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, 1998
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
FINANCIAL STATEMENTS
Independent Auditors' Report 3
Statements of Financial Condition -
December 31, 1998 and 1997 4
Statements of Income and Changes in Plan Equity
Years ended December 31, 1998, 1997, and 1996 5
Notes to Financial Statements 6
Signatures 9
Exhibit 23 - Consent of Independent Auditors
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 (the Plan) as of
December 31, 1998 and 1997, and the related statements of income and changes in
plan equity for each of the years in the three-year period ended December 31,
1998. 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, 1998 and 1997,
and the results of its operations and changes in plan equity for each of the
years in the three-year period ended December 31, 1998 in conformity with
generally accepted accounting principles.
As discussed in note 1 to the financial statements, the Board of Directors of
Scott & Stringfellow Financial, Inc., the Plan's administrator, voted to
terminate the plan; accordingly, all assets of the Plan were distributed to
participants on November 2, 1998.
KPMG LLP
Richmond, Virginia
January 13, 1999
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
Statements of Financial Condition
December 31, 1998 and 1997
1998 1997
ASSETS
Investment - 231,150 shares of
Scott & Stringfellow Financial, Inc.
common stock, at fair value
(cost of $2,319,077) $ - $ 5,894,325
Cash in trust - 7,523
Dividends and interest receivable - 19,693
Receivable from Scott & Stringfellow
Financial, Inc. (note 3) - 1,328
Total assets $ - $ 5,922,869
PLAN EQUITY
Plan equity $ - $ 5,922,869
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, 1998, 1997 and 1996
1998 1997 1996
Investment income:
Dividend income on Scott & Stringfellow
Financial, Inc. common stock $ 43,511 74,322 74,310
Interest 9,321 8,693 4,483
Increase (decrease) in unrealized appreciation
in fair value of Scott & Stringfellow
Financial, Inc. common stock (note 4) -3,575,248 2,313,440 886,030
Realized gains on sales and distributions
of investments in Scott & Stringfellow
Financial, Inc. common stock (note 5) 4,057,477 1,057,923 72,778
Total investment income 535,061 3,454,378 1,037,601
Participant contributions 794,537 1,027,942 825,364
Participant withdrawals -7,252,467 -1,945,148 -218,912
Net increase (decrease) in
plan equity -5,922,869 2,537,172 1,644,053
Plan equity - beginning of year 5,922,869 3,385,697 1,741,644
Plan equity - end of year $ - 5,922,869 3,385,697
See accompanying notes to financial statements.
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1) Description of the Plan and Significant Accounting Policies
(a) 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 purchases on the open market. The Company has reserved 441,000
shares of its common stock for issuance and purchase by employees under the
Plan. During 1998, the Administrative Committee voted to terminate the plan.
Accordingly, all assets of the Plan were distributed to participants on
November 2, 1998.
(b) 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.
(c)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.
(d) 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 is
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.
(e) Use of Estimates
Generally accepted accounting principles require management to make estimates
and assumptions when preparing financial statements. Actual results could
differ from those estimates.
(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.
(a) 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 1998, 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 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 1998, 1997 and 1996.
(b) Participant Accounts
Each Participant's account (the 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. Immediately prior to liquidation, there were 258 employees
participating in the plan.
(c)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.
(d) 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 (see note 1).
(3) Receivable From Scott & Stringfellow Financial, Inc.
The amount receivable from Scott & Stringfellow Financial, Inc. at December
31, 1997 totaling $1,328 represents the amount due as a result of sales of
shares of Scott & Stringfellow Financial, Inc. common stock by Participants.
(4) Unrealized Appreciation in Fair Value of Investments
During 1998, 1997 and 1996, the Plan's investment in Scott & Stringfellow
Financial, Inc. common stock appreciated or depreciated as follows:
Year ended December 31,
1998 1997 1996
Unrealized appreciation, end of year $ - 3,575,248 1,261,808
Unrealized appreciation, beginning of year 3,575,248 1,261,808 375,778
Increase (decrease)in unrealized
appreciation -3,575,248 2,313,040 886,030
Unrealized appreciation includes the increase in value to Participants as a
result of the purchase of shares at 85% of fair value.
(5) Realized Gains on Sales and Distributions
The aggregate cost and proceeds/fair value relating to realized gains on Scott
& Stringfellow Financial, Inc. common stock were as follows:
Proceeds/fair
value at date of Realized
sale/distribution Cost gains
Year ended December 31, 1998:
Sale of common stock $ 105,665 43,690 61,975
Distribution of common stock to
Participants 6,940,943 2,945,441 3,995,502
Total $ 7,046,608 2,989,131 4,057,477
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
(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 1998, 1997 and 1996, the Company elected to pay for all
administrative expenses of the Plan.
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 February 18, 1999
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 January 13, 1999, relating to the statements of financial condition of
the Scott & Stringfellow Financial, Inc. Employee Stock Purchase Plan (the
Plan) as of December 31, 1998 and 1997, and the related statements of income
and changes in plan equity for each of the years in the three-year period
ended December 31, 1998, which report appears in the December 31, 1998 annual
report on Form 11-K of the Plan.
KPMG LLP
Richmond, Virginia
February 17, 1999
