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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 30, 2000
Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, L.L.L.P.
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(Exact name of registrant as specified in its charter)
MISSOURI 43-1450818
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12555 Manchester Road
St. Louis, Missouri 63131
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(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.
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THE JONES FINANCIAL COMPANIES, L.L.L.P.
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition 3
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Consolidated Statements 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 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
2
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<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
<CAPTION>
(Unaudited)
June 30, December 31,
(Amounts in thousands) 2000 1999
----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 160,597 $ 142,545
Securities purchased under agreements to resell - 75,000
Receivable from:
Customers 2,035,106 1,662,257
Brokers, dealers and clearing
organizations 30,021 25,517
Mortgages and loans 95,622 82,724
Securities owned, at market value:
Inventory securities 169,502 122,078
Investment securities 195,149 210,510
Equipment, property and improvements 237,135 224,792
Other assets 176,728 147,818
---------- ----------
Total assets $3,099,860 $2,693,241
==============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
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<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
<CAPTION>
(Unaudited)
June 30, December 31,
(Amounts in thousands) 2000 1999
----------------------------------------------------------------------------------------------
<S> <C> <C>
Bank loans $ 452,925 $ 109,897
Securities sold under agreements to repurchase 136,174 188,880
Securities loaned 134,303 46,211
Payable to:
Customers 1,157,841 1,155,884
Brokers, dealers and clearing organizations 23,007 11,007
Depositors 77,976 77,252
Securities sold, not yet purchased, at market value 21,611 18,666
Accounts payable and accrued expenses 103,999 83,386
Accrued compensation and employee benefits 200,670 216,934
Long-term debt 32,128 34,540
---------- ----------
2,340,634 1,942,657
---------- ----------
Liabilities subordinated to claims of general creditors 242,825 259,050
---------- ----------
Partnership capital 481,343 445,137
Partnership capital reserved for anticipated withdrawals 35,058 46,397
---------- ----------
Total partnership capital 516,401 491,534
---------- ----------
Total liabilities and capital $3,099,860 $2,693,241
==============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
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<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
(Amounts in thousands, June 30, June 25, June 30, June 25,
except per unit information) 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $358,676 $302,287 $ 751,766 $569,771
Principal transactions 73,357 66,167 137,382 112,277
Investment banking 4,950 6,762 16,553 16,149
Interest and dividends 57,243 34,551 105,225 64,964
Other 72,706 49,749 133,885 93,138
-------- -------- ---------- --------
Total revenue 566,932 459,516 1,144,811 856,299
Interest expense 22,399 12,732 40,720 24,496
-------- -------- ---------- --------
Net revenue 544,533 446,784 1,104,091 831,803
-------- -------- ---------- --------
Operating expenses:
Compensation and benefits 319,105 267,681 653,256 497,926
Communications and data processing 53,802 42,938 105,291 81,560
Occupancy and equipment 44,890 31,249 86,003 61,701
Payroll and other taxes 17,036 14,128 38,158 30,273
Floor brokerage and clearance fees 4,756 3,039 9,283 6,086
Other operating expenses 41,716 33,349 80,335 60,472
-------- -------- ---------- --------
Total operating expenses 481,305 392,384 972,326 738,018
-------- -------- ---------- --------
Net income $ 63,228 $ 54,400 $ 131,765 $ 93,785
======== ======== ========== ========
Net income allocated to:
Limited partners $ 7,282 $ 7,631 $ 15,220 $ 13,187
Subordinated limited partners 5,852 4,969 12,521 8,697
General partners 50,094 41,800 104,024 71,901
-------- -------- ---------- --------
$ 63,228 $ 54,400 $ 131,765 $ 93,785
======== ======== ========== ========
Net income per weighted average $1,000
equivalent partnership units outstanding:
Limited partners $ 49.28 $ 50.48 $ 102.58 $ 87.04
======== ======== ========== ========
Subordinated limited partners $ 95.22 $ 96.69 $ 203.73 $ 169.23
======== ======== ========== ========
Weighted average $1,000 equivalent
partnership units outstanding:
Limited partners 147,752 151,129 148,367 151,557
======== ======== ========== ========
Subordinated limited partners 61,457 51,392 61,457 51,392
======== ======== ========== ========
===================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
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<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
June 30, June 25,
(Amounts in thousands) 2000 1999
----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows Provided by Operating Activities:
Net income $ 131,765 $ 93,785
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 32,333 26,617
Changes in operating assets & liabilities:
Securities purchased under
agreements to resell 75,000 115,000
Net receivable from customers (370,892) (342,394)
Net payable to
brokers, dealers and clearing organizations 7,496 10,866
Receivable from mortgages and loans (12,898) (3,125)
Securities owned, net (29,118) (60,604)
Other assets (29,010) (21,652)
Bank loans 343,028 289,944
Securities sold under agreements to repurchase (52,706) -
Securities loaned 88,092 1,984
Payables to depositors 724 3,838
Accounts payable and accrued expenses 4,349 13,618
--------- ---------
Net cash provided by operating activities 188,163 127,877
--------- ---------
Cash Flows Used by Investing Activities:
Purchase of equipment, property and improvements, net (44,576) (43,633)
--------- ---------
Net cash used by investing activities (44,576) (43,633)
--------- ---------
Cash Flows Used by Financing Activities:
Repayment of long-term debt (2,412) (2,724)
Repayment of subordinated debt (16,225) (16,225)
Issuance of partnership interests 8,994 6,496
Redemption of partnership interests (1,499) (1,719)
Withdrawals and distributions from
partnership capital (114,393) (90,381)
--------- ---------
Net cash used by financing activities (125,535) (104,553)
--------- ---------
Net increase (decrease) in cash and cash equivalents 18,052 (20,309)
Cash and Cash Equivalents, beginning of period 142,545 143,745
--------- ---------
Cash and Cash Equivalents, end of period $ 160,597 $ 123,436
========= =========
Cash paid for interest $ 40,161 $ 24,666
==============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
6
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<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL
SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 25, 1999
(Unaudited)
<CAPTION>
Subordinated
Limited Limited General
partnership partnership partnership
(Amounts in thousands) capital capital capital Total
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998 $152,732 $ 44,896 $204,734 $402,362
Net income 13,187 8,697 71,901 93,785
Issuance of partnership interests - 6,496 - 6,496
Redemption of partnership interests (1,719) - - (1,719)
Withdrawals and distributions (52) (7,774) (42,193) (50,019)
Reserved for anticipated withdrawals (13,135) (923) (10,763) (24,821)
-------- -------- -------- --------
Balance, June 25, 1999 $151,013 $ 51,392 $223,679 $426,084
=======================================================================================================
Balance, December 31, 1999 $149,009 $ 52,463 $243,665 $445,137
Net income 15,220 12,521 104,024 131,765
Issuance of partnership interests - 8,994 - 8,994
Redemption of partnership interests (1,499) - - (1,499)
Withdrawals and distributions (1,103) (10,585) (56,308) (67,996)
Reserved for anticipated withdrawals (14,117) (1,936) (19,005) (35,058)
-------- -------- -------- --------
Balance, June 30, 2000 $147,510 $ 61,457 $272,376 $481,343
The accompanying notes are an integral part of these financial statements.
</TABLE>
7
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands)
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of The Jones Financial Companies, L.L.L.P. and all wholly owned
subsidiaries (The "Partnership"). 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 Partnership's principal operating subsidiary, Edward D. Jones
& Co., L.P. ("EDJ"), is engaged in business as a registered
broker/dealer primarily serving individual investors. The Partnership
derives its revenues from the sale of listed and unlisted securities and
insurance products, investment banking and principal transactions, and
is a distributor of mutual fund shares. The Partnership conducts
business throughout the United States, Canada, and the United Kingdom
with its customers, various brokers, dealers, clearing organizations,
depositories and banks.
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. Where appropriate, prior years' financial
statements have been reclassified to conform with the 2000 presentation.
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.
The results of operations for the six months ended June 30, 2000
and June 25, 1999 are not necessarily indicative of the results to be
expected for the full year.
8
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
NET CAPITAL REQUIREMENTS
As a result of its activities as a broker/dealer, EDJ is subject
to the Net Capital provisions of Rule 15c3-1 of the Securities Exchange
Act of 1934 and the capital rules of the New York Stock Exchange. Under
the alternative method permitted by the rules, EDJ must maintain minimum
Net Capital, as defined, equal to the greater of $250 or 2% of aggregate
debit items arising from customer transactions. The Net Capital rule
also provides that partnership capital may not be withdrawn if resulting
Net Capital would be less than 5% of aggregate debit items.
Additionally, certain withdrawals require the consent of the SEC to the
extent they exceed defined levels even though such withdrawals would not
cause Net Capital to be less than 5% of aggregate debit items.
At June 30, 2000, EDJ's Net Capital of $320.2 million was 16% of
aggregate debit items and its Net Capital in excess of the minimum
required was $280.6 million. Net Capital as a percentage of aggregate
debits after anticipated withdrawals was 16%. Net Capital and the
related capital percentage may fluctuate on a daily basis.
The firm has other operating subsidiaries, including Boone
National Savings and Loan Association, F.A. ("Boone") and broker/dealer
subsidiaries in Canada and the United Kingdom. These wholly owned
subsidiaries are required to maintain specified levels of liquidity and
capital standards. Each subsidiary is in compliance with the applicable
regulations as of June 30, 2000.
9
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Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
THE JONES FINANCIAL COMPANIES, L.L.L.P.
MANAGEMENT'S FINANCIAL DISCUSSION
QUARTER and SIX MONTHS ENDED JUNE 30, 2000, VERSUS
QUARTER and SIX MONTHS ENDED JUNE 25, 1999
RESULTS OF OPERATIONS
The Partnership attained record levels of total revenue and net
income for both the quarter and six months ended June 30, 2000 due
primarily to active securities markets, growth in the sales force and
five additional selling days during the first six months of 2000. Total
revenue increased 23% ($107.4 million) to $566.9 million and net income
increased 16% ($8.8 million) to $63.2 million for the second quarter of
2000. For the first six months of 2000, total revenue increased 34%
($288.5 million) to $1.1 billion and net income increased 40% ($38.0
million) to $131.8 million.
The partnership segments its revenues between trade revenue
(revenue from buy or sell transactions on securities) and fee revenue
(sources other than trade revenues). Trade revenue, expressed as a
percentage of total revenue, comprised 64% and 70% for the second
quarters and 67% and 69% for the first six months of 2000 and 1999,
respectively. Fee revenue sources, such as service fees, management
fees, IRA fees and interest income, represented the remaining 36% and
30% for the second quarters and 33% and 31% for the first six months of
2000 and 1999, respectively.
Trade revenue increased 13% ($42.5 million) during the second
quarter and 29% ($170.3 million) during the first six months of 2000.
Revenue increased primarily due to an increase in the number of
investment representatives (IRs), customer dollars invested, and an
increase in the number of selling days. The Partnership added 1,396 IRs
since June 25, 1999 (27%), ending the quarter with 6,639 IRs in the
United States, Canada and the United Kingdom. Total customer dollars
invested were $16.2 billion and $34.5 billion during the second quarter
and first six months of 2000, respectively, representing an 18% ($2.5
billion) and 34% ($8.7 billion) increase over the comparable prior year
periods. Continued growth and productivity of the sales force, combined
with five additional selling days during the first quarter of 2000,
significantly contributed to the increase in customer dollars invested
to record levels. These positive factors were partially offset by a
shift in product mix to lower margin products, primarily CDs, which
10
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Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
resulted in a 5% decrease in revenue per $1,000 invested from $22.80 in
the first six months of 1999 to $21.70 in the first six months of 2000.
Fee revenue sources, which include service fees, revenue sharing
agreements with mutual funds and insurance companies, interest income,
IRA custodial fees and other fees, increased 47% ($64.9 million) for the
quarter and 45% ($118.2 million) for the six months ended June 30, 2000.
Underlying fee revenue growth is growth in the value of customers'
assets. Total customers' assets increased 22% ($44.9 billion) year over
year due to market fluctuations and growth in the number of customers
served by the Partnership. Additionally, the Partnership's continued
expansion in recent years of its product and service offerings has had a
positive impact on fee revenue.
Focusing on changes in major revenue categories, commissions
revenue, including service fees, increased 19% ($56.4 million) during
the second quarter and 32% ($182.0 million) during the first six months
of 2000. Mutual fund commissions increased 23% ($35.8 million) and 35%
($102.8 million) for the periods, and accounted for 63% and 56%,
respectively, of commission revenue growth. Listed and over-the-counter
(OTC) agency commissions increased 17% ($16.2 million) for the quarter
and 35% ($63.1 million) for the first six months, accounting for 29% and
35%, respectively, of total commission growth. The firm experienced strong
growth in commissions due to the highly active securities markets and to
the growth in the number of IRs.
Principal transactions revenue increased 11% ($7.2 million) during
the second quarter and 22% ($25.1 million) during the first six months
of 2000. Fixed income products, including CDs, municipal bonds and
corporate bonds all increased in revenue compared to the prior year
period. Rising interest rates combined with growth in the number of IRs
contributed to the increase.
Interest and dividend revenues increased 66% ($22.7 million) for
the second quarter and 62% ($40.3 million) for the first six months of
2000. Interest from customer loans increased 73% ($21.1 million) for
the quarter and 70% ($37.5 million) during the first six months as the
Partnership's customer loan balances increased 23% ($375.9 million) to
$2.0 billion during the first six months of 2000 and 40% from $1.4
billion at June 25, 1999.
11
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Other revenue, comprised of various fee revenue sources, increased
46% ($23.0 million) for the quarter and 44% ($40.7 million) for the
first six months of 2000. Fee revenue received from money market,
mutual fund and insurance products increased 63% ($22.0 million) for the
quarter and 53% ($34.8 million) for the first six months. Additionally,
the number of IRA accounts increased, resulting in custodial fee revenue
growth of 39% ($2.3 million) for the quarter and 45% ($5.2 million) for
the first six months.
Interest expense increased 76% ($9.7 million) during the quarter
and 66% ($16.2 million) for the six months ended June 30, 2000, due
primarily to an increase in bank loans outstanding to fund customer loan
balances.
Operating expenses increased 23% ($88.9 million) to $481.3 million
during the quarter, and 32% ($234.3 million) to $972.3 million for the
six months ended June 30, 2000. Compensation costs represent 58% ($51.4
million) and 66% ($155.3 million) of the total expense growth for the
quarter and six month periods, respectively. Sales compensation
increased 15% ($23.4 million) and 28% ($81.7 million) for the quarter
and six months, respectively, due to increased revenue and an increased
number of IRs. Variable compensation, including bonuses and profit
sharing paid to IRs, branch office assistants and headquarters
associates, which expands and contracts in relation to revenues, net
income and profit margin, increased 17% ($8.2 million) and 41% ($35.7
million) due to the Partnership's strong revenue and earning levels.
Remaining increases in compensation expense are primarily attributable
to increased payroll for existing personnel and additional support at
both the headquarters and in the branches as the firm grows its sales
force.
Communications and data processing expenses increased 25% ($10.9
million) for the quarter and 29% ($23.7 million) for the first six
months, accounting for 12% and 10%, respectively, of the total operating
expense growth. Additionally, occupancy and equipment expenses
increased 44% ($13.6 million) for the quarter and 39% ($24.3 million)
for the six month period, comprising 15% and 10%, respectively, of the
total operating expense increase. The Partnership continues to expand
its headquarters, branch locations and communications systems to enable
it to continue to increase the number of IRs, locations and customers.
12
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's equity capital at June 30, 2000 including the
reserve for anticipated withdrawals, was $516.4 million, compared to
$446.2 million at June 25, 1999. Equity capital has increased primarily
due to retention of General Partner earnings and to an increase in
Subordinated Limited Partner capital.
At June 30, 2000, the Partnership had $160,597 in cash and cash
equivalents. Lines of credit are in place at ten banks aggregating
$1,045,000 ($995,000 of which is through uncommitted lines of credit).
Actual borrowing availability is based on 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 has $195.1 million in U.S. agency and treasury securities
(Investment Securities) which can be sold to meet liquidity needs. The
Partnership believes that the liquidity provided by existing cash
balances, borrowing arrangements, and investment securities will be
sufficient to meet the Partnership capital and liquidity requirements.
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.
For the six months ended June 30, 2000, cash and cash equivalents
increased $18.1 million. Cash provided by operating activities was
$188.2 million. Sources include increased bank loans ($343.0 million)
and securities loaned ($88.1 million) required to fund the Partnership's
balance sheet growth, net income ($131.8 million) and proceeds from
disposition of securities purchased under agreements to resell ($75.0
million). These sources were partially offset by an increase in net
receivable from customers ($370.9 million) due primarily to increased
customer loan balances, and a decrease in securities sold under
agreements to repurchase ($52.7 million). Cash used for investing
activities consisted of $44.6 million in capital expenditures primarily
attributable to the firm's expansion of its headquarters and branch
facilities required as the firm grows its sales force. Cash used by
financing activities was $125.5 million consisting of repayment of
subordinated debt and partnership withdrawals.
13
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
As a result of its activities as a broker/dealer, EDJ, the
Partnership's principal subsidiary, is subject to the Net Capital
provisions of Rule 15c3-1 of the Securities Exchange Act of 1934 and the
capital rules of the New York Stock Exchange. Under the alternative
method permitted by the rules, EDJ must maintain minimum Net Capital, as
defined, equal to the greater of $250 or 2% of aggregate debit items
arising from customer transactions. The Net Capital Rule also provides
that partnership capital may not be withdrawn if resulting Net Capital
would be less than 5% of aggregate debit items. Additionally, certain
withdrawals require the consent of the SEC to the extent they exceed
defined levels even though such withdrawals would not cause Net Capital
to be less than 5% of aggregate debit items. At June 30, 2000, EDJ's Net
Capital of $320.2 million was 16% of aggregate debit items and its Net
Capital in excess of the minimum required was $280.6 million. Net
Capital as a percentage of aggregate debits after anticipated
withdrawals was 16%. Net Capital and the related capital percentage may
fluctuate on a daily basis.
There were no material changes in the Partnership's overall
financial condition during the six months ended June 30, 2000, compared
with the six months ended June 25, 1999. The Partnership's consolidated
statement of financial condition is comprised primarily of cash and
assets readily convertible into cash. Securities inventories are carried
at market value 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 amounts payable to customers,
checks and 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.
YEAR 2000 SYSTEM ISSUES
As of August 11, 2000, the Partnership has not encountered any
significant business disruptions as a result of internal or external
Year 2000 issues. However, while no such occurrence has developed, Year
2000 issues may arise that may not become immediately apparent.
Therefore, the Partnership will continue to monitor and work to
remediate any issues that may arise. Although the Partnership expects
not to be materially impacted, such future events cannot be known with
certainty.
14
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
THE EFFECTS OF INFLATION
The Partnership's net assets are primarily monetary, consisting of
cash, securities inventories and receivables less liabilities. Monetary
net assets are primarily liquid in nature and would not be significantly
affected by inflation. Inflation and future expectations of inflation
influence securities prices, as well as activity levels in the
securities markets. As a result, profitability and capital may be
impacted by inflation and inflationary expectations. Additionally,
inflation's impact on the Partnership's operating expenses may affect
profitability to the extent that additional costs are not recoverable
through increased prices of services offered by the Partnership.
FORWARD-LOOKING STATEMENTS
The Management's Financial Discussion, including the discussion
under "Year 2000 System Issues," contains forward-looking statements
within the meaning of federal securities laws. Actual results are
subject to risks and uncertainties, including both those specific to the
Partnership and those specific to the industry which could cause results
to differ materially from those contemplated. The risks and
uncertainties include, but are not limited to, third-party or
Partnership failures to achieve timely, effective remediation of the
Year 2000 issue, general economic conditions, actions of competitors,
regulatory actions, changes in legislation and technology changes.
Undue reliance should not be placed on the forward-looking statements,
which speak only as of the date of this Quarterly Report on Form 10-Q.
The Partnership does not undertake any obligation to publicly update any
forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The SEC issued market risk disclosure requirements to enhance
disclosures of accounting policies for derivatives and other financial
instruments and to provide quantitative and qualitative disclosures
about market risk inherent in derivatives and other financial
instruments. Various levels of management within the Partnership manage
the firm's risk exposure. Position limits in trading and inventory
accounts are established and monitored on an ongoing basis. Credit risk
related to various financing activities is reduced by the industry
practice of obtaining and maintaining collateral. The Partnership
monitors its exposure to counterparty risk through the use of credit
exposure information, the monitoring of collateral values and the
establishment of credit limits.
15
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There were no significant changes in the Partnership's exposure to
interest rate risk during the quarter ended June 30, 2000.
16
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Part II. OTHER INFORMATION
THE JONES FINANCIAL COMPANIES, L.L.L.P.
Item 1. Legal Proceedings
There have been no material changes in the legal proceedings
previously reported.
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
Eleventh Amended and Restated Agreement of Registered
Limited Liability Limited Partnership of The Jones Financial Companies,
L.L.L.P., dated as of May 23, 2000, incorporated herein by reference to
Form 8-K filed on May 24, 2000.
17
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Part II. OTHER INFORMATION
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, L.L.L.P.
(Registrant)
Dated: August 11, 2000 /s/ Steven Novik
---------------------------
Steven Novik
Chief Financial Officer
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EXHIBIT INDEX
THE JONES FINANCIAL COMPANIES, L.L.L.P.
For the quarter ended June 30, 2000
Exhibit No. Description
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27.0 Financial Data Schedule (provided for the Securities
and Exchange Commission only)
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