01—Abstract
Summary
Summary of the 10-K filed December 24, 1998. Cited figures are marked; the original filing is the authoritative source.
Raymond James Financial, Inc. (RJF) reported its fiscal 1998 10-K for the year ended September 25, 1998.
Total revenues rose to $1,082,907 thousanda ($1.08 billion), up from $927,607 thousand in fiscal 1997, which included a $30,646 thousand one-time gain on the sale of Liberty Investment Management, Inc. Net income was $92,704 thousand, or $1.86 per diluted share, compared with $98,915 thousand in 1997. The filing states that excluding the Liberty gain, 1997 net income was $80,126 thousand, so earnings rose 16% on that basis, as the filing itself notes. Management described fiscal 1998 as the fourteenth consecutive year of record revenues.
The business is driven by a retail brokerage network, with Raymond James & Associates, Inc. (RJA) generating 59% of consolidated revenues. Securities commissions were $631,661 thousandb, and interest revenue was $202,255 thousand. Net trading profits fell 51% to $6,300 thousand as over-the-counter equity trading changes virtually eliminated gross equity trading profits, and management expects flat or negative results from that activity to be the norm.
Investment banking revenue was roughly flat at $107,772 thousandc. Total financial assets under management reached $11,206,957 thousand, up 22% for the year, though the filing notes a quarterly decline in the September 1998 quarter. Total assets grew to $3,852,737 thousand and shareholders' equity to $509,898 thousand.
Net cash from operating activities was $448,330 thousandd. The filing discloses that the SEC and other regulators are reviewing over-the-counter trading practices and municipal advance refunding practices, and management believes these matters will not have a material adverse effect. The Company also discusses Year 2000 readiness, stating its costs to date have not been material.
02—Key points
Key Highlights
- Total revenues of $1,082,907 thousand, the first year above $1 billion, up from $927,607 thousand in fiscal 1997 (which included a $30,646 thousand Liberty gain).
- Net income of $92,704 thousand, or $1.86 diluted EPS, versus $98,915 thousand in fiscal 1997; excluding the Liberty gain, the filing states earnings rose 16%.
- Securities commissions of $631,661 thousand, up from $514,964 thousand, with retail commission revenues of $523,890 thousand.
- Net trading profits fell 51% to $6,300 thousand due to changes in over-the-counter equity trading regulations and practices.
- Financial assets under management totaled $11,206,957 thousand at year-end, up 22% for the fiscal year.
- Total assets of $3,852,737 thousand and shareholders' equity of $509,898 thousand at September 25, 1998.
- Net cash provided by operating activities of $448,330 thousand; a $50 million unsecured bank line of credit remained unused at year-end.
03—Questions
Frequently Asked Questions
How did Raymond James perform in fiscal 1998?
Total revenues rose to $1,082,907 thousand from $927,607 thousand, and net income was $92,704 thousand, down from $98,915 thousand. The prior year included a $30,646 thousand gain on the sale of Liberty Investment Management, Inc. The filing states that excluding that gain, net income rose 16%.
What are the main sources of revenue?
Securities commissions were the largest source at $631,661 thousand, followed by interest revenue of $202,255 thousand and investment banking revenue of $107,772 thousand. Investment advisory fees were $79,485 thousand.
Did trading and investment banking revenues change materially?
Net trading profits declined 51% to $6,300 thousand because changes in over-the-counter equity trading regulations virtually eliminated gross equity trading profits. Investment banking revenue was roughly flat, decreasing nominally to $108 million from $109 million, as deal flow slowed in the second half of fiscal 1998.
What regulatory matters does the filing disclose?
The SEC investigated certain over-the-counter trading practices in 1994 and 1995, and the SEC, IRS, and NASD have reviewed investment banking practices related to municipal advance refunding transactions. Management believes these matters will not have a material adverse effect on the Company's financial position or results of operations.
What is the Company's Year 2000 exposure?
The Company states that it has revised its critical internal IT code and will begin full integration testing in the first quarter of fiscal 1999. It notes that its costs to date have not been material, but that the securities industry's dependence on interconnected systems means it could be adversely affected depending on whether its counterparties address the issue successfully.
04—Continue