<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 1997
The John Nuveen Company
------------------------------------------------------
( Exact name of registrant as specified in its charter)
Delaware 1-11123 36-3817266
---------- --------- ----------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
333 West Wacker Drive, Chicago, IL 60606
--------------------------------------------
(Address of principal executive offices)
(312) 917-7700
----------------------------------------
(Registrant's telephone number, including area code)
This document contains 4 pages.
<PAGE> 2
Item 2. OTHER EVENTS.
As reported in a current report on a Form 8-K on August 31, 1997 and
filed on September 3, 1997, The John Nuveen Company ("JNC") completed its
purchase of all of the outstanding shares of capital stock of Rittenhouse
Financial Services, Inc. ("Rittenhouse")
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
a) Financial Statements of Business Acquired.
i) Rittenhouse Financial Services, Inc. -
Financial Statements as of December 31, 1996 and 1995 with
accompanying auditors report thereon.
ii) Rittenhouse Financial Services, Inc. -
Unaudited Financial Statements for the period ended August
31, 1997.
b) Pro Forma Financial Information
i) The John Nuveen Company - Unaudited Pro Forma
Consolidated Statement of Income for the Year Ended December
31, 1996.
ii) The John Nuveen Company - Unaudited Pro Forma
Consolidated Statement of Income for the Nine Months Ended
September 30, 1997.
c) Exhibits.
The following exhibits are filed with this reports:
Exhibit No. Description
99.2 Financial Statements of Rittenhouse Financial Services,
Inc.
99.3 Pro Forma Financial Information of the Registrant.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereto duly authorized.
THE JOHN NUVEEN COMPANY
BY: /s/ John P. Amboian
John P. Amboian
Executive Vice President and
Chief Financial Officer
Dated: November 13, 1997
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description
99.2 Financial Statements of Rittenhouse Financial Services,
Inc.
99.3 Pro Forma Financial Information of the Registrant.
<PAGE> 1
EXHIBIT 99.2
[Company Logo]
RITTENHOUSE FINANCIAL
SERVICES, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1996
<PAGE> 2
[Company Logo]
PRICE WATERHOUSE LLP
REPORT OF INDEPENDENT ACCOUNTANTS
February 12, 1997
To the Board of Directors and Stockholder of
Rittenhouse Financial Services, Inc.
In our opinion, the accompanying balance sheet and the related statements of
income, of changes in stockholder's equity and of cash flows present fairly, in
all material respects, the financial position of Rittenhouse Financial
Services, Inc. (the "Company") at December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- ------------------------
<PAGE> 3
RITTENHOUSE FINANCIAL SERVICES, INC.
BALANCE SHEET
DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
ASSETS
<S> <C> <C>
Cash and cash equivalents $3,330,767 $3,015,212
Repurchase agreement, at cost
(which approximates market value) 600,000 600,000
Investments-available for sale 108,324
Advisory fees receivable 2,613,579 1,977,027
Taxes receivable 421,224 578,474
Due from affiliates 775,445
Furniture, fixtures, equipment and leasehold
improvements at cost, less accumulated
depreciation and amortization of $1,353,361
in 1996 and $1,069,894 in 1995 929,919 701,445
Prepaid and other assets 190,434 141,082
---------- ----------
Total assets $8,969,692 $7,013,240
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable and other liabilities $1,110,548 $1,129,902
Accrued payroll and related withholdings 171,335 98,369
Income taxes payable 1,120,027
Due to affiliates 133,048
Notes payable 1,300,000 1,398,390
---------- ----------
Total liabilities 2,581,883 3,879,736
---------- ----------
Commitments
Stockholder's Equity:
Common stock , $.01 par value - 10,000 shares
authorized, 230 shares issued and outstanding 2 2
Additional paid-in capital 474,080 474,080
Unrealized gains (losses) on investments 8,324
Retained earnings 5,905,403 2,659,422
---------- ----------
Total stockholder's equity 6,387,809 3,133,504
---------- ----------
Total liabilities and stockholder's equity $8,969,692 $7,013,240
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
RITTENHOUSE FINANCIAL SERVICES, INC.
STATEMENT OF INCOME
DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Revenue
Advisory fees $26,495,063 $20,683,803
Interest and dividend income 88,033 6,706
Other income 134 6,340
----------- -----------
Total income 26,583,230 20,696,849
----------- -----------
Expenses:
Employee compensation and benefits 11,266,592 8,595,924
Accounting and auditing 41,635 32,913
Advertising and printing 1,374,051 573,386
Computer services and related charges 2,045,627 1,919,245
Custody charges 81,290 84,990
Depreciation and amortization 283,602 284,319
Directors' fees 100,000 100,000
Information retrieval services 280,167 244,426
Insurance 116,941 134,723
Interest expense 101,717 374,816
Legal fees 146,890 195,766
Occupancy 368,407 345,841
Office supplies and expenses 445,577 264,273
Professional fees 1,107,880 486,684
Registration fees 100,858 40,069
Miscellaneous taxes 527,166 409,829
Telephone 210,579 177,264
Trading errors 275,923 51,059
Travel and entertainment 2,148,642 1,241,357
Other expenses 656,974 525,452
----------- -----------
Total expenses 21,680,518 16,082,336
----------- -----------
Net income before tax 4,902,712 4,614,513
Tax provision 156,731 1,120,027
----------- -----------
Net income $ 4,745,981 $ 3,494,486
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
RITTENHOUSE FINANCIAL SERVICES, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONAL UNREALIZED
COMMON PAID-IN RETAINED GAIN (LOSS)
STOCK CAPITAL EARNINGS ON INVESTMENTS TOTAL
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $ 2 $ 474,080 $ 2,799,873 $ 3,273,955
Net income 3,494,486 3,494,486
Dividends paid (3,634,937) (3,634,937)
------- --------- ----------- ------- -----------
Balance, December 31, 1995 $ 2 $ 474,080 $ 2,659,422 $ 3,133,504
======= ========= =========== ======= ===========
Net income 4,745,981 4,745,981
Dividends paid (1,500,000) (1,500,000)
Unrealized gain on $ 8,324 8,324
investments ------- --------- ----------- ------- -----------
Balance, December 31, 1996 $ 2 $ 474,080 $ 5,905,403 $ 8,324 $ 6,387,809
======= ========= =========== ======= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
RITTENHOUSE FINANCIAL SERVICES, INC.
STATEMENT OF CASH FLOWS
DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Operating activities:
Net income $ 4,745,981 $ 3,494,486
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Net (gain) loss on sale of:
Fixed Assets (6,344)
Depreciation and amortization 283,602 284,319
Changes in assets and liabilities which provided
(used) cash:
Increase in advisory fees receivable (636,552) (354,238)
Decrease in taxes receivable 157,250 231,551
(Increase) decrease in prepaid and other assets (49,352) 113,808
(Decrease) increase in accounts payable and other liabilities (19,354) 192,769
(Decrease) increase in due to affiliates (908,493) 135,234
Increase in accrued payroll and related withholding 72,966 18,358
(Decrease) increase in income taxes payable (1,120,027) 1,120,027
------------ ------------
Net cash provided by operating activities 2,526,021 5,229,970
------------ ------------
Investing activities:
Purchase of investments (100,000)
Purchase of furniture, fixtures and equipment (512,076) (154,932)
Proceeds from sale of furniture, fixtures and equipment 11,000
------------ ------------
Net cash provided by (used in) investing activities (612,076) (143,932)
------------ ------------
Financing activities:
Additional borrowings from stockholder 0 1,400,000
Loan repayment to banks and stockholder (98,390) (2,499,000)
Dividends paid (1,500,000) (3,634,937)
------------ ------------
Net cash used in financing activities (1,598,390) (4,733,937)
------------ ------------
Net increase in cash 315,555 352,102
Cash and cash equivalents, beginning of year 3,015,212 2,663,111
------------ ------------
Cash and cash equivalents, end of year $ 3,330,767 $ 3,015,212
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $ 1,118,422 $ 0
============ ============
Interest $ 310,874 $ 165,665
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
RITTENHOUSE FINANCIAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
Rittenhouse Financial Services, Inc. ("RFS" or the "Company") is registered
as an investment advisor under Section 203 of the Investment Advisors Act
of 1940. RFS has provided investment management services to endowments,
foundations, retirement plans and other institutional clients since the
Company's incorporation in 1979. The Broker Sponsored division of RFS
provides investment management services for clients referred by stock
brokerage firms. The sole stockholder of RFS is also the sole stockholder
of The Rittenhouse Trust Company ("RTC"), a state-chartered trust company
and commercial bank under the laws of the Commonwealth of Pennsylvania. RTC
owns all of the outstanding stock of Rittenhouse Financial Securities, Inc.
("RFSecurities"), a broker-dealer registered with the Securities and
Exchange Commission.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Advisory Fees. RFS computes revenue for advisory fees by applying a
client's contracted rate to the market value of each client's investment
portfolio on a quarterly basis. Income is recognized as earned.
Cash and Cash Equivalents. Cash equivalents are short-term, highly liquid
investments, generally with original maturities of three months or less,
that consist of demand deposits, money market funds and certificates of
deposit.
Fixed Assets. Furniture, fixtures, equipment and leasehold improvements
are stated at cost less allowances for depreciation and amortization.
Depreciation on furniture, fixtures and equipment is provided using the
straight-line method over estimated useful lives of three to ten years.
Leasehold improvements are amortized over the lease terms.
Income Taxes. The Company has elected to be taxed as an "S" corporation
for federal and state income tax purposes. As an "S" corporation, all
federal and state income taxes are payable by the sole stockholder and not
by the Company.
Investments. RFS holds investments in marketable equity securities which
are classified as available for sale. The securities are carried at fair
value with unrealized gains and losses reported as a separate component of
stockholder's equity.
<PAGE> 8
RITTENHOUSE FINANCIAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
3. NOTES PAYABLE
At December 31, 1996, notes payable consisted of:
<TABLE>
<S> <C>
Term loan payable to a bank on April 30, 1999;
interest at 1% per year. $ 300,000
Demand notes payable to stockholder; interest at
prime plus 1% per year 300,000
Note payable to stockholder on January 31, 1997;
automatically extended for six month periods at the
stockholder's option; interest at prime plus 1% per
year 700,000
-----------
Total notes payable $ 1,300,000
===========
</TABLE>
The notes payable to a bank are secured by an unrestricted balance
maintained by RTC in the form of a non-interest bearing deposit at the
lending bank of $300,000 ($400,000 at December 31, 1995). If this deposit is
withdrawn during the term of the notes, the lending bank will increase the
interest rate charged on the notes to 1% over the bank's base lending rate
and will assess a 1% fee on the outstanding principal balance.
The note payable to stockholder was extended to July 31, 1997.
4. TAXES
Taxes receivable of $421,224 and $578,474 at December 31, 1996 and 1995
relate to a federal income tax refund which originated prior to the
Company's "S" corporation election in 1993.
Prior to January 1, 1993, RFS filed a consolidated federal income tax
return as a "C" corporation with RTC and RFSecurities. The Internal
Revenue Service (IRS) has examined the consolidated tax return of RFS, a
"C" Corporation prior to January 1, 1993, for the year ended December 31,
1992. In addition, the IRS has examined RFS's claim for refund relating to
its consolidated tax return for the year ended December 31, 1991. In
January 1996, the IRS issued its report for the year ended December 31,
1992 and assessed additional tax due of $824,000 plus interest of $208,000.
Also in January 1996, the IRS denied RFS's claim for refund for 1991. RFS
did not contest the IRS's assessment for 1992 and recorded a federal and
state tax provision in 1995. RFS has vigorously continued to pursue its
claim for refund for 1991 through the tax appeal system. Based on the
present negotiations with the IRS, management believes that the amount
refundable will be reduced by approximately 25%. As a result, taxes
receivable have been reduced to $421,224 which resulted in a charge to
operations of $157,250.
<PAGE> 9
RITTENHOUSE FINANCIAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
5. AGREEMENTS WITH STOCK BROKERAGE FIRMS
A significant portion of the Company's advisory fee revenue results from
relationships established under investment management agreements with stock
brokerage firms. One of those relationships accounted for $11,517,300 and
$9,758,881 of advisory fee revenue in 1996 and 1995, respectively.
6. COMMITMENTS
The Company leases offices under noncancelable leases. Minimum payments
under the terms of the leases, which expire on November 30, 2002, are as
follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
<S> <S>
1997 $ 572,422
1998 677,408
1999 704,436
2000 731,523
2001 758,670
Thereafter 718,378
----------
$4,162,837
==========
</TABLE>
7. EMPLOYEE BENEFIT PLAN
"The Rittenhouse Financial Services, Inc. Employees' Retirement Plan", a
non-contributory defined benefit plan, was terminated as of August 31, 1995,
and "The Rittenhouse Companies 401(k) Plan" was amended effective January
1, 1995 to include a thirty-five percent company match of the participants'
contributions. The matching contribution expense for the year ended December
31, 1996 and December 31, 1995 was $114,075 and $94,114, respectively.
8. RELATED PARTY TRANSACTIONS
RFS provides to RTC and RFSecurities personnel time and certain
administrative services, the costs of which are allocated to RTC and
RFSecurities based upon assets under management, time spent by employees
and other reasonable bases. In addition, RFS pays expenses incurred by
RTC and RFSecurities and charges them for the actual expenses paid on their
behalf.
<PAGE> 10
RITTENHOUSE FINANCIAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
RTC and RFSecurities sublet office space from the Company under separate
sublease agreements for $9,367 per month and $350 per month, respectively.
Total future minimum rental payments to be received under these
noncancelable subleases which expire on November 30, 1997 are $106,887 for
1997. Occupancy expense reported in the Company's statement of income for
the years ended December 31, 1996 and 1995 is net of amounts received under
the sublease agreements.
At December 31, 1996 and 1995, the Company had $13,055 and $12,509,
respectively, on deposit in money market accounts at RTC.
<PAGE> 11
RITTENHOUSE FINANCIAL SERVICES, INC.
BALANCE SHEET
AUGUST 31, 1997
( Unaudited )
In thousands, except per share data
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents $ 539
Investments - available for sale 129
Advisory fees receivable 4,565
Due from affiliates 736
Furniture, equipment and leasehold
improvements at cost, net 1,754
Prepaid and other assets 251
-----------
Total assets $ 7,974
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable and other liabilities $ 1,651
Accrued payroll 54
Deferred income 1,841
Other liabilities 126
-----------
Total liabilities 3,672
-----------
Stockholder's Equity:
Common stock, $.01 par value - 10,000 shares authorized,
230 shares issued and outstanding -
Additional paid-in capital 474
Retained earnings 3,799
Unrealized gains on investments 29
-----------
Total stockholder's equity 4,302
-----------
Total liabilities and stockholder's equity $ 7,974
===========
</TABLE>
<PAGE> 12
RITTENHOUSE FINANCIAL SERVICES, INC.
STATEMENT OF INCOME
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1997
( Unaudited )
<TABLE>
<CAPTION>
REVENUE:
<S> <C>
Advisory fees $ 22,325
Interest and dividends 243
Loss on sale of assets (12)
------------
Total income 22,556
------------
EXPENSES:
Compensation and benefits 10,928
Travel and entertainment 1,547
Computer services 1,499
Advertising and promotional costs 1,181
Occupancy and equipment costs 541
Interest 62
Other operating expenses 3,019
------------
Total expenses 18,777
------------
NET INCOME $ 3,779
============
</TABLE>
<PAGE> 13
RITTENHOUSE FINANCIAL SERVICES, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1997
( Unaudited )
<TABLE>
<CAPTION>
Additional Unrealized
Common paid-in Retained gain on
stock capital earnings investments Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ - $ 474 $ 5,905 $ 8 $ 6,387
Net income 3,779 3,779
Dividends paid (5,885) (5,885)
Unrealized gain on investments 21 21
---------------------------------------------------------------------------
Balance at August 31, 1997 $ - $ 474 $ 3,799 $ 29 $ 4,302
===========================================================================
</TABLE>
<PAGE> 14
RITTENHOUSE FINANCIAL SERVICES, INC.
STATEMENT OF CASH FLOWS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1997
( Unaudited )
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 3,779
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation and amortization 228
Net loss on sale of assets 14
Increase in advisory fees receivable (1,952)
Increase in deferred income 1,841
Net (increase) decrease in:
Taxes receivable 421
Due from affiliates 40
Prepaid and other assets (61)
Net increase (decrease) in:
Accounts payable 541
Accrued payroll (117)
------------
Net cash provided from operating activities 4,734
------------
Cash flows from investing activities:
Proceeds from sale of repurchase agreements 600
Purchases of furniture, equipment and leasehold improvements (971)
Proceeds from sale of furniture and equipment 35
------------
Net cash used in investing activities (336)
------------
Cash flows from financing activities:
Dividends paid (5,885)
Decrease in borrowing from stockholder (300)
Decrease in borrowings from banks (1,000)
Other (5)
------------
Net cash used in financing activities (7,190)
------------
Net decrease in cash and cash equivalents (2,792)
Cash and cash equivalents:
Beginning of year 3,331
------------
End of period $ 539
------------
</TABLE>
<PAGE> 1
EXHIBIT 99.3
THE JOHN NUVEEN COMPANY
Unaudited Pro Forma Consolidated Financial Statements
The accompanying unaudited pro forma consolidated statements of income for the
year ended December 31, 1996 and the nine month period ended September 30,
1997, give effect to the acquisition of Rittenhouse Financial Services, Inc. by
The John Nuveen Company as if such acquisition had occurred on January 1, 1996.
These unaudited pro forma consolidated statements of income are not necessarily
indicative of the results of operations that would have been achieved had such
acquisition actually occurred on such date, or of the future results of
operations of the Company. The pro forma adjustments set forth below reflect
only purchase accounting adjustments and other adjustments that reflect
obligations required under the Stock Purchase Agreement dated July 14, 1997
("the Agreement"). They do not reflect any benefits or cost savings anticipated
as a result of the merger except for certain stockholder related expenses as
described in Note 3 below. The pro forma adjustments are based on available
information and certain assumptions that management believes are reasonable.
The pro forma adjustments are applied to the historical consolidated financial
statements of the Company, using the purchase method of accounting and
information available. Under purchase accounting, the acquisition cost of such
ownership interest will be allocated to the assets and liabilities acquired
based on their relative fair value as of the closing date of the transaction,
with any excess of the acquisition cost over the fair value of the assets
acquired less the fair value of the liabilities assumed recorded as goodwill.
The final allocations may be different from the amounts reflected herein;
management of the Company believes that any adjustments will not have a
material financial impact.
<PAGE> 2
THE JOHN NUVEEN COMPANY
Pro Forma Consolidated Statement of Income
Year ended December 31, 1996
(in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Nuveen Rittenhouse Pro forma Nuveen
Actual Actual Adjustments Reference Pro forma
----------- ------------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Investment Advisory fees $ 185,845 $ 26,495 $ (333) (1) $ 212,007
Underwriting and distribution 14,566 - 14,566
Positioning profits (losses) (191) - (191)
Investment banking 11,098 - 11,098
Interest, dividends and all other, net 21,029 88 (3,868) (2) 17,249
-------------------------------------------------- -----------
Total income 232,347 26,583 (4,201) 254,729
-------------------------------------------------- -----------
EXPENSES:
Compensation and benefits 71,683 11,266 (3,872) (3) 79,077
Advertising and promotional costs 12,641 1,374 14,015
Occupancy and equipment costs 11,948 652 12,600
Travel and entertainment 4,627 2,149 6,776
Professional fees 3,061 1,296 4,357
Interest 2,325 102 1,880 (2) 4,307
Amortization expense - - 4,717 (4) 4,717
Other operating expenses 8,560 4,841 (170) (5) 13,231
-------------------------------------------------- -----------
Total expense 114,845 21,680 2,555 139,080
-------------------------------------------------- -----------
Income before taxes 117,502 4,903 (6,756) 115,649
-------------------------------------------------- -----------
Income tax 44,973 157 (1,293) (6) 43,837
-------------------------------------------------- -----------
NET INCOME $ 72,529 $ 4,746 $ (5,463) $ 71,812
================================================== ===========
Average common and common equivalent shares outstanding:
Primary 36,702 36,702
Fully Diluted 36,889 36,889
=========== ===========
Earnings per common share
Primary $ 1.98 $ 1.96
Fully Diluted $ 1.97 $ 1.95
=========== ===========
</TABLE>
The accompanying notes are an intregal part of these unaudited pro forma
financial statements.
<PAGE> 3
THE JOHN NUVEEN COMPANY
Pro Forma Consolidated Statement of Income
Nine months ended September 30, 1997
(in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Nuveen Rittenhouse Pro forma Nuveen
Actual Actual Adjustments Reference Pro forma
---------- ----------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Investment Advisory fees $ 158,144 $ 22,325 $ (222) (1) $ 180,247
Underwriting and distribution 10,595 - 10,595
Positioning profits (losses) 821 - 821
Investment banking 9,274 - 9,274
Interest, dividends and all other, net 13,409 231 (2,579) (2) 11,061
------------------------------------------------ ----------
Total income 192,243 22,556 (2,801) 211,998
------------------------------------------------ ----------
EXPENSES:
Compensation and benefits 56,282 10,928 $ (4,442) (3) 62,768
Advertising and promotional costs 12,782 1,181 13,963
Occupancy and equipment costs 8,838 541 9,379
Travel and entertainment 4,919 1,547 6,466
Professional fees 2,956 559 (115) (5) 3,400
Interest 2,485 62 1,259 (2) 3,806
Amortization expense 2,093 - 3,144 (4) 5,237
Other operating expenses 13,223 3,959 (604) (5) 16,578
------------------------------------------------ ----------
Total expense 103,578 18,777 (758) 121,597
------------------------------------------------ ----------
Income before taxes 88,665 3,779 (2,043) 90,401
------------------------------------------------ ----------
Income tax 34,553 - 284 (6) 34,837
------------------------------------------------ ----------
NET INCOME $ 54,112 $ 3,779 $ (2,327) $ 55,564
================================================ ==========
Average common and common equivalent shares outstanding:
Primary 33,361 33,361
Fully Diluted 35,253 35,253
========== ==========
Earnings per common share
Primary $ 1.57 $ 1.61
Fully Diluted $ 1.53 $ 1.58
========== ==========
</TABLE>
The accompanying notes are an intregal part of these unaudited pro forma
financial statements.
<PAGE> 4
THE JOHN NUVEEN COMPANY
Notes to Unaudited Pro Forma Consolidated Statements of Income
Pro Forma Adjustments
Sources and Uses of Funds
The sources and uses of the financing for the merger are summarized below ( $
in thousands):
Sources of Funds
Available cash $ 95,500
Issuance of debt 33,590
Balance due 16,410
after the closing date -------
$ 145,500
=======
Uses of Funds
Purchase of stock $ 145,000
Estimated costs of acquisition 500
-------
$ 145,500
=======
Acquisition Adjustments
Pro forma adjustments to give effect to the acquisition are summarized as
follows:
1. Revenue from certain assets under management not included as part of the
acquisition have been removed from Investment Advisory Fees.
2. Interest income and interest expense have been adjusted to reflect the
lower cash balances available for investing as a result of, and the debt
incurred pursuant to, the transaction.
<PAGE> 5
3. Expense has been adjusted to reflect compensation paid to the former
controlling shareholder and certain others who did not become employees of
the Company. Profit sharing expense, included in compensation and
benefits, has also been adjusted to reflect the effects of the
transaction.
4. Adjustment reflects the amortization over 30 years of the estimated
goodwill arising from the transaction.
5. Adjustment reflects the effect of other expenses directly related to the
transaction which would not otherwise have been incurred.
6. All applicable pro forma adjustments, as well as the pretax earnings of
Rittenhouse (formerly an S-Corporation), were tax effected at the
appropriate rate.
