UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from....................to.....................
Commission file number 0-15105
A. Full title of the plan:
Scott & Stringfellow Financial, Inc. Employee Stock Purchase Plan
B. Name of the issuer of the securities held pursuant to the Plan and the
address of its principal executive offices:
Scott & Stringfellow Financial, Inc.
909 East Main Street
Richmond, Virginia 23219
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
INDEX
Page Number
FINANCIAL STATEMENTS
Independent Auditors' Report 3
Statements of Financial Condition -
December 31, 1997 and 1996 4
Statements of Income and Changes in Plan Equity
Years ended December 31, 1997, 1996, and 1995 5
Notes to Financial Statements 6
Signatures 10
Exhibit 23 - Consent of Independent Auditors 11
Independent Auditors' Report
Administrative Committee
Scott & Stringfellow Financial, Inc.
Employee Stock Purchase Plan:
We have audited the accompanying statements of financial condition of the Scott
& Stringfellow Financial, Inc. Employee Stock Purchase Plan as of December 31,
1997 and 1996, and the related statements of income and changes in plan equity
for each of the years in the three-year period ended December 31, 1997. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Scott & Stringfellow
Financial, Inc. Employee Stock Purchase Plan as of December 31, 1997 and 1996,
and the results of its operations and changes in plan equity for each of the
years in the three-year period ended December 31, 1997 in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Richmond, Virginia
March 20, 1998
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
Statements of Financial Condition
December 31, 1997 and 1996
1997 1996
ASSETS
Investment - 231,150 shares in 1997 and 255,929
shares in 1996 of Scott & Stringfellow
Financial, Inc. common stock, at fair
value (cost of $2,319,077 in 1997 and
$2,022,607 in 1996 (note 7)) $ 5,894,325 3,284,416
Cash in trust 7,523 215,191
Dividends and interest receivable 19,693 19,465
Receivable from Scott & Stringfellow
Financial, Inc. (note 3) 1,328 11,348
Total assets $ 5,922,869 3,530,420
LIABILITIES AND PLAN EQUITY
Due to Scott & Stringfellow
Financial, Inc. (note 3) $ - 144,723
Plan equity 5,922,869 3,385,697
Total liabilities and plan equity $ 5,922,869 3,530,420
See accompanying notes to financial statements.
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
Statements of Income and Changes in Plan Equity
Years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Investment income:
Dividend income on Scott & Stringfellow
Financial, Inc. common stock $ 74,322 74,310 43,408
Interest 8,693 4,483 3,157
Unrealized appreciation in
fair value of Scott & Stringfellow
Financial, Inc. common stock (note 4) 2,313,440 886,030 316,956
Realized gains on sales and distributions
of investments in Scott & Stringfellow
Financial, Inc. common stock (note 5) 1,057,923 72,778 15,509
Total investment income 3,454,378 1,037,601 379,030
Participant contributions 1,027,942 825,364 549,268
Participant withdrawals -1,945,148 -218,912 -106,112
Net increase in plan equity 2,537,172 1,644,053 822,186
Plan equity - beginning of year 3,385,697 1,741,644 919,458
Plan equity - end of year $5,922,869 3,385,697 1,741,644
See accompanying notes to financial statements.
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1997, 1996 and 1995
(1) Description of the Plan and Significant Accounting Policies
General
The Scott & Stringfellow Financial, Inc. Employee Stock Purchase Plan (the
'Plan') covers all full time and some qualified part-time employees
('Participants') of Scott & Stringfellow Financial, Inc. (the 'Company') and
its subsidiaries. The Company believes that the Plan is not presently subject
to the provisions of the Employee Retirement Income Security Act of 1974.
The Plan is administered by a committee appointed by the Board of Directors of
Scott & Stringfellow Financial, Inc. ('Administrative Committee'). The Trustee
of the plan is Mellon Bank, N.A. ('Trustee'). The Trustee may acquire share of
Company stock from the Company or, if directed by the Administrative Committee,
by purchase on the open market. The Company has reserved 441,000 shares of its
common stock for issuance and purchase by employees under the Plan.
Basis of Presentation
The accompanying financial statements have been prepared on the accrual basis of
accounting. Accordingly, interest and dividend income are recognized as
earned; Plan contributions and withdrawals are recognized when incurred;
and realized gains or losses on sales and distributions of investments and
unrealized appreciation or depreciation of investments are recognized as they
occur.
Investments
Marketable investments, including the Plan's investment asset, common stock of
Scott & Stringfellow Financial, Inc., are stated at estimated fair value as
determined by the Plan's Trustee (generally based upon quoted market prices).
Purchases and sales of investments are recorded as of the trade date. The cost
of investments sold or distributed from each Participant's account is based on
the first-in, first-out method.
Federal Income Taxes
The Plan is intended to qualify as an employee stock purchase plan under section
423 of the Internal Revenue Code of 1986, as amended (Section 423). Under
Section 423, neither the Plan nor its participants will incur federal income tax
as a result of purchasing Scott & Stringfellow Financial, Inc. common stock
under the Plan at not less than 85% of fair market value. Interest and dividend
income of the Plan allocated to the Participants are taxed directly to the
Participants. Participants disposing of the common stock acquired under the
Plan will recognize capital gain or loss and may also have ordinary income under
the circumstances specified by Section 423.
(2) Summary of Significant Provisions of the Plan
The following brief description of the Plan is provided for general information
purposes only. Participants should refer to the Plan document for more complete
information.
Contributions
Participants may contribute a minimum of $75 per calendar quarter and a maximum
of 15% of quarterly base compensation, subject to the annual purchase limitation
of Section 423. During 1997, this limitation was $25,000. All Participant
contributions, including reinvestment of dividend and interest income, are
invested in the common stock of Scott & Stringfellow Financial, Inc. at 85% of
the fair market value, as defined, of the shares on each investment date, which
is the last business day of each calendar quarter on which shares of the common
stock are traded over-the-counter. Company contributions are made to the Plan
equal to the difference between Participant contributions and the purchase price
of Scott & Stringfellow Financial, Inc. common stock when shares are purchased
in the open market. There were no Company contributions in 1997, 1996 and 1995.
Participant Accounts
Each Participant's account ('Account') is credited with an allocation of shares
purchased with the Participant's and Company's contributions and reinvested
dividend and interest income allocable to the shares maintained in the
Participant's Account. Participants are immediately 100% vested in their
Account. As of December 31, 1997 there were 236 employees participating in
the plan.
Withdrawals and Sales
Participants may withdraw from the Plan at any time and may direct the Trustee
to either sell or withdraw the shares held in their Account. Participants may
make partial withdrawals once per calendar year. Proceeds of shares sold, less
expenses of the sale and any required income tax withholding, are remitted to
the withdrawing Participant.
Plan Termination
The Plan shall terminate when there are no remaining shares of the Company's
common stock reserved for the Plan or at any time at the discretion of the
Company's Board of Directors.
(3) Receivable From and Due to Scott & Stringfellow Financial, Inc.
The amounts receivable from Scott & Stringfellow Financial, Inc. at December 31,
1997 and 1996 totaling $1,328 and $11,348, respectively, represent amounts due
as a result of sales of shares of Scott & Stringfellow Financial, Inc. common
stock by Participants.
Amounts due to Scott & Stringfellow Financial, Inc. at December 31, 1996
totaling $144,723 represents the amount due for the purchase of 12,612 shares of
Scott & Stringfellow Financial, Inc. common stock. The common stock was
acquired at an average per share cost of $11.47. In 1997, the common stock was
acquired at an average per share cost of $19.89.
(4) Unrealized Appreciation in Fair Value of Investments
During 1997, 1996 and 1995, the Plan's investment in Scott & Stringfellow
Financial, Inc. common stock appreciated as follows:
Year ended December 31,
1997 1996 1995
Unrealized appreciation, end of year $ 3,575,248 1,261,808 375,778
Unrealized appreciation, beginning of year 1,261,808 375,778 58,822
Increase in unrealized
appreciation $ 2,313,440 886,030 316,956
Unrealized appreciation includes the increase in value to Participants as a
result of the purchase of shares at 85% of fair market value.
(5) Realized Gains on Sales and Distributions
The aggregate cost and proceeds/market value relating to realized gains Scott &
Stringfellow Financial, Inc. common stock were as follows:
Proceeds/fair
value at date of Realized
sale/distribution Cost gains
Year ended December 31, 1997:
Sale of common stock $ 126,634 61,158 65,476
Distribution of common stock to
Participants 1,587,760 595,313 992,447
Total $ 1,714,394 656,471 1,057,923
Year ended December 31, 1996:
Sale of common stock $ 204,075 147,371 56,704
Distribution of common stock to
Participants 90,567 74,493 16,074
Total $ 294,642 221,864 72,778
Year ended December 31, 1995:
Sale of common stock $ 30,073 25,674 4,399
Distribution of common stock to
Participants 59,489 48,379 11,110
Total $ 89,562 74,053 15,509
(6) Administrative Expenses
Under the Plan, expenses incurred in the purchase of shares and the expenses of
the Trustee are payable by the Company. Expenses incurred in the sale of shares
for a withdrawing participant are netted from the proceeds of such sale. All
other administrative expenses of the Plan are the responsibility of the Plan.
However in 1997, 1996 and 1995, the Company elected to pay for all
administrative expenses of the Plan.
(7) Stock Split
Common share amounts for 1996 have been adjusted to reflect a 3:2 stock split
effected in the form of a 50% stock dividend distributed on May 6, 1997, to
Plan participants of record on April 18, 1997.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the members of the Plan Administration Committee have duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
By: Date:
/s/ Diann D. Fox March 30, 1998
Diann D. Fox
Plan Administrator
Exhibit 23
Consent of Independent Auditors
Administrative Committee
Scott & Stringfellow Financial, Inc.
Employee Stock Purchase Plan:
We consent to incorporation by reference in the Registration Statement No.
33-54700 on Form S-8 of Scott & Stringfellow Financial, Inc. of our report
dated March 20, 1998, relating to the statements of financial condition of the
Scott & Stringfellow Financial, Inc. Employee Stock Purchase Plan (the Plan)
as of December 31, 1997 and 1996, and the related statements of income and
changes in plan equity 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 11-K of the Plan.
KPMG PEAT MARWICK LLP
Richmond, Virginia
March 24, 1998
