<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1996
_____________
Commission file number 0-16633
_______
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
______________________________________________________________________
(Exact name of registrant as specified in its charter)
MISSOURI 43-1450818
______________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
__________________
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
____ ____
As of the filing date, there are no voting
securities held by non-affiliates of the Registrant.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
INDEX
Page
Number
Part I.FINANCIAL INFORMATION
Item 1.Financial Statements
Consolidated Statement of Financial Condition ...........3
Consolidated Statement of Income .......................5
Consolidated Statement of Cash Flows ....................6
Consolidated Statement of Changes in Partnership Capital 7
Notes to Consolidated Financial Statements ..............8
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations .....................9
Part II.OTHER INFORMATION
Item 1.Legal Proceedings.......................................13
Signatures ..............................................14
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ASSETS
(Unaudited)
June 28, December 31,
1996 1995
(Amounts in thousands)
Cash and cash equivalents $58,194 $44,112
Receivable from:
Customers 546,025 489,041
Brokers or dealers and clearing
organizations 11,798 22,094
Mortgages and loans 60,531 58,836
Securities owned, at market value:
Inventory securities 54,626 88,295
Investment securities 123,621 123,060
Equipment, property and improvements 158,679 145,095
Other assets 69,694 74,968
__________ __________
$ 1,083,168 $1,045,501
The accompanying notes are an integral part of these financial
statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
(Unaudited)
June 28, December 31,
1996 1995
(Amounts in thousands)
Bank loans $ - $ 32,503
Payable to:
Customers 410,439 360,754
Brokers or dealers and clearing
organizations 18,693 13,025
Depositors 60,648 61,189
Securities sold but not yet purchased,
at market value 15,308 18,428
Accounts payable and accrued expenses 49,230 49,097
Accrued compensation and employee
benefits 78,182 70,084
Long-term debt 72,274 70,127
__________ __________
704,774 675,207
Liabilities subordinated to claims
of general creditors 122,000 122,000
Partnership capital 256,394 248,294
__________ __________
$1,083,168 $1,045,501
The accompanying notes are an integral part of these financial
statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
(Amounts in thousands June 28, June 30, June 28, June 30,
except per unit information) 1996 1995 1996 1995
Revenues:
Commissions $ 159,936 $ 108,751 $ 320,132 $196,406
Principal transactions 52,993 34,476 86,707 81,166
Investment banking 3,895 6,051 6,878 9,895
Interest and dividends 17,022 15,209 32,024 28,730
Other 17,480 11,661 32,694 21,038
__________ __________ ________ _______
251,326 176,148 478,435 337,235
__________ __________ ________ _______
Expenses:
Employee and partner
compensation and
benefits 147,995 97,603 278,922 187,885
Occupancy and equipment 25,120 20,174 48,494 40,067
Communications and data
processing 18,630 13,405 34,342 26,518
Interest 8,183 7,908 15,906 15,836
Payroll and other taxes 7,249 5,474 16,669 12,662
Floor brokerage and
clearance fees 1,865 1,509 3,531 2,916
Other operating expenses 16,384 14,630 31,448 26,966
_________ ________ ________ ________
225,426 160,703 429,312 312,850
_________ ________ ________ ________
Net income $ 25,900 $ 15,445 $ 49,123 $24,385
========= ======== ======== ========
Net income allocated to:
Limited partners $ 4,623 $ 1,809 $ 8,792 $ 3,120
Subordinated limited
partners 2,650 1,607 5,120 2,574
General partners 18,627 12,029 35,211 18,691
_________ ________ ________ ________
$ 25,900 $ 15,445 $ 49,123 $24,385
========= ======== ======== ========
Net income per weighted average
$1,000 equivalent partnership
units outstanding:
Limited partners $ 47.57 $ 29.44 $ 90.18 $ 50.54
========= ========= ========= ========
Subordinated limited
partners $ 84.94 $ 62.78 $ 163.92 $ 98.58
========= ========= ========= ========
Weighted average $1,000 equivalent
partnership units outstanding:
Limited partners 97,177 61,438 97,491 61,731
========= ========= ========= ========
Subordinated limited
partners 31,200 25,599 31,234 26,112
========= ========= ========= ========
The accompanying notes are an integral part of these statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
June 28, June 30,
(Amounts in thousands) 1996 1995
Cash Flows Provided by Operating Activities:
Net income $49,123 $24,385
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 13,082 10,275
(Increase) decrease in net receivable
from/payable
to customers (7,299) 28,982
Decrease (increase) in net receivable
from/payable to brokers or dealers and
clearing organizations 15,964 (9,506)
Increase in receivable from mortgages
and loans (1,695) -
Decrease in securities owned, net 29,988 15,339
Decrease in payable to depositors (541) -
Increase (decrease) in accounts payable
and accrued expenses 8,231 (4,400)
Other assets 5,274 2,706
__________ __________
Net cash provided by operating
activities 112,127 67,781
__________ __________
Cash Flows Used by Investing Activities:
Purchase of equipment, property
and improvements (26,666) (19,738)
__________ __________
Cash Flows Used by Financing Activities:
Repayment of bank loans (32,503) (18,000)
Issuance of long-term debt 6,698 3,345
Repayment of long-term debt (4,551) (2,394)
Repayment of subordinated debt - (7,000)
Issuance of partnership interests 3,365 4,651
Redemption of partnership interests (2,572) (4,178)
Withdrawals and distributions from
partnership capital (41,816) (24,911)
__________ __________
Net cash used by financing activities(71,379) (48,487)
__________ __________
Net increase (decrease) in cash and
cash equivalents 14,082 (444)
Cash and Cash Equivalents,
beginning of period 44,112 36,682
__________ __________
Cash and Cash Equivalents,
end of period $58,194 $36,238
Interest payments for the periods were $15,983 and $16,268.
The accompanying notes are an integral part of these financial
statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
SIX MONTHS ENDED JUNE 28, 1996, AND JUNE 30, 1995
(Unaudited)
Subordinated
Limited limited General
ptnrship ptnrship ptnrship
(Amounts in thousands) capital capital capital Total
Balance, December 31, 1994 $ 67,461 $ 23,722 $ 99,340 $190,523
Issuance of partnership
interests - 4,605 - 4,605
Redemption of partnership
interests (1,200) (2,978) - (4,178)
Net income 3,120 2,574 18,691 24,385
Withdrawals and distributions(5,448) (3,527) (15,890) (24,865)
________ ________ ________ _______
Balance, June 30, 1995 $ 63,933 $ 24,396 $102,141 $190,470
Balance, December 31, 1995 $103,972 $ 31,524 $112,798 $248,294
Issuance of partnership
interests - 3,365 - 3,365
Redemption of partnership
interests (1,464) (1,108) - (2,572)
Net income 8,792 5,120 35,211 49,123
Withdrawals and distributions(5,973) (7,001) (28,842) (41,816)
________ ________ ________ ________
Balance, June 28, 1996 $105,327 $31,900 $119,167 $256,394
The accompanying notes are an integral part of these financial
statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of The Jones Financial Companies, A Limited Partnership and
all wholly owned subsidiaries (The "Partnership"), including the
Partnership's principal subsidiary, Edward D. Jones & Co., L.P.,
("EDJ"), a registered broker/dealer. All material intercompany
balances and transactions have been eliminated. Investments in
nonconsolidated companies which are at least 20% owned are accounted
for under the equity method.
The financial statements have been prepared under the accrual basis
of accounting which requires the use of certain estimates by
management in determining the Partnership's assets, liabilities,
revenues and expenses.
The financial information included herein is unaudited. However,
in the opinion of management, such information includes all
adjustments, consisting solely of normal recurring accruals, which are
necessary for a fair presentation of the results of interim
operations.
Certificate of deposit revenues have been reclassified beginning in
the second quarter of 1996 to principal transactions revenues from
investment banking revenues. Where appropriate, prior years'
financial statements have been reclassified to conform with the 1996
presentation.
The results of operations for the three and six months ended June
28, 1996, are not necessarily indicative of the results to be expected
for the full year.
<PAGE>
NET CAPITAL REQUIREMENTS
As a result of its activities as a registered broker/dealer, EDJ is
subject to the Net Capital requirements of the Securities and Exchange
Commission and the New York Stock Exchange. Under the alternative
method permitted by the rules, EDJ is required to maintain minimum Net
Capital of 2% of aggregate debit items arising from customer
transactions. The Net Capital rules also provide that EDJ may not
expand its business nor may partnership capital be withdrawn if
resulting Net Capital would be less than 5% of aggregate debit items.
At June 28, 1996, EDJ's Net Capital of $191.3 million was 36% of
aggregate debit items and its Net Capital in excess of the minimum
required was $180.6 million.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
MANAGEMENT'S FINANCIAL DISCUSSION
OPERATIONS
QUARTER AND SIX MONTHS ENDED JUNE 28, 1996
VERSUS QUARTER AND SIX MONTHS ENDED JUNE 30, 1995
During the first six months of 1996, the Partnership benefited from
favorable conditions in the U.S. securities markets. Revenues
increased 42% ($141.2 million) to $478.4 million compared to the six
months ended June 30, 1995. Expenses increased 37% ($116.5 million)
to $429.3 million. As a result, net income during the six month
period increased by 101% ($24.7 million) to $49.1 million. Similarly,
for the second quarter, revenues increased 43% ($75.2 million) to
$251.3 million compared to the quarter ended June 30, 1995, with
expenses increasing 40% ($64.7 million) to $225.4 million, and net
income increasing by 67% ($10.5 million) to $25.9 million.
The favorable trends in product mix and transaction volume
experienced during the first quarter continued in the second quarter
of 1996. Transaction revenues derived from equity products, including
equity mutual funds and variable annuities, comprised 66% or $128.4
million of the quarter's transaction revenues compared with 61% or
$79.8 million for the second quarter of 1995. For the first six
months of the year, equity related transaction revenues were 69%
($256.6 million) of transaction revenues compared to 55% ($139.8
million) for the first six months of 1995. The shift in product mix
to equity related products in 1996 from shorter term fixed income
products in 1995 favorably impacted the gross commission percentages.
At the same time as the gross commission percentage improved, the
volume of customer dollars generating transaction revenue for the firm
increased 44% to $7.3 billion for the quarter. For the six months,
the increase was 36% to $13.6 billion compared to the first six months
<PAGE>
of 1995.
Along with the shift in product mix favorably impacting transaction
revenues, other revenues increased 50% for the quarter to $17.5
million and 55% for the six month period to $32.7 million. Other
revenues consist of IRA custodian fees and management fees from money
market and mutual funds distributed by the Partnership. Additionally,
service fees derived from mutual funds and annuities, which are
included in commission revenues, increased 34% to $43.7 million for
the six months and 31% to $22.6 million for the second quarter,
compared to 1995. The base for these two revenue components
(customers' assets under control) has increased to $100 billion at the
end of the second quarter compared to $81 billion a year ago.
<PAGE>
Interest and dividend revenues increased $3.3 million for the six
month period and $1.8 million for the second quarter, compared to the
prior year. This increase is due to additional income earned on loans
at Boone National Savings and Loan Association, F.A., which was
acquired in July, 1995, and increased levels of short term
investments.
Expenses for both the quarter and first six months of 1996 have
been influenced by increased compensation costs and costs associated
with the firm's strategic decision to convert its existing mainframe
based technology to new client server technology.
Compensation costs for both the quarter and six months have
increased by approximately 50%. Sales compensation has increased due
to increased revenues. Additionally, variable compensation, including
sales bonuses, sales incentives, and profit sharing expenses has
increased significantly due to increased revenues and net income.
Compensation costs related to non-sales personnel has also increased
due to the growth in the number of support personnel in the firm's
branch offices and to growth in personnel required to support the
conversion to client server technology.
Expense increases in occupancy and communication systems costs
result from the implementation of client server technology. Until the
installation of the new system in the branch locations and St. Louis
headquarters is completed, which is planned for 1997, costs will be
incurred to support both the existing technology and the new client
server technology.
During 1996, the Partnership resumed its long term strategy of
growing the salesforce. As of June 28, 1996, the number of investment
representatives has increased to 3,321 versus 3,148 as of June 30,
1995. During 1995, the number of investment representatives decreased
as the firm's hiring was reduced in conjunction with a planned
<PAGE>
revision of its new investment representative training program. The
revised new investment representative training program has been in
place for approximately one year and the results of new trainees
completing the program over the past year are meeting the
Partnership's expectations. In view of these results, the firm
substantially increased its hiring of new investment representatives
during the second quarter of 1996.
LIQUIDITY AND CAPITAL ADEQUACY
The Partnership's equity capital at June 28, 1996, was $256.4
million compared to $190.5 million as of June 30, 1995. General
partnership capital increased $17.0 million due to retention of
earnings and to an increase in distributable profits. Subordinated
limited partnership capital increased $7.5 million due to capital
contributions and undistributed profits. Limited partnership capital
increased $41.4 million primarily from a $39.7 million Limited
Partnership offering in October, 1995, and an increase in
distributable profits.
At June 28, 1996, the Partnership had $58.2 million in cash and
cash equivalents. Lines of credit are in place at ten banks
aggregating $575 million ($500 million of which are through
uncommitted lines of credit). Actual borrowing availability is
primarily based on market values of securities owned and customers'
margin securities which serve as collateral for the loans.
A substantial portion of the Partnership's assets are primarily
liquid, consisting mainly of cash and assets readily convertible into
cash. These assets are financed primarily by customer credit
balances, equity capital, bank lines of credit and other payables.
The Partnership believes that the liquidity provided by existing cash
balances and borrowing arrangements will be sufficient to meet the
Partnership capital and liquidity requirements.
<PAGE>
CASH FLOWS
For the six months ended June 28, 1996, cash and cash equivalents
increased $14.1 million. Cash flows from operating activities
provided $112 million, primarily attributable to net income, decreases
in securities owned, net receivables from brokers or dealers and
clearing organizations, and other assets, adjusted for depreciation
and amortization. Investing activities used $26.7 million for the
purchase of fixed assets. Cash flows from financing activities used
$71.4 million primarily to decrease bank loans, repay long-term debt
and fund redemptions, withdrawals and distributions from partnership
capital.
There were no material changes in the Partnership's overall
financial condition during the six months ended June 28, 1996,
compared with the six months ended June 30, 1995. The Partnership's
balance sheet is comprised primarily of cash and assets readily
convertible into cash. Securities inventories are carried at market
values and are readily marketable. Customer margin accounts are
collateralized by marketable securities. Other customer receivables
and receivables and payables with other broker/dealers normally settle
on a current basis. Liabilities, including certain amounts payable to
customers, checks, accounts payable and accrued expenses are sources
of funds to the Partnership. These liabilities, to the extent not
utilized to finance assets, are available to meet liquidity needs and
provide funds for short term investments, which favorably impacts
profitability.
The Partnership's growth in recent years has been financed through
sales of limited partnership interests to its employees, retention of
earnings, and private placements of long-term and subordinated debt.
REGULATORY REQUIREMENTS
The Partnership's principal subsidiary, Edward D. Jones & Co., L.P.
<PAGE>
(``EDJ'') as a securities broker/dealer, is subject to the Securities
and Exchange Commission regulations requiring EDJ to maintain certain
liquidity and capital standards. EDJ has been in compliance with
these regulations.
The Partnership's subsidiary, Boone National Savings and Loan
Association, F.A. (``Boone''), a Federally-chartered stock savings and
loan association, is required under federal regulations to maintain
specified levels of liquidity and capital standards. Boone has been
in compliance with these regulations.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
Item 1: Legal Proceedings
There have been no material changes in the legal proceedings
previously reported.
Item 5: Other Information
None
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Reference is made to the Exhibit Index contained hereinafter.
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended June 28,
1996.
<PAGE>
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.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
(Registrant)
Dated: August 9, 1996 /s/John W. Bachmann
_____________________
John W. Bachmann
Managing Partner
Dated: August 9, 1996 /s/Steven Novik
_____________________
Steven Novik
Chief Financial Officer
<PAGE>
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.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
(Registrant)
Dated: August 9, 1996
_____________________
John W. Bachmann
Managing Partner
Dated: August 9, 1996
_____________________
Steven Novik
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
For the quarter ended June 28, 1996
Exhibit No. Description Page
27.0 Financial Data Schedule
(provided for the Securities
and Exchange Commission only)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for The Jones Financial Companies for the quarter
ended June 28, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000815917
<NAME> THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-28-1996
<EXCHANGE-RATE> 1
<CASH> 58,194
<RECEIVABLES> 555,797
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 2,026
<INSTRUMENTS-OWNED> 178,247
<PP&E> 158,679
<TOTAL-ASSETS> 1,083,168
<SHORT-TERM> 0
<PAYABLES> 421,624
<REPOS-SOLD> 0
<SECURITIES-LOANED> 7,508
<INSTRUMENTS-SOLD> 15,308
<LONG-TERM> 194,274
0
0
<COMMON> 0
<OTHER-SE> 256,394
<TOTAL-LIABILITY-AND-EQUITY> 1,083,168
<TRADING-REVENUE> 0
<INTEREST-DIVIDENDS> 32,024
<COMMISSIONS> 406,839
<INVESTMENT-BANKING-REVENUES> 6,878
<FEE-REVENUE> 32,694
<INTEREST-EXPENSE> 15,906
<COMPENSATION> 278,922
<INCOME-PRETAX> 49,123
<INCOME-PRE-EXTRAORDINARY> 49,123
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,123
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
