FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (Mark one) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 26, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ----------- Commission file number 1-9109 ------ RAYMOND JAMES FINANCIAL, INC. ----------------------------- (Exact name of registrant as specified in its charter) Florida No. 59-1517485 ------------------------------ -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 880 Carillon Parkway, St. Petersburg, Florida 33716 ------------------------------------------------------- (Address of principal executive offices) (Zip Code) (727) 573-3800 -------------- (Registrant's telephone number, including area code) 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 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___ Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the close of the latest practicable date. 47,627,055 shares of Common Stock as of April 28, 1999 ------------------------------------------------------ RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- Form 10-Q for the Quarter Ended March 26, 1999 ---------------------------------------------- INDEX ----- PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Statement of Financial Condition as of March 26, 1999 (unaudited) and September 25, 1998 2 Consolidated Statement of Operations (unaudited) for the three and six month periods ended March 26, 1999 and March 27, 1998 3 Consolidated Statement of Cash Flows (unaudited) for the six months ended March 26, 1999 and March 27, 1998 4 Notes to Consolidated Financial Statements (unaudited) 5 Item 2. Management's Financial Discussion and Analysis 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 10: PURCHASE AGREEMENT between BANK ONE CORPORATION, as Seller, and RAYMOND JAMES FINANCIAL, INC., Exhibit 11: Computation of Earnings Per Share 10 Exhibit 27: Financial Data Schedule - EDGAR version only (filed electronically) (b) Reports on Form 8-K: Dated April 26, 1999, reporting the agreement to purchase Roney & Co., a wholly-owned broker-dealer subsidiary of Bank One Corporation All other items required in Part II have been previously filed or are not applicable for the quarter ended March 26, 1999. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (in thousands, except share amounts) March 26, September 25, 1999 1998 --------- ------------- (Unaudited) ASSETS - ------ Cash and cash equivalents $ 285,124 $ 296,817 Assets segregated pursuant to Federal Regulations: Cash and cash equivalents 25 1 Securities purchased under agreements to resell 1,207,132 946,723 Securities owned: Trading and investment account securities 172,635 105,892 Available for sale securities 382,736 385,676 Receivables: Clients, net 1,008,276 893,839 Stock borrowed 1,533,239 852,744 Brokers, dealers and clearing organizations 52,436 112,838 Other 57,565 62,722 Investment in leveraged leases 23,673 23,297 Property and equipment, net 82,019 81,372 Deferred income taxes, net 34,307 32,841 Deposits with clearing organizations 32,229 21,206 Prepaid expenses and other assets 45,421 36,769 ----------- ----------- $4,916,817 $3,852,737 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Loans payable $ 245,556 $ 44,767 Payables: Clients 2,317,678 2,126,699 Stock loaned 1,487,013 828,102 Brokers, dealers and clearing organizations 50,985 43,227 Trade and other 101,505 99,690 Trading account securities sold but not yet purchased 68,572 30,841 Accrued compensation and commissions 118,637 158,539 Income taxes payable 6,234 10,974 ----------- ----------- 4,396,180 3,342,839 =========== =========== Commitments and contingencies - - Shareholders' equity: Preferred stock; $.10 par value; authorized 10,000,000 shares; issued and outstanding -0- shares - - Common stock; $.01 par value; authorized 100,000,000 shares; issued 48,997,995 shares 490 490 Additional paid-in capital 57,730 57,777 Accumulated other comprehensive income: Unrealized gain (loss) on securities available for sale, net of deferred taxes (252) 114 Retained earnings 491,770 459,099 ----------- ----------- 549,738 517,480 Less: 1,750,912 and 730,118 common shares in treasury, at cost (29,101) (7,582) ----------- ----------- 520,637 509,898 ----------- ----------- $4,916,817 $3,852,737 =========== =========== See notes to Consolidated Financial Statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS ------------------------------------ (UNAUDITED) (in thousands, except per share amounts) Three Months Ended Six Months Ended -------------------- --------------------- March 26, March 27, March 26, March 27, 1999 1998 1999 1998 Revenues: --------- --------- --------- --------- Securities commissions and fees $185,329 $157,626 $349,589 $302,489 Investment banking 15,819 28,338 27,349 59,609 Investment advisory fees 22,750 17,583 43,227 33,998 Interest 55,653 48,606 104,829 94,796 Correspondent clearing 1,217 1,100 2,285 2,219 Net trading profits 4,445 3,035 10,491 4,909 Financial service fees 10,098 6,858 18,395 13,362 Other 3,880 4,392 7,533 8,460 -------- -------- -------- -------- Total revenues 299,191 267,538 563,698 519,842 -------- -------- -------- -------- Expenses: Employee compensation and benefits 181,467 159,167 344,023 311,653 Communications and information processing 13,613 10,817 24,373 20,602 Occupancy and equipment 9,387 7,916 19,245 15,434 Clearing and floor brokerage 3,367 2,767 6,127 5,796 Interest 37,675 31,268 69,517 60,687 Business development 9,590 8,042 18,718 14,621 Other 8,773 7,027 18,039 13,628 -------- -------- -------- -------- Total expenses 263,872 227,004 500,042 442,421 -------- -------- -------- -------- Income before provision for income taxes 35,319 40,534 63,656 77,421 Provision for income taxes 13,450 15,834 24,308 29,976 -------- -------- -------- -------- Net income $ 21,869 $ 24,700 $ 39,348 $ 47,445 ======== ======== ======== ======== Net income per share-basic* $ .46 $ .51 $ .82 $ .99 ======== ======== ======== ======== Net income per share-diluted* $ .45 $ .50 $ .81 $ .96 ======== ======== ======== ======== Cash dividends declared per common share* $ .07 $ .06 $ .14 $ .12 ======== ======== ======== ======== Weighted average common shares outstanding-basic* 47,697 48,158 47,908 47,953 ======== ======== ======== ======== Weighted average common and common equivalent shares outstanding -diluted* 48,492 49,515 48,805 49,233 ======== ======== ======== ======== * Gives effect to the 3-for-2 stock split paid to shareholders in April 1998. See Notes to Consolidated Financial Statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (UNAUDITED) (in thousands) Six Months Ended --------------------------- March 26, March 27, 1999 1998 Cash flows from operating activities: ----------- ----------- Net income $ 39,348 $ 47,445 Adjustments to reconcile net income ---------- ---------- to net cash provided by operating activities: Depreciation and amortization 9,538 7,429 (Increase) decrease in assets: Available for sale investments 2,940 (18,050) Deposits with clearing organizations (11,023) 13 Receivables: Clients, net (114,437) (81,634) Stock borrowed (680,495) (471,846) Brokers, dealers and clearing organizations 60,402 8,783 Other 5,157 (3,934) Trading account securities, net (29,012) (100,321) Deferred income taxes (1,466) (6,366) Prepaid expenses and other assets (9,028) (5,179) Increase (decrease) in liabilities: Payables: Clients 190,979 355,930 Stock loaned 658,911 423,096 Brokers, dealers and clearing organizations 7,758 40,137 Trade and other 1,815 2,368 Accrued compensation (39,902) (27,757) Income taxes payable (4,740) (4,415) ----------- ----------- Total adjustments 47,397 118,254 ----------- ----------- Net cash provided by operating activities 86,745 165,699 Cash flows from investing activities: ----------- ----------- Additions to property and equipment, net (10,185) (26,240) ----------- ----------- Cash flows from financing activities: Borrowings from banks and financial institutions 201,077 20,000 Repayments on loans (288) (14,285) Exercise of stock options and employee stock purchases 5,081 6,452 Purchase of treasury stock (27,149) - Corporate sale of put options 502 - Cash in lieu of fractional shares (16) Cash dividends on common stock (6,677) (5,768) Unrealized (loss) gain on securities available for sale, net (366) (15) ----------- ----------- Net cash provided by financing activities 172,180 6,368 ----------- ----------- Net increase in cash and cash equivalents 248,740 145,827 Cash and cash equivalents at beginning of period 1,243,541 888,780 ----------- ----------- Cash and cash equivalents at end of period $1,492,281 $1,034,607 =========== =========== Supplemental disclosures of cash flow information: Cash paid for interest $ 65,673 $ 58,762 =========== =========== Cash paid for taxes $ 44,360 $ 40,756 =========== =========== See Notes to Consolidated Financial Statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ------------------------------------------------------ March 26, 1999 -------------- Basis of Consolidation The consolidated financial statements include the accounts of Raymond James Financial, Inc. and its consolidated subsidiaries (the "Company"). All material intercompany balances and transactions have been eliminated in consolidation. These statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments made are of a normal, recurring nature. The nature of the Company's business is such that the results of any interim period are not necessarily indicative of results for a full year. Commitments and Contingencies The Company has committed to lend to, or guarantee other debt for, Raymond James Tax Credit Funds, Inc. ("RJTCF") up to $25 million upon request. RJTCF, a wholly-owned subsidiary of the Company, is a sponsor of limited partnerships qualifying for low income housing tax credits. The borrowings are secured by properties under development. The commitment expires in November 1999, at which time any outstanding balances will be due and payable. At March 26, 1999, there were loans of $12,816,854 and guarantees of $1,530,800 outstanding. The Company is a defendant or co-defendant in various lawsuits incidental to its securities business. The Company is contesting the allegations in these cases and believes that there are meritorious defenses in each of these lawsuits. In view of the number and diversity of claims against the Company, the number of jurisdictions in which litigation is pending and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot state with certainty what the eventual outcome of pending litigation or other claims will be. In the opinion of management, based on discussions with counsel, the outcome of these matters will not result in a material adverse effect on the financial position or results of operations. Immediately following the quarter end the Company entered into an agreement to purchase Roney & Co., a wholly-owned broker-dealer subsidiary of Bank One Corporation for approximately $70 million in cash and the assumption of $10 million in deferred compensation liabilities. Pending regulatory approval and other conditions of closing contained in the agreement, the agreement is anticipated to close during the Company's third fiscal quarter. Capital Transactions The Company's Board of Directors has, from time to time, adopted resolutions authorizing the Company to repurchase its common stock for the funding of its incentive stock option and stock purchase plans and other corporate purposes. As of March 26, 1999, management has Board authorization to purchase up to 1,318,300 shares. At their meeting on February 12, 1999, the Board of Directors of the Company declared a quarterly cash dividend of $.07 per share. Net Capital Requirements The broker-dealer subsidiaries of the Company are subject to the requirements of Rule 15c3-under the Securities Exchange Act of 1934. This rule requires that aggregate indebtedness, as defined, shall not exceed fifteen times net capital, as defined. Rule 15c3-1 also provides for an "alternative net capital requirement" which, if elected, requires that net capital be equal to the greater of $250,000 or two percent of aggregate debit items computed in applying the formula for determination of reserve requirements. The New York Stock Exchange may require a member organization to reduce its business if its net capital is less than four percent of aggregate debit items and may prohibit a member firm from expanding its business and declaring cash dividends if its net capital is less than five percent of aggregate debit items. The net capital positions of the Company's broker-dealer subsidiaries at March 26, 1999 were as follows (dollar amounts in thousands): Raymond James & Associates, Inc.: --------------------------------- (alternative method elected) Net capital as a percent of aggregate debit items 18.30% Net capital $187,165 Required net capital $20,457 Raymond James Financial Services, Inc.: --------------------------------------- Ratio of aggregate indebtedness to net capital .93 Net capital $23,792 Required net capital $1,475 Comprehensive Income Total comprehensive income for the three and six months ended March 26, 1999 and March 27, 1998 is as follows (in thousands): Three Months Ended Six Months Ended -------------------- -------------------- March 26, March 27, March 26, March 27, 1999 1998 1999 1998 --------- --------- --------- --------- Net income $21,869 $24,700 $39,348 $47,445 Other comprehensive income: Unrealized gains on securities (31) (46) (366) (15) -------- -------- -------- -------- Total comprehensive income $21,838 $24,654 $38,982 $47,430 ======== ======== ======== ======== MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS (Any statements containing forward looking information should be read in conjunction with Management's Discussion and Analysis of Results of Operations and Financial Condition in the Company's Annual Report on Form 10-K for the year ended September 25, 1998). Results of Operations - Three months ended March 26, 1999 compared with - --------------------- three months ended March 27, 1998. The record volumes in the extremely active equity markets more than offset the Company's fall-off in investment banking activity and led to record revenues of $299.2 million for the quarter, up 12% from $267.5 million in the prior year. Margins declined from the prior year, however, largely due to the lack of the aforementioned investment banking revenues. Accordingly, net income of $21.9 million represents an 11% decline from the prior year's $24.7 million. Sequentially, the current quarter represented a substantial improvement over the preceding quarter as some of the anomalous factors in the December quarter were no longer present. Subsequent to quarter end the Company entered into an agreement to purchase Roney & Co., a Detroit-based retail brokerage firm with 320 Financial Advisors in 28 offices. See further discussion under Commitments and Contingencies. Securities commission revenues continued their steady increase, up 18% over the same quarter of the prior year. The number of Financial Advisors has increased 12% over the prior year, thus the balance of the increase reflects productivity improvement. The Company's transaction volume was at record levels with over one million trades processed in the quarter. Investment banking results are 44% below the same quarter of the prior year, directly related to the weakness in non-technology related small cap stocks. The Company managed 6 deals with an average size of $108 million in the quarter ended March 1999, versus 7 with an average size of $189 million in the quarter ended March 1998. More significantly, the Company participated in only 22 offerings during the quarter which were managed by other firms, compared to 32 in the prior year quarter. Assets under management exceeded $13 billion at the end of March 1999, a 19% increase over March 1998. The largest increases were in the Heritage Cash Trust money market fund and Investment Advisory Services accounts, the Company's program which offers the services of a variety of unaffiliated portfolio management firms. Assets in small cap objectives have declined due to both a decrease in market value and client liquidations. March 26, March 27, % Increase 1999 1998 (Decrease) Assets Under Management (000's): ----------- ----------- ---------- Eagle Asset Management, Inc. $ 5,310,000 $ 4,889,000 9% Heritage Family of Mutual Funds 4,535,000 3,711,000 22% Investment Advisory Services 2,515,000 1,425,000 76% Awad Asset Management 651,000 859,000 (24%) Carillon Asset Management 0 60,000 (100%) Total Financial Assets Under ----------- ----------- Management $13,011,000 $10,944,000 19% =========== =========== Net interest income of nearly $18 million exceeds both the same quarter prior year and the immediately preceding quarter, but has not yet reached the record level attained in the September 1998 quarter. Customer cash and margin debit balances increased during the quarter, but the Company used approximately $23 million of its free cash to repurchase stock. Further, the rate earned on free cash has declined as there were three 25 basis point reductions in short term rates during the December quarter. Financial service fees continue to increase with the growth in the number of accounts which generate administrative fees for the Company such as IRA accounts, trust accounts and Passport (wrap fee) accounts, the latter generating transaction processing fees. Employee compensation increased 14% over the same quarter in the prior year, the combined result of an 18% increase in commission expense, a 14% increase in administrative compensation and an 11% decline in incentive compensation. The increased commission expense is directly related to the increased securities commission revenue. Administrative expense reflects the overall growth of backoffice and support staff required for current activity levels, but was level with the immediately preceding quarter. Incentive compensation expense is generally related to departmental and firm-wide profitability. Both data communications and occupancy costs are at a level exceeding the prior year, reflecting the Company's growth. The expenses related to the completion and occupancy of the third headquarters building in the late spring of 1998 has significantly increased the Company's occupancy costs. An increase in business volume has given rise to increased postage, printing, supplies and telephone costs. This combined with the increased communication and information dissemination costs associated with growth have led to the increase in data communication expense. Business development expense includes over $1 million in one-time expenses such as replacement signage, business cards, stationary and marketing materials, related to the merger of the Company's two independent contractor broker-dealers into Raymond James Financial Services, Inc. Also included in business development expenses are cost associated with the firm's branding efforts, including television advertising and the stadium naming rights. Results of Operations - Six months ended March 26, 1999 compared with six - ----------------------- months ended March 27, 1998. The results from the six month periods reflect the same trend as those for the comparative quarterly results. Revenues for the six months ended March 26, 1999 were up 8% to $563,698,000, while net income declined 17% to $39,348,000, or $0.81 per share compared to $0.96 per share. (The underlying reasons for most of the variances to the prior year period are substantially the same as the comparative quarterly discussion above and the statements contained in such foregoing discussion also apply to the six month comparison. Therefore, this section is limited to the discussion of additional factors influencing the comparative six month results.) Year to date net trading profits include $3.6 million in profits for the Company's own investment account, predominately realized in the first quarter. Despite significant increases in client balances, net interest income is roughly flat with the prior year due to the combined effects of a dip in margin balances early in the year, spread compression during the first quarter of the current year, and a decline in short-term rates earned on free cash. Segment Information - ------------------- The company's reportable segments are: retail distribution, institutional distribution, investment banking, asset management and other. Segment data include charges allocating corporate overhead to each segment. Intersegment revenues and charges are eliminated between segments. The Company has not disclosed asset information by segment as the information is not produced internally. Information concerning operations in these segments of business is as follows: Three Months Ended Six Months Ended -------------------- -------------------- March 26, March 27, March 26, March 27, 1999 1998 1999 1998 Revenues: (000's) --------- --------- --------- --------- - --------- Retail distribution $205,070 $172,080 $378,852 $337,243 Institutional distribution 41,452 38,113 83,622 74,824 Investment banking 7,955 15,288 12,800 29,289 Asset management 23,508 19,983 44,900 37,935 Other 21,206 22,066 43,524 40,551 --------- -------- --------- -------- Total $299,191 $267,530 $563,698 $519,842 ========= ======== ========= ======== Pre-tax Income: (000's) - --------------- Retail distribution $ 24,910 $ 18,227 $ 39,266 $ 39,855 Institutional distribution 4,170 5,505 9,738 11,622 Investment banking 1,060 7,821 (86) 13,167 Asset management 5,411 4,728 9,977 9,330 Other (232) 4,253 4,761 3,447 --------- -------- --------- -------- Total $ 35,319 $ 40,534 $ 63,656 $ 77,421 ========= ======== ========= ======== Financial Condition - ------------------- The Company's total assets have increased 28% since fiscal year end, reaching a record $4.9 billion. The rise was due to increases in matched-book stock loan program balances, and increased customer margin loan and cash balances. Customer cash balances are reflected as a customer payable, and the corresponding assets are included in assets segregated pursuant to Federal Regulations. Customer margin loan balances are included in client receivables. Loans payable at March 26, 1999 includes $140 million related to short- term borrowings under existing lines of credit in order to accommodate customer settlement activity, and $60 million to finance customer borrowing in a Regulation G subsidiary, which provides loans collateralized by restricted or control shares of public companies. Liquidity and Capital Resources - ------------------------------- Net cash provided by operating activities for the six months was $86,745,000. The primary source of this increase was the aforementioned increased customer cash balances, net of increased margin loans, which does not give rise to cash available for use in normal operations due to regulatory segregation requirements. Investing and financing activities provided a net additional $161,995,000 over the last six months . The source of the additional cash was the short term borrowings from banks under existing credit lines. The primary uses were purchases of treasury stock, purchases of property and equipment and the payment of cash dividends. The Company has two committed lines of credit. The parent company has an unsecured $50 million line for general corporate purposes. In addition, a $60 million line was established to finance Raymond James Credit Corporation, a Regulation G subsidiary which provides loans collateralized by restricted or control shares of public companies. The latter line is fully utilized and is included in loans payable. In addition, Raymond James & Associates, Inc. has uncommitted lines of credit aggregating $360 million. The Company's broker-dealer subsidiaries are subject to requirements of the Securities and Exchange Commission relating to liquidity and capital standards (see Notes to Consolidated Financial Statements). Year 2000 - --------- The widespread use of computer programs that rely on two-digit date programs to perform computations and decision-making functions may cause computer systems to malfunction in the year 2000 and lead to significant business delays and disruptions in the U.S. and internationally. The Company has revised all critical information technology (IT) internal computer code that it has identified as requiring modification for Year 2000 compliance, and has begun full integration testing of the revised code; testing will continue during the third quarter of fiscal 1999. All of the Company's securities transactions are processed on software provided by Securities Industry Software (SIS), a subsidiary of Automatic Data Processing, Inc., and the Company is closely monitoring the progress of SIS in revising its software. Based on information received to date, the Company believes that SIS will complete revision and testing of its software on a timely basis. The Company is also monitoring information received from third-party vendors regarding their progress in modification of other software used by the Company, as well as the progress of other industry suppliers, in addressing this issue. With respect to non-IT systems, primarily those located at its headquarters campus and those provided by its telecommunications and satellite service providers, the Company has completed the inventory of all systems and has begun the process of confirming the compliance status of its vendors. Most of these vendors are major national or international companies which have been addressing the Year 2000 issue for some time. The Company expects to complete this process of third-party review by August of 1999. With the exception of those discussed below, all of the Company's subsidiaries are substantially dependent upon the Company's Year 2000 compliance program. Raymond James Bank, Raymond James Trust Company and Heritage Asset Management, Inc. have received revised computer software from the third-party vendors on whom they are dependent and have begun the testing process, which they anticipate will be completed by July of 1999. Eagle Asset Management, Inc. has installed a new portfolio management system which has been designed to be Year 2000 compliant and expects to complete system testing by July of 1999. The Company has begun the process of developing contingency plans and will continue this process during the balance of the year. The securities industry conducted a series of industry-wide tests for Year 2000 compliance during the spring of 1999; the Company participated in all tests and did not experience any material problems relating to its year 2000 code and data revisions. In general, representatives of the securities industry were satisfied that the tests confirmed substantial success in dealing with the year 2000 issue. The testing process did identify a number of minor communications problems, most of them unrelated to year 2000 issues; these problems were identified and successfully resolved during the course of the testing. The Company estimates that its costs for these efforts during this fiscal year will be approximately $2,500,000, and an additional $800,000 will be spent during fiscal 2000. Because many of the Company's basic operating systems are provided by third party vendors, as indicated above, the Company's costs for Year 2000 remediation have been substantially less than the costs incurred by companies which have developed and maintain all their own operating systems. The impact of this problem on the securities industry will be material, however, since virtually every aspect of the sale of securities and the processing of transactions will be affected. Due to the enormous task facing the securities industry, the interdependent nature of securities transactions, and reliance on third parties such as utilities, and telecommunications providers, the Company may be adversely affected by this problem in the Year 2000 depending on whether it and the entities with whom it does business address this issue successfully. Effects of Inflation - -------------------- The Company's assets are primarily liquid in nature and are not significantly affected by inflation. Management believes that the changes in replacement cost of property and equipment would not materially affect operating results. However, the rate of inflation affects the Company's expenses, including employee compensation, communications and occupancy, which may not be readily recoverable through charges for services provided by the Company. RAYMOND JAMES FINANCIAL, INC. ----------------------------- COMPUTATION OF EARNINGS PER SHARE --------------------------------- (in thousands, except per share amounts) Three Months Ended Six Months Ended ----------------------- ---------------------- March 26, March 27, March 26, March 27, 1999 1998 1999 1998 ---------- --------- --------- --------- Net income $21,869 $24,700 $39,348 $47,445 ======= ======= ======= ======= Weighted average common shares outstanding during the period (2) 47,697 48,158 47,908 47,953 Additional shares assuming exercise of stock options and warrants (1)(2) 795 1,357 897 1,280 ======= ======= ======= ======= Weighted average diluted common shares (2) 48,492 49,515 48,805 49,233 ======= ======= ======= ======= Net income per share-basic (2) $ .46 $ .51 $ .82 $ .99 ======= ======= ======= ======= Net income per share-diluted(2)$ .45 $ .50 $ .81 $ .96 ======= ======= ======= ======= (1) Represents the number of shares of common stock issuable on the exercise of dilutive employee stock options less the number of shares of common stock which could have been purchased with the proceeds from the exercise of such options. These purchases were assumed to have been made at the average market price of the common stock during the period, or that part of the period for which the option was outstanding. (2) Gives effect to the 3-for-2 stock split paid to shareholders on April 2, 1998. 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. RAYMOND JAMES FINANCIAL, INC. ----------------------------- (Registrant) Date: May 7, 1999 /s/ Thomas A. James ----------- ------------------------- Thomas A. James Chairman and Chief Executive Officer /s/ Jeffrey P. Julien ------------------------- Jeffrey P. Julien Vice President - Finance and Chief Financial Officer