01—Abstract
Summary
Summary of the 10-K/A filed December 27, 2001. Cited figures are marked; the original filing is the authoritative source.
Raymond James Financial, Inc. reported total revenues of $1,657,844 thousanda for the fiscal year ended September 28, 2001, compared with $1,698,594 thousand in fiscal 2000 and $1,232,206 thousand in fiscal 1999.
Net income was $96,410 thousandb, or $1.98 per diluted share, versus $125,195 thousand ($2.67 diluted) in 2000. The filing attributes the decline to poor equity markets that reduced transaction volume, with retail commission revenues falling to $830,841 thousand from $903,448 thousand, and to lower interest income as margin balances declined. Management states that fee-based revenues, including investment advisory fees, interest and asset-based commission alternatives, represented approximately 48% of total revenues, up from 36% five years earlier.
The results include a $16 millionc reversal of the legal reserve tied to the Corporex judgment, which was settled in June 2001 for $27.5 million. Excluding that reversal, net income was $87,678 thousand. The Canadian broker-dealer Goepel McDermid Inc., renamed Raymond James Ltd., was acquired January 1, 2001 and contributed $65,463 thousand of revenue.
Total assets were $6,372,054 thousandd and shareholders' equity was $770,876 thousand at September 28, 2001, and the company had 5,811 employees, including 4,650 retail Financial Advisors at year end. The filing notes that the company's auditor changed during the year and that the company is contesting various lawsuits, which management does not expect to have a material adverse effect on financial position or results. Management also identifies risks from market volatility, interest rate fluctuations, and regulatory change, and says that adoption of SFAS 142 may require goodwill impairment testing on roughly $62 million of unamortized goodwill.
02—Key points
Key Highlights
- Total revenues were $1,657,844 thousand, down 2% from $1,698,594 thousand in fiscal 2000; excluding $65,463 thousand from Raymond James Ltd., revenues declined 6%.
- Net income fell to $96,410 thousand ($1.98 diluted EPS) from $125,195 thousand ($2.67 diluted EPS), a 23% decrease; the filing says operating results excluding the Corporex reserve items were down 36%.
- Fee-based revenues represented approximately 48% of total revenues, up from 36% five years ago, reflecting a shift away from transaction-dependent income.
- Retail commission revenues fell 8% to $830,841 thousand, reflecting poor equity markets and lower transaction volume.
- Net interest income declined 9% to $106,036 thousand as margin balances fell; average margin balance dropped to $1,249,495 thousand from $1,526,273 thousand.
- The company paid $27.5 million in June 2001 to settle the Corporex judgment, after a $16 million reversal of the related legal reserve in fiscal 2001.
- Total assets were $6,372,054 thousand and shareholders' equity was $770,876 thousand at September 28, 2001, with book value of $15.99 per share.
03—Questions
Frequently Asked Questions
How did Raymond James perform in fiscal 2001?
Revenues were $1,657,844 thousand, slightly below the prior year, and net income was $96,410 thousand, or $1.98 per diluted share, compared with $125,195 thousand ($2.67) in fiscal 2000. Management attributes the decline to poor equity markets that reduced transaction volume and lower margin interest income.
What drove the decline in revenue and earnings?
The filing cites lower retail commissions, reduced interest income from smaller margin balances, and weaker results across most business lines as negative market conditions affected most sectors. Investment banking and financial service fees rose, partly due to the acquisition of Raymond James Ltd.
What was the Corporex matter and how was it resolved?
A June 19, 2000 judgment of $40.7 million was entered against Raymond James & Associates and RJ Mortgage Acceptance Corp. In June 2001 the company paid Corporex $27.5 million in full settlement. The company recorded a $20 million legal reserve charge in fiscal 2000 and a $16 million reversal in fiscal 2001.
What acquisitions did the company complete?
On January 1, 2001, the company purchased Goepel McDermid Inc., a Canadian broker-dealer later renamed Raymond James Ltd., for $78 million, including $48 million in cash and one million exchangeable shares. Its results contributed $65,463 thousand to fiscal 2001 revenues. The company also acquired Roney & Co. in May 1999.
What are the main risks identified in the filing?
The filing identifies transaction volume, securities market volatility, interest rate fluctuations, regulatory changes, currency rates, general economic conditions, competition, and legal developments as key risks. It also discloses concentration in two leveraged aircraft leases and that management does not expect a material adverse effect from pending litigation.
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