<PAGE>
UNITED STATES
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 SEPTEMBER 29, 2000
Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, L.L.L.P.
------------------------------------------------------------------------
(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 15
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
2
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
<CAPTION>
(Unaudited)
September 29, December 31,
(Amounts in thousands) 2000 1999
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 127,315 $ 142,545
Securities purchased under agreements to resell - 75,000
Receivable from:
Customers 2,108,083 1,662,257
Brokers, dealers and clearing organizations 25,415 25,517
Mortgages and loans 103,122 82,724
Securities owned, at market value:
Inventory securities 167,921 122,078
Investment securities 198,260 210,510
Equipment, property and improvements 245,478 224,792
Other assets 194,596 147,818
---------- ----------
Total assets $3,170,190 $2,693,241
===============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
<CAPTION>
(Unaudited)
September 29, December 31,
(Amounts in thousands) 2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Bank loans $522,678 $109,897
Securities sold under agreements to repurchase 23,969 188,880
Securities loaned 141,337 46,211
Payable to:
Customers 1,075,380 1,155,884
Brokers, dealers and clearing organizations 12,083 11,007
Depositors 82,788 77,252
Securities sold, not yet purchased, at market value 46,898 18,666
Accounts payable and accrued expenses 120,807 83,386
Accrued compensation and employee benefits 247,359 216,934
Long-term debt 30,886 34,540
---------- ----------
2,304,185 1,942,657
---------- ----------
Liabilities subordinated to claims of general creditors 232,325 259,050
---------- ----------
Partnership capital 595,333 445,137
Partnership capital reserved for anticipated withdrawals 38,347 46,397
---------- ----------
Total partnership capital 633,680 491,534
---------- ----------
Total liabilities and capital $3,170,190 $2,693,241
==================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
(Amounts in thousands, September 29, September 24, September 29, September 24,
except per unit information) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $336,311 $273,057 $1,088,077 $ 842,828
Principal transactions 64,917 78,963 202,299 191,240
Investment banking 4,071 2,059 20,624 18,208
Interest and dividends 58,416 38,863 163,641 103,827
Other 68,149 50,041 202,034 143,179
-------- -------- ---------- ----------
Total revenue 531,864 442,983 1,676,675 1,299,282
Interest expense 22,828 15,701 63,548 40,197
-------- -------- ---------- ----------
Net revenue 509,036 427,282 1,613,127 1,259,085
-------- -------- ---------- ----------
Operating expenses:
Compensation and benefits 293,888 255,171 947,144 753,097
Communications and data processing 51,994 44,096 157,285 125,656
Occupancy and equipment 47,959 35,077 133,962 96,778
Payroll and other taxes 14,467 11,541 52,625 41,814
Floor brokerage and clearance fees 4,341 3,143 13,624 9,229
Other operating expenses 45,796 33,749 126,131 94,221
-------- -------- ---------- ----------
Total operating expenses 458,445 382,777 1,430,771 1,120,795
-------- -------- ---------- ----------
Net income $ 50,591 $ 44,505 $ 182,356 $ 138,290
======== ======== ========== ==========
Net income allocated to:
Limited partners $7,308 $6,209 $ 22,528 $19,396
Subordinated limited partners 4,549 3,912 17,070 12,609
General partners 38,734 34,384 142,758 106,285
-------- -------- ---------- ----------
$ 50,591 $ 44,505 $ 182,356 $ 138,290
======== ======== ========== ==========
Net income per weighted average $1,000
equivalent partnership units outstanding:
Limited partners $ 39.61 $ 41.31 $ 142.19 $ 128.35
======== ======== ========== ==========
Subordinated limited partners $ 70.20 $ 75.82 $ 273.93 $ 245.05
======== ======== ========== ==========
Weighted average $1,000 equivalent
partnership units outstanding:
Limited partners 162,922 150,349 150,314 151,133
======== ======== ========== ==========
Subordinated limited partners 62,948 51,537 61,656 51,500
======== ======== ========== ==========
===========================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
September 29, September 24,
(Amounts in thousands) 2000 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows Provided by Operating Activities:
Net income $ 182,356 $ 138,290
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 49,030 41,849
Changes in operating assets & liabilities:
Securities purchased under
agreements to resell 75,000 115,000
Net receivable from customers (526,330) (509,468)
Net payable to brokers, dealers
and clearing organizations 1,178 3,264
Receivable from mortgages and loans (20,398) (7,582)
Securities owned, net (5,361) (27,643)
Other assets (46,778) (35,017)
Bank loans 412,781 317,409
Securities sold under agreements to repurchase (164,911) -
Securities loaned 95,126 (2,177)
Payables to depositors 5,536 4,484
Accounts payable and accrued expenses 67,846 68,786
--------- ---------
Net cash provided by operating activities 125,075 107,195
--------- ---------
Cash Flows Used by Investing Activities:
Purchase of equipment, property and improvements, net (69,716) (62,514)
--------- ---------
Net cash used by investing activities (69,716) (62,514)
--------- ---------
Cash Flows Used by Financing Activities:
Repayment of long-term debt (3,654) (4,119)
Issuance of subordinated debt - 75,000
Repayment of subordinated debt (26,725) (16,225)
Issuance of partnership interests 114,014 8,058
Redemption of partnership interests (3,219) (3,353)
Withdrawals and distributions from
partnership capital (151,005) (129,651)
--------- ---------
Net cash used by financing activities (70,589) (70,290)
--------- ---------
Net decrease in cash and cash equivalents (15,230) (25,609)
Cash and Cash Equivalents, beginning of period 142,545 143,745
--------- ---------
Cash and Cash Equivalents, end of period $ 127,315 $ 118,136
========= =========
Cash paid for interest $ 65,085 $ 39,991
=========================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
6
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
THE JONES FINANCIAL COMPANIES, L.L.L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL
NINE MONTHS ENDED SEPTEMBER 29, 2000 AND SEPTEMBER 24, 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 19,396 12,609 106,285 138,290
Issuance of partnership interests - 8,058 - 8,058
Redemption of partnership interests (2,623) (730) - (3,353)
Withdrawals and distributions (10,151) (11,650) (67,488) (89,289)
Reserved for anticipated withdrawals (9,246) (959) (10,363) (20,568)
-------- -------- -------- ---------
Balance, September 24, 1999 $150,108 $ 52,224 $233,168 $ 435,500
Balance, December 31, 1999 $149,009 $ 52,463 $243,665 $ 445,137
Net income 22,528 17,070 142,758 182,356
Issuance of partnership interests 95,572 18,442 - 114,014
Redemption of partnership interests (2,719) (500) - (3,219)
Withdrawals and distributions (1,220) (15,283) (88,105) (104,608)
Reserved for anticipated withdrawals (21,308) (1,787) (15,252) (38,347)
-------- -------- -------- ---------
Balance, September 29, 2000 $241,862 $ 70,405 $283,066 $ 595,333
===============================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
7
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE JONES FINANCIAL COMPANIES, L.L.L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 nine months ended September 29,
2000 and September 24, 1999 are not necessarily indicative of the
results to be expected for the full year.
8
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<PAGE>
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 $250,000 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 September 29, 2000, EDJ's Net Capital of $310.6 million was
15% of aggregate debit items and its Net Capital in excess of the
minimum required was $269.7 million. Net Capital as a percentage of
aggregate debits after anticipated withdrawals was 15%. 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 September 29, 2000.
9
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
THE JONES FINANCIAL COMPANIES, L.L.L.P.
MANAGEMENT'S FINANCIAL DISCUSSION
QUARTER and NINE MONTHS ENDED SEPTEMBER 29, 2000, VERSUS
QUARTER and NINE MONTHS ENDED SEPTEMBER 24, 1999
RESULTS OF OPERATIONS
The Partnership attained record levels of total revenue and net
income for the nine months ended September 29, 2000 due primarily to
active securities markets, growth in the sales force and five additional
selling days during the period. For the first nine months of 2000,
total revenue increased 29% ($377.4 million) to $1.7 billion and net
income increased 32% ($44.1 million) to $182.4 million. During the
thrid quarter of 2000, total revenue increased 20% ($88.9 million) to
$531.9 million and net income increased 14% ($6.1 million) to $50.6
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 comprised 62% of
total revenue for the third quarter of 2000, down from 66% in 1999.
Similarly, for the first 9 months of 2000 trade revenue was 65%, a
decrease from 68% in 1999. Conversely fee revenue sources, such as
service fees, management fees, IRA fees and interest income, were 38% of
total revenue for the third quarter of 2000, up from 34% in 1999. For
the first nine months of 2000, fee revenue increased to 35% from 32% a
year ago.
Trade revenue increased 13% ($37.1 million) during the third
quarter and 23% ($207.4 million) during the first nine months of 2000.
Trade revenue increased 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 1,530 IRs since
September 24, 1999 (28%), ending the quarter with 7,045 IRs in the
United States, Canada and the United Kingdom. Total customer dollars
invested were $14.0 billion and $48.5 billion during the third quarter
and first nine months of 2000, respectively, representing an 11% ($1.4
billion) and 26% ($10.1 billion) increase over the comparable prior year
periods. Continued growth and productivity of the sales force, combined
with five additional selling days in 2000, significantly contributed to
the increase in customer dollars invested to record levels. On a year
to date basis, these positive factors were partially offset by a shift
in product mix to lower margin products,
10
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
primarily CDs and equities, which resulted in a 3% decrease in trade
revenue margin for each $1,000 invested from $22.90 in the first nine
months of 1999 to $22.10 in the first nine 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 35% ($51.8 million) for the
quarter and 41% ($169.9 million) for the nine months ended September 29,
2000. Underlying fee revenue growth is growth in the value of
customers' assets. Total customers' assets increased 24% ($49.2
billion) year over year to $250.6 billion 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 23% ($63.3 million) during
the third quarter and 29% ($245.2 million) during the first nine months
of 2000. Mutual fund commissions increased 29% ($41.0 million) and 33%
($143.8 million) for the periods. Listed and over-the-counter (OTC)
agency commissions increased 32% ($23.2 million) for the quarter and 34%
($86.4 million) for the first nine months. 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 decreased 18% ($14.0 million)
during the third quarter and increased 6% ($11.1 million) during the
first nine months of 2000. The decrease quarter over quarter is due
primarily to a shift away from CDs and municipal bonds. The increase
year to date is primarily attributable to increases in corporate bonds.
Interest and dividend revenues increased 50% ($19.6 million) for
the third quarter and 58% ($59.8 million) for the first nine months of
2000. Interest from customer loans increased 63% ($20.5 million) for
the quarter and 67% ($58.0 million) during the nine months as the
Partnership's customer loan balances increased 27% ($445.5 million) to
$2.1 billion during the first nine months of 2000 and 42% ($611.7
million) from $1.5 billion at September 24, 1999.
Other revenue, comprised of various fee revenue sources, increased
36% ($18.1 million) for the quarter and 41% ($58.8 million) for the
first nine months of 2000. Fee revenue received from money market,
mutual fund and insurance products increased 43% ($15.8 million) for the
quarter and 49% ($50.5 million) for the first nine months.
Additionally, the number of IRA accounts increased, resulting
11
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
in custodial fee revenue growth of 39% ($1.8 million) for the quarter
and 44% ($7.1 million) for the first nine months.
Interest expense increased 45% ($7.1 million) during the quarter
and 58% ($23.4 million) for the nine months ended September 29, 2000,
due primarily to an increase in bank loans outstanding to fund customer
loan balances.
Operating expenses increased 20% ($75.7 million) to $458.4 million
during the quarter, and 28% ($310.0 million) to $1.4 billion for the
nine months ended September 29, 2000. Compensation costs represent 51%
($38.7 million) and 63% ($194.0 million) of the total expense growth for
the quarter and nine month periods, respectively. Sales compensation
increased 13% ($18.6 million) and 23% ($100.3 million) for the quarter
and nine 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, was flat for the quarter and increased 28%
($35.7 million) year to date due to the Partnership's strong revenue and
earnings 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.
Occupancy and equipment expenses increased 37% ($12.9 million) for
the quarter and 38% ($37.2 million) for the nine month period,
comprising 17% and 12%, respectively, of the total operating expense
increase. Additionally, communications and data processing expenses
increased 18% ($7.9 million) for the quarter and 25% ($31.6 million) for
the first nine months, accounting for 10% of the total operating expense
growth for both periods. 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.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's equity capital at September 29, 2000, excluding
the reserve for anticipated withdrawals, was $595.3 million, compared to
$445.1 million at December 31, 1999. Equity capital has increased
primarily due to the issuance of Limited Partner interests in August
2000 ($95.6 million), retention of General Partner earnings ($39.4
million) and to an increase in Subordinated Limited Partner capital
($17.9 million).
12
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
At September 29, 2000, the Partnership had $127.3 million in cash
and cash equivalents. Lines of credit are in place at ten banks
aggregating $1.045 billion ($995 million 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 $198.3 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 nine months ended September 29, 2000, cash and cash
equivalents decreased $15.2 million. Cash provided by operating
activities was $125.1 million. Sources include increased bank loans
($412.8 million) and securities loaned ($95.1 million), net income
($182.4 million), proceeds from disposition of securities purchased
under agreements to resell ($75.0 million) and increase in accounts
payable and accrued expenses ($67.8 million). These sources were
partially offset by an increase in net receivable from customers ($526.3
million) due primarily to increased customer loan balances, and a
decrease in securities sold under agreements to repurchase ($164.9
million). Cash used for investing activities consisted of $69.7 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 $70.6 million
consisting of partnership withdrawals ($151.0 million) and repayment of
subordinated debt ($26.7 million), partially offset by issuance of
Limited Partner and Subordinated Limited Partner interests ($114.0
million).
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 $250,000 or 2% of aggregate
13
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
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
September 29, 2000, EDJ's Net Capital of $310.6 million was 15% of
aggregate debit items and its Net Capital in excess of the minimum
required was $269.7 million. Net Capital as a percentage of aggregate
debits after anticipated withdrawals was 15%. 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 nine months ended September 29, 2000,
compared with the nine months ended September 24, 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 November 10, 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.
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
14
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
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.
There were no significant changes in the Partnership's exposure to
interest rate risk during the quarter ended September 29, 2000.
15
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<PAGE>
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
None
16
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<PAGE>
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: November 10, 2000 /s/ Steven Novik
-------------------------
Steven Novik
Chief Financial Officer
17
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EXHIBIT INDEX
THE JONES FINANCIAL COMPANIES, L.L.L.P.
For the quarter ended September 29, 2000
Exhibit No. Description
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27.0 Financial Data Schedule (provided for the Securities
and Exchange Commission only)
18
