consolidated financial statements.
SCOTT & STRINGFELLOW FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters Ended September 25, 1998 and September 26, 1997
(Unaudited)
September 25, September 26,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 807,183 $ 1,625,464
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 467,347 418,148
Allowance for doubtful accounts -20,366 15,677
Losses on dispositions of fixed assets 1,564 13,718
Changes in assets and liabilities:
Cash segregated under Federal regulations 378 363,519
Receivable from brokers, dealers and
clearing organizations 4,561,934 -3,847,286
Receivable from customers -7,359,384 -2,030,605
Trading securities 2,001,394 608,359
Other assets 1,998,717 -729,203
Payable to brokers, dealers and
clearing organizations 1,385,670 501,753
Payable to customers 6,057,244 12,497,025
Securities sold, but not yet purchased -942,537 359,604
Accounts payable, accrued compensation
and other liabilities 312,123 3,173,344
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 9,271,267 12,969,517
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of not readily
marketable securities 84,123 0
Purchases of not readily marketable securities -200,104 0
Proceeds from disposition of fixed assets 9,024 918
Purchases of fixed assets -496,835 -462,210
Repayment of loans receivable 35,264 42,848
Increase in loans receivable -325,000 -883,125
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES -893,528 -1,301,569
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in drafts payable 3,341,352 435,214
Net change in short term bank loans -11,700,000 -4,950,000
Cash dividends paid -327,766 -285,565
Purchase and retirement of common stock 0 -651,427
Issuance of common stock 1,567,718 827,160
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES -7,118,696 -4,624,618
Net increase (decrease) in cash and cash equivalents 1,259,043 7,043,330
Cash and cash equivalents at beginning of period 3,218,034 6,566,361
Cash and cash equivalents at end of period $ 4,477,077 $ 13,609,691
Cash paid during the period for interest $ 897,588 $ 631,894
Cash paid during the period for income taxes $ 712,733 $ 640,925
See notes to consolidated financial statements.
SCOTT & STRINGFELLOW FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 25, 1998
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Scott & Stringfellow Financial, Inc. and its subsidiaries (collectively the
"Company"), Scott & Stringfellow, Inc. ("S&S"), Scott & Stringfellow Capital
Management, Inc. ("SSCM"), and Scott & Stringfellow Realty, Inc. S&S, the
Company's principal subsidiary, is a broker-dealer registered under the
Securities Exchange Act of 1934. SSCM is an investment advisor registered
under the Investment Advisors Act of 1940.
These interim consolidated financial statements are unaudited; however, such
information reflects all normal recurring adjustments which, in the opinion
of management, are necessary for a fair presentation of the results for the
period in accordance with generally accepted accounting principles. The
nature of the Company's business is such that the results of any interim
period are not necessarily indicative of the results which might be expected
for the full fiscal year. The notes included herein should be read in
conjunction with the notes to the consolidated financial statements included
in the Company's annual audited report for the fiscal year ended June 26,
1998.
As of July, 1998, the Company implemented the provisions of Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), which establishes
standards for the reporting and presentation of comprehensive income. Under
the standard, comphrehensive income is divided into net income and other
comprehensive income. As the Company had no material items of other
comprehensive income during the period, the implementation of SFAS 130 had
no material effect on the consolidated financial statements.
2. NET CAPITAL REQUIREMENTS
As a registered broker-dealer and a member of the New York Stock Exchange
("NYSE"), the Company's wholly-owned subsidiary, S&S, is subject to the
Securities and Exchange Commission's Uniform Net Capital Rule (Rule 15c3-1).
S&S has elected to utilize the alternative method of the Rule, which
prohibits a broker-dealer from engaging in any transactions which would
cause its "net capital" to be less than 2% of its "aggregate debit balances"
arising from customer transactions, as those terms are defined in the Rule.
The NYSE may also impose restrictions on S&S's business if its net capital
falls below 5% of aggregate debit balances. At September 25, 1998, S&S's
net capital of $18,554,304 was 14% of its aggregate debit balances and was
$15,893,439 in excess of its minimum regulatory requirement.
3. COMMON STOCK
During the quarter ended September 25, 1998, the Company issued 203,152
shares of common stock pursuant to the exercise of employee stock options
for net proceeds of $1,490,095. In addition, the Company issued 732 shares
to its outside directors, pursuant to a private placement exemption,
representing annual directors fees of $17,989. The Company did not
repurchase any shares during the period.
4. LEGAL PROCEEDINGS
The Company and its subsidiaries are from time to time named as defendants
in legal actions incidental to its securities brokerage and investment
banking activities. Management believes that all pending claims and
lawsuits of which it has knowledge will be resolved with no material adverse
effect on the financial condition of the Company, although the resolution
of such matters might have a material adverse impact on the operating
results for any given quarterly accounting period.
SIGNATURES
Pursuant to the requirements 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.
SCOTT & STRINGFELLOW FINANCIAL, INC. (Registrant)
Signatures Date
/s/John Sherman, Jr. November 17, 1998
John Sherman, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
/s/Mike D. Johnson November 17, 1998
Mike D. Johnston
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)<PAGE>
