HomeMy WebLinkAbout1996-06-12 - Agendas - Final r
FAYETTEVI LLE
THE CITY OF FAYETTEVILLE, ARKANSAS TRACI PAUL, CITY CLERK
TO : Policemen ' s Pension Board Members
FROM : Traci Paul , City Clerk/Treasurer Tl:�'
DATE : June 7 , 1996
SUBJECT : SPECIAL POLICE PENSION BOARD MEETING
There will be a Special Police Pension Board meeting on
Wednesday , June 12 , 1996 , at 2 : 30 p .m . , in room 326 of City Hall .
The Board will be discussing management options with Mike
Kirkland .
113 WEST MOUNTAIN 72701 501 575-0323
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lA2organ Keegan & 'Campan} .is one of the
'Sout}i'c
la jgesninsestmentiArms I'hrou:gh our 34toffice� ,`'
m 1:2 .state's, Morgan Keegan ser�,esan.dtrotdual
investorsIn-the ;South.er:n Un'imcl Srates ,And
'institutiona' rc],lents (throu,ghoutvheLS. iau.d .z'broad . t
We are 'ri em'b:ers :ofkhe \T:ew 16rk Stud&-Exchanige
and ,other !ma :or �exchan;ges. ,MorganKeegan X
Company subsidiary of..,10orga.n Keegan
'Financial ;serVicesh'oldingreom,pan� llte- donithe
New York Stock Exchancge: .�
i
i'Nlorg.an Keegan3has anade iits .mark wish researdh +,
icoverag:e of�companies based An dhe region. !Our
r:esearch ;recotrrtnendations linclude .For.tune :5;00
fir;nis, :but Ii'ts .ou'r specia'li;iat�ion 'in IS.ouehern j
�sto.cks4and ;b'ondsw,h�ich •;distin'96 h'estusfrom
ooit'er 'brukerage.hr.ms. Unlike th:e 6red, '"me too" IL
commentary on Ifhe big eon;glome;rates ,pub'lish.e.d
b} amanv !brokers, , lorgan .Ke:egan;'s ;research `focuses
on ;the undiscovered,, growing concerns strningico
;be tomorroH°s blue chipstocks.
Morgan Keegan ision'erofitbe 'few re;g.`iond, 'fLr,ms f
Hlith ,a department �delicrate.d to resear.dhing ifixed
i,n(,ome •prod•uct's. +l'fitlearnsiinterest �l]`o
kee.p'vgg our cl.ients •,u.pu) date -,on ,cur ent ;i'nt.erest
rates, .$)VAp :strategies an'd new ,an'd ;esisi'i•ng bond
opportunities .
We sprov.I'd e :ou r cl'i e.nts kw,,i't h eth'e it ates t :n e•ws ron
;the eeonomy (Clhrough (our consu'lt;ing ;eeonomist,
Dr. Dona'ld ;Rata;jczak . 'Often yuoted 'i•n such
res pected +pub'li'cation's ;as .The IWrIl;Sh;ee,t
Journal rand +Business Week, D,r: !Ratajc.za•k 'is
noted for ;his ac,c.u.racviin ;forecastingithe
Consumer Price Index and the 'Producer
Price lntl:ex, .two kev :econonr is
ndicatorsLwatched closely by
anarketstrat�e.grsts. ���
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I
STORY
Products and services available at Morgan Keegan
�ude: '
• stocks, bonds, mutual funds
• money market funds
II • Access cash management account
• insuranceproducts, limited partnerships,
managed futures
• financial planning, retirement planning
• trust and estate services
• money management and asset
consulting services
• private placement of debt and securities
• underwriting corporate and public issues
• arranging mergers and acquisitions
• valuation services
• raising venture capital
All accounts at Morgan Keegan benefit from up to
$2 , 500,000 in protection provided through
Securities Investor Protection Corporation (SIPQ
and Aetna Casualty R Surety Company. Morgan
Keegan provides an additional $22 , 500,000 in
Aetna coverage for its Access Accounts.
�tni our headquarters in the Morgan Keegan
er in downtown Memphis, Morgan Keegan
communicates constantly with our brokers on the
floor of the New York and American stock
exchanges and with market makers in stocks and
bonds across the country. Swift and accurate
execution of orders is a high priority, and careful
attention is given to order entry.
With more than 1 ,300 employees and over $ 140
million in equity capital, Morgan Keegan is an
established leader in the financial services industry
in the South. Our goal is to be recognized as the
premier investment firm in the region—a goal we
i hope to reach by maintaining our tradition of
quality service for each of our clients.
' n Keegan Offices
ALABAMA LOUISIANA (Continue
Birmingham, Alabama New ,Orleans, Louisiana
'(205) 87.9-001-6 ( 504) .539 1556
Decatur, Alabama Shreveport, Louisiana
(205) 350-1925 (-318) 434-2000
Fairhope, Alabama 'MASSACHUSETTS
,(334) 928-0555 Boston, Massachusetts
(617) :54.-9515
Huntsville, Alabama
.(205) 539-6939 ,.'MISSISSIPPI
Mobile, Alabama (Iackson, Mississippi
;(601) '969-0717
(33-4) 316-3100
NEW YORK
Montgomery, .AlabamaNew York, New York
(334) 262-0100 (212) 319=0433
;ARKANSAS NORTH CAROLINA
Little Rock, Arkansas DUT11am, North Carolina
(501 ):666-1566 '(91y) 41y-2500
FLORIDA Wilmington. North Carolina
Fr. Lauderdale, Florida ;(910) 256-2406
(305) -:728-2800
'TENNESSEE
Pensacola, Florida Jackson, Tennessee
(904) 434 -2207 '(.901) '668-1010
t
GEORGIA Knox-villc, Tennessee
Athens, Georgia (423 ) '521.6'653
.('06) 613-9915
Memphis, 7ennes see
Atlanta. Georgia Morgan Keegan Tower
(404) 240-6700 (901) 524-4100
KENTUCKY .'Mcniphis,'Tennessee
Bowling ;Green, Kentucky Crescent Center
1502) 781=0430 '(9.01) '166-.7-700
Lexington, Kentucky Nashville, Tennessee
8606) 253-9769 !(615)25'5-0600
Louisville, Kentucky "TEXAS
(502) 589-7979 Austin,'Texas
LOUISIANA (512) 329-6700
Baton 'Rouge, Louisiana Dallas, Texas
(504) :344-9020 ,(214) 365-5500
Lafayette, Louisiana Houston,'Texas
(3.18) 232-0644 ,(713) 8-10-3600
Morgan
;Keegan
'Morgan & 'Company, inc.
Members •NewYorkStock Exchange, SIRC
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That's Why We Like It In The South
The American South, birthplace of the blues, •
land of literary giants, cradle of ambrosia cui-
sine, is home to Morgan Keegan, Inc. From its
headquarters in Memphis, Tennessee, and in its
34 offices throughout the region (and in New
York and Boston), Morgan Keegan's 1,33$
employees enjoy the cordiality characteristic of
Southern living, and their customers benefit
from the emerging investment opportunities that
have sprung up like kudzu along the Southern
landscape — investments that are Morgan Keegan's
specialty. For dynamic companies such as
Wal-Mart, Federal Express, and Home Depot are
also rooted in the South, and Morgan Keegan's
investment bankers and brokers bring current
and comprehensive knowledge of these and other
emerging blue-chip companies to investors. That's
why at the top of the list of things we like about ',
the South, above even fresh-hatred peach pie, the
scent of magnolia blossoms, and the familiar
comfort of a front porch rocker, are the top
quality business opportunities that are lighting
up the Southern sky.
Financial Highlights
Morgan Keegan, Inc. and Suheidiaries
Year ended f my 31, 1995
Operating Results
Revenues $228,072
Net Income $ 23,848
Return on Average Fquity 18%
Pre-Tax Profit Margins 17%
Per Share Data'
Income $ 1.17
Dividends $ .22
I3twdr Value $ 6.91
Financial Position
Total Assets $ 2
Staakholders Fquity $139,457
Common Shares Outstanding' 20,169
Pictured on the cover is 'Adiun.df.,r. \Lr fn.n.,,. .m.�k ,rs\ n, ,kl.nl wa.. , I...,,f..r-,h.
Morgan Mor Keegan's office in UwL6plnin &TWn1.... IwL..., .e
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9 g , d.�.h.r.t... n,r4 ,p1nn. L.... w43, ,..J , tInw.f..,a.,.. nmk min
Athens, Georgia, built in 1841 .
231
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pl 34
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25
182 23
18
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91 92 93 94 95 91 92 93 94 95 91 92 93 94 95 91 92 93 94 95
REVENUES NET INCOME BOOKVALIIE RETURNON
ill 11 , II1, ,,I' l AVERAGE EQUITY
TABLE OF CONTENTS
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . .2
Business Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
lanagement's Discussion and Analysis . . . . . . 12
Wnsolidated Financial Reports . . . . . . . . . . . . . 14
Corporate Information . . . . . . . . . . . . . . . . . . . . . .25
(In thou.and., except per share amounts)
1994 1993 1992 1991 1990 1989 1988 1987 1986
$231 ,720 $209,195 $182,664 $116,517 $ 89,008 $ 79,431 $ 73,556 $ 86,395 $ 69,810
$ 31 ,841 $ 30,702 $ 25,791 $ 7,704 $ 25 $ 2,372 $ 2,505 $ 6,699 $ 5,474
2746 34% 40% 16% 0% 5% 5% 15% 17%
22% 24% 23% 10% (0.5)96 4% 5% 15% 14%
$ 1.46 $ 1.45 S 1.25 $ .38 S .01 $ . to $ .10 $ .29 S .26
$ .19 $ .15 $ .09 $ .05 S .05 $ .05 $ .05 S .05 S .03
$ 6. 10 S 4.97 $ 3.67 $ 250 S 2.14 $ 2. 18 $ 2.11 $ 2. 10 $ 1.60
W9 $527,084 $434, $304,445 $236,2X)1 $397,007 $236,209 $195, 128 5180,318
$ 36448 5 $106,335 $ 76,690 $ 50,837 $ 4.1,888 $ 48,432 $ 49,325 $ 55,999 S 33,889
20,556 21 ,408 20,893 20,336 20,959 22,219 23,374 26,697 21,177
1
" E R O 5 H A R E H 0 l D E R 5
Fiscal 1995 was a strong, if not record, year for Morgan Keegan. In fiscal 1995, revenues declined
slightly more than one percent, to 8228,072 ,000 from $2. 31, 70,000 in 1994. Net income decreased
some 25 percent, Lo 823 ,848,000, or x1,17 per share, from 831.,841.,000, or 81.46 per share. in 1994 .
Still , it was a very good year. Equity capital im teased 11 percent , return on equity was 18 percent .
and pre-tax margins were 17 percent, rates ranking among the best returns in the securities industry.
Total assets grew by 55 percent. Additionally, hfirm the grew significantly with several strategic acqui-
sitinns . In fiscal 1995, Morgan Keegan acquired Athletic Resource Managemenl , Inc. (ARM ) , a
Memphis-based sports agency representing professional basketball, football, and baseball players such
as Scottie Pippen , Horace Grant and Reggie albite. Paled one of the 12 top sports agencies in
America, ARM fits in well with Morgan Keegan ' s plan to build its fee- based money management
business . Also advancing tbal effort was the purchase of the former Trust Company of Chattanooga
from the National Bank of Commerce. from that acquisition grew the newly-formed Morgan Trust
Company, a full-service trust company offering portfolio management and asset custody services , as
well as personal and charitable trust administration. morgan Keegan last year also formed an alliance
with AmSouth Bank of Alabama to provide investment advice and transaction services to AmSouth
correspondent banks. All of these initiatives provide the firm wilh additional
means for capturing assets, which we believe is key to advancing in the invest-
ment industry today.
Prior to the close of fiscal 1995 , your board of directors declared a
three-far-two stock split and raised the quarterly dividend by nearly 13 per-
cent. Since 1991, Morgan Keegan's dividend bas increased 350 percent.
In fiscal 1995, Morgan Keegan also enjoyed some significant recog-
nition from its peers. Equities magazine ranked :Morgan Keegan as the
third fastest-growing firm listed on the New York Stock 17xehange, t
based on average earnings per share growth over the past five years.
The firm's growth rate of 136 percent made it one of only six firma
reporting triple-digit growtb . 1 was honored to be named by
Financial Q'orld magazine as one of the top chief executive officers
2
in the securities industry, determined by a poll of fellow CEOs and 21
industry analysts. This was really a recognition of the firms pattern of w
outstanding performance in recent years. In a recent report by Lipper
IN,
Analytical Securities Corporation, Morgan Keegan was listed among
I
05
the top 10 securities firms on the basis of pre-tax operating margin,
return on average equity, and pre-tax return on average assets. Perhaps I
91 92 93 94 95
most important for our fellow shareholders, from December of 1990 to DIVIDENDS PER SHARE
August 1995, the shares of Morgan Keegan common stock have appreciated in value 759 percent,
more than triple the group average for investment firms. These honors and accomplishments are
directly attributable to the extraordinary efforts of the men and women of Morgan Keegan. It is their
ingenuity, energy, and enthusiasm that keep the firm growing and advancing toward our goal.
I have often said our goal at Morgan Keegan is to he the best investment firm in the best region of
• the best country in the world. I am partial to the South, no doubt, because I was born here. But from
purely an objective business standpoint, I cant imagine a better climate for an investment firm than
that found in our home region.
The South's low tax rates, favorable weather, and bountiful natural resources foster business
growth. Its renowned Southern hospitality creates a congenial atmosphere in which corporate execu-
tives and employees thrive. Our region, for a multitude of reasons, is a wonderful place to live
and work and grow, and we clearly see evidence of that at Morgan Keegan and at the companies we
follow and recommend.
In this annual report well tell you why we think our region is a tangible advantage to our company.
We believe our firm, our employees, and our customers benefit from our being located in a region
where businesses can grow and prosper, and where people who work hard can realize their dreams.
That's why
yII like it in the South.
• Allen B. Morgan, Jr.
Chairman
3
LP F I y A E C I I E N i G R O U P
It was a record year for the Private Client Group, which coordinates the marketing,
the management, and the delivery of all products and services to individual investors.
The groups revenues grew by five percent from 1994, Nearly half of the branch
offices in the Private Client Group hit new records for revenues, and more than one-
third of the Group s branch offices set records in net income as well. In July, the final
month of the firm 's fiscal year, the branch offices set a cumulative record for monthly
revenues. As a result of all this activity, commissions for so-called "retail" business
s
accounted for over 62 percent of Morgan Keegan's total commissions in fiscal 1995,
the first time in the firm's history that figure has exceeded the 60 percent mark.
Five year compound growth in commissions from individual investors served by
the Private Client Group is over 17 percent. more than 33 percent better than the
average growth at comparable regional firms,
Assets under management have grown as well. Since 1991 , assets in cash and
margin accounts at Morgan Keegan have nearly tripled. Assets under management by
the firms Southern Capital Advisors division of Morgan Asset Management, Inc.,
advanced in fiscal 1995 by more than $100 million, a 56 percent increase year over
year. Total private client assets at the end of calendar 1994 drew by 16 percent over
the previous year. and assets per "retail " investment broker show compound growth of
more than 10 percent in the past four years.
A branch office was opened in Athens, Georgia in early fiscal '95, and Morgan
Keegan's growth in Texas continued apace. The number of brokers in the firm 's
offices in Austin, Dallas , and Houston grew by 61 percent last year. Total number of
brokers in the Private Client Group firmwide drew by 29 percent.
1995 was a year in which Morgan Keegan placed a physical footprint in Little
Rock, Mobile, and Birmingham. Signature office buildings were built or begun in
each of those cities for the branch offices there, in an effort to accommodate Morgan
""' Keegan's continuing growth, and to establisb a more visible presence in those markets.
w i
i Despite the almost non-stop enlargement and expansion of Morgan Keegan a hrancb
locations, as a percent of gross sales, the Group'a adminislra-
m
t live costs and occupancy expenses remain lower than many
As a result, Morgan Keegan 's branch
of its competitors.
i offices are measurably more productive than those of most .
91 92 93 94 95 comparable regional firms.
R17A1L COMMISSIONS
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• F I E D I N C O M E C A P I T A L M A R K E T S G R O U P
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Ines
995 was not a stellar year for the bond market, but Morgan Keegan's Fixed Income
Capital Markets Group managed to make progress, and moreover, make strategic addi- Rav
tions which position the Group for future growth. e's
Institutional revenues for the Group declined by 14 percent, reflecting an industry- I
wide slump in fixed income revenues estimated at 25 percent. Fixed income investment 91 92 93 94 95
banking revenues were down 11 percent for the year, however Mortgage Finance TOTALEMPLOYEES
doubled their revenues in fiscal 1995 for a new firm record. Public Finance did their
usual superb job, ranking Morgan Keegan as the leading underwriter of long-term
municipal bonds in the South Central United States, according to the Securities Data
ACCORDING TO ATLAS VAN LLL ,
Corporation. The region includes Alabama, Arkansas, Louisiana, Mississippi, and THE SOUTHEAST IS SHAPING UP TO
Tennessee. This marks the third straight year Morgan Keegan has led the South BE AMERICA'S ECONOMIC PROMISED
Central region in long-term underwritings. Morgan Keegan served as senior or co- LAND IF RECENT MOVING PATTERNS
manager for 200 issues totalling $2.3 billion in aggregate principal. Morgan Keegan ARE INDICATIVE. OF THE 20
•
Cumberland , Inc. in 1995 ranked first amort regional conal So CALLED -MAGNET STATES,"subsidiary Securities Company, g
IDENTIFIED BY ATLAS AS HAVING
firms for the fifth straight year, acting as advisor for Tennessee bond issuers, based on
A MINIMUM OF 55 RF RCFNT OF
the number of offerings advised. THEIR ATLAS INTERSTATE RELOCA-
For fixed income trading and syndicate, It was a turnaround year, with trading TIONS MOVING INTO THE STATE,
income of more than $2,630,000, versus $75,000 the previous year. To further SIX WERE IN MORGAN KEEGAN'S
strengthen the fixed income trading effort, two senior traders were brought in from TERRITORY ONE FAVORABLE
RESULT OF THAT POPULATION
major Wall Street firms, one to head the corporate trading desk, and one to lead the
INFLUX FOR MORGAN KEEGAN IS
mortgage-hacked securities trading effort. THE INFRASTRUCTURE IMPROVE
As much as anything, 1995 was a year of acquisition and realignment, as the Fixed MENT IT REQUIRES, WHICH WILL
Income Capital Markets Group looked toward the future. Two senior investment MEAN NEW ISSUANCE OF DEBT BY
bankers and one municipal trader were hired in Birmingham. The Group opened full MUNICIPALITIES AND STATES,ANAREA
IN WHICH MORGAN KEEGAN'S
service investment banking operations in Nashville and Atlanta, adding senior bankers
FIXED INCOME BANKERS EXCEL.
and staff in both locations. A senior sales professional was brought in to establish a
fixed income sales office in east Memphis, and three senior analysts were added to the
fixed income research staff in Memphis. The acquisitions of J. Lee Peeler & Company in
North Carolina, and certain assets of Commonwealth Investment Group, Inc. in
Trader John Compton (r)
Kentucky were completed, adding significantly to the Groups
and investment broker sales, banking, and trading capabilities throughout the
• Bob Berry look over the
test Fixed income research Southeast. The long-term strategy of the Fixed Income
I eport at the firm's new
Little Rock office. Capital Markets Group is to continue to upgrade its profes-
sional staff, increase its revenues and expand its coverage
domestically and abroad.
7
F O l 1 7 v C A P 1 7 A I M A R k k 7 - R O U P
The Equily Capital Markets \irnup put in another solid performance during fiscal
1995. Tim investment bankers turned in a second cunsecutive record Year, serving as
manager or co-manager of 23 stock offerings. totalling over X1.3 billion . of these
offerings, eight were initial public offerings, and for remaining 15 were secondary
offerings, 11 from established corporals finance clients. Theme numbers were good
` enough to cause The Wall Street ]ournal to name Morgan Keegan the number one
investment banking firm in the South for equity offerings at the end of calendar 1994.
,a " Morgan Keegan led the pack, outdistancing the next-hest firm by more than 370 per-
. . it • .I
cent in total capital raised for clients, and by 75 percent in number of offerings.
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Mergers and Acquisitions reported record revenues for the fifth straight year.
, , . . rAI .,
,I . 1 ., 16I .. 16 PI 1 Morgan Keegan's M&A professionals assisted clients in 21 transactions. including sale
P -Allo. ,I - . . 11 iL of business engagements, acquisition advisories, and fairness opinions. The average
I ' ' "'" ''" ' "" " "' ' `" size of completed transactions was $59 million.
lu• , P, 01 • < • i Ai . A . It was also a record year for commissions generated in stocks followed by
Morgan Kee Qan'S equity research analysts. CommisFions in Morgan Keegan-followed
DIU, I r1 IL11 , . '14 ' lu P• 1 .
VA 'I 1 I , . 1 - .q It 1P stocks hit `lo57 million, a 280 percent increase in that total since 1991. The reason is
A ,. r) � I .r All •wl I . ISI L„n•.1 clear. Morgan Keegan's restart It recommendations have outperformed the general mar-
,Ir. .lvnn - 1 ^ - i r.l l, kel indexes in each of the last seven years. In calendar 1994, an exlremcly difficult
I • Ivi 1"111 ', � % I I - „v 1 1 year for the small and medium capitalization stocks in which Morgan Keegan special-
izes. Morgan Keegan's stock recommendations, excluding dividends, advanced by 3.8
1 I PI. '.'t At 4, n• , ... ...1 I .1 1
F r 'l- 1111n 1 , 11. A "II 11 . r r Id percent, compared to a 1.5 percent decline in the Slandard N Pours 500 index, and a 3.2
13 bL yr"1 '41 , ) W. -1. 1 API percent drop in the Nasdaq over-the-counter stock index.
; 1N Al , I• qJ AIII. %'4 P11 . -, 1. Statistics show that on a quarterly basis, Morgan Keegan's stock recommendations
114JI14IRT InAI ,ri •rlo r,l .v , have outperformed both the Nasdaq and S&P market indexes in 21 of the 28 quarters
• , lP Vr1P, .ArJ PI A-4 i?„
measured from March 1988 4n)ugli December of 1994. obviously, every ?1K stock
•nn I I'�nw I, P• .no Irrv • • I • P.
recommended has not increased in value. but Morgan Keegan 's analysis have demon-
straled ibeir a6ility to react quickly to the chancing fundamentals and economic condi-
tions that affect stock prices . f=urther details of equity
ln,ov)tilivl16rc•Ir”
F •+et.r
research results are available on request. Bc4ir I andRch. BI+n' r Ir )rlln•
On the sales side of the group, Morgan Keegan's instilu. ' rvlrwng nvrlo4+e• • Id11
tional sales offices in both New York and Boston sell records R 'll;.'I V Hi:;111
COMMISSIONS BY PROD l TO .
- F ,.6 ii 74for revenues in fiscal 1995, besting their previous records by
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df five percent and 17 percent respectively.
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Morgan Keegan, Inc. and Subsicianes. _
ears enaed Juts 3l 1995 1994 ;993
Revenues
Commieemr.s
I.isO srcurifi F $ 21,246 ? 22.748 20457
liver-lhr-onm{rr 12,624 '.0,07h lois
llptiors 2,631 LOW 1,927
lthrr 9,661 1 L723 1 L196
-- 46,162 46.537 43.:39
Principal transactions
iorp.,ratesecuntics 36,724 33.5+4. 34,404
Minim pal securities 16,404 14,134 11,432
U.S. gn\ emment 'ectinties 33,(482 Q:,S46 51,297
67,110 F9,421 103,133
investment hanleinie
Corp,rate evcunhcs 25.009
Nluuic..pal securitips 1 ,926 4.059 3,94!1
1 'noem-riling mars meet and oilier fct> 18.259 18973 5:471
- - 45,194 ! 44832 29,278
Interest
I n forest an margi r balances 17,519 1Ca24 X047
Ir L est on semrifieF ovmed 20,261 14.070 7
37,780 14.894
other 11 ,826 1:.034
228,072 23L720 209,195
Expenses
Compensation 120.795 125,204 10c1,74F
Wkerao and clearance 3'724 ''874
Communi,,atior.e 15.962 13,852 1 .1.,012
Trawl and promotional 5.855 5.-A 21 4,241
0,ccupan.y and equ pment a,stF 9,716 5320 8,143
lnteMFf 23,600 14.393 79185
Taxes, .•ther than ira,me taxes 6,298 4'977 4,199
ciher Operating exp•necs 3,774 3.741 4,649
189.724 180.079 159,493
Income Mosel iron iamme taxes 38,348 51,641 49,702
Income tax expense (credit) 14,500 19.800 19,000
Ne♦ imnme ? 23,848 .'^ 31,841 ? 3Q702
Per Share Datas -
Nei incrme $ 1 .17 ? L46 L45
6:0 ? 4.97
n{M1F: \'d1LLe
other Data iat veir end)
'Foal assets $882,292 $57L1109 $52',,184
SErlx}nnldere np,ily
? 139,457 $125,31)4 ?706,335
Common shares rutsandirg' 20,169 :0.:56 2L+115
'.tdinsnJ 6„ e n',r.v-)'w,r :w k Ari i n Aro! 1a':'. a tnnr rar tti.e. :to k .rin ,n .9rr1rmlvr 1091. •
a tbnm„ -iv. Ftaek Fret ,n +4ar4 l00.:. and c i6,e.-ieNu. •t., k srll .a lune JW3. and a n tv
1"hc s'." Frdn .n sne it W5.
10
•
o„ d,,,,,.,nd,, c,. pt w. .ham. ,m„unbi
1992 1991 1990 1989 1988 1987 1986
$ 18,378 $ 13J43 $ 14,444 $ 13,675 $ 12,901 $ 10,829 $ 7,073
9,041 5,347 1,745 1,848 2,088 2,313 1,440
2,089 2443 2,180 2,339 2,509 2,564 2,030
71632 41824 4,434 4,192 3,943 6,714 6,001
37,140 25,448 22,803 22,054 21,441 22,420 16,544
2$161 16,554 11,808 14,369 15,421 17,723 14,430
12,037 10,730 71445 5,993 6,401 4,550 7,428
48,588 30,279 18,478 14,707 14,829 19,927 17,591
88,786 57,563 37,731 35,069 36,651 42,200 39,449
16,730 4,836 2,947 3,461 2,225 8,152 3,923
3,960 376 159 213 19 394 314
9,862 5,436 3,926 4,057 3,302 5,267 3,835
30,552 10,648 7,032 7,731 5,546 13,813 8,072
5,941 4,867 5,521 5,698 5,406 4,753 3,497
12,709 12,490 10,769 6,129 3,407 2,307 1,681
18,650 17,357 16,290 11,827 8,813 7,060 5,178
71536 5,501 5,152 2,750 IJ05 902 567
182,664 116,517 89,008 79,431 73,556 86,395 69,810
94,348 61,265 48,243 43,953 42,242 50,119 40,846
4,571 3,751 3,749 2,966 2,900 2,044 1,897
9,791 8,764 8,436 7,996 7,366 6,744 5,801
3,699 2,982 2,660 11990 2,649 3,040 2,009
7,557 8J94 7,789 6,852 5,755 4,645 3,848
12,562 12,953 12,591 7,931 4,620 3,926 3,113
31823 3,116 2,682 21326 2,179 1,934 1,476
4,122 3,288 3,308 2,330 1,989 1,342 1,046
140J73 104,313 89,458 76,344 69,700 73,796 60,036
42J91 12,204 (450) 3,087 3,856 12,599 9,774
16,400 4,500 (475) 715 1,351 5,900 4,300
$ 25,791 $ 7,704 $ 25 $ 2,372 $ 2,505 $ 6,699 $ 5,474
$ 125 $ .38 $ .01 S .10 $ .10 $ .29 5 .26
$ 3.67 $ 2.50 $ 214 S 218 $ 2.11 S 2.10 $ 1.60
$434,448 $304,445 $236,991 S397,007 $236,209 $ 195,128 $ 180,318
$ 76,690 $ 50,837 $ 44,888 $ 48,432 $ 49,325 $ 55,999 $ 33,889
20,893 20,336 20,959 22,219 23,374 26,697 21,177
•
I1
General Business Envirc nlnenl . Ah rgall --the 50.20j.kW incmave In ma•rnt :xp•n=, which . -v 1)1, 117g dueonly pail , f the vtar. the c•,mpam
hereon Ivt.ls.ar;xelt, w til tsuhrIalanrs, 'd: ' Com- dot :o m
the tailor inlvre,t lite: fo- die tear a• uv.: a= . lit li In tb It s4 Vie n purlasr rn Isra:n perch a: in
pane -Inp•rshsafel rerrievteginnalhrle•aaI'u:ne>r argerirk vAnxane .urminl^ crewt -noition, comlcn- :hare: f,a ail "dreg L' . alae of
th rough ill pnnlpxl sI bsidia•,. Morvan hregaulucOn- ration exp•nrc Jecko I :♦,410000 or 4 ' which .,,r- 54, 149.LVO. Tin. Ie lowed hr.al 3094 mpunhave.
pant, Itc The c:arpanl i= imohet in Iht onmabrn , -eeprnded my lilt dco'mr :n pmtl .ton rc,rneev. itks .If . 111111RU v ha ms N at ued a irebel , $,01ij1. a•at
U tttrwntng. di=Irkfi ll . l-a' a gmldhrok, lora' d fixrvi ruled anet: rose rtighth due a. the Canpam = ,:cm-nd- Iraxrr 'i09.h11 =hare= it e xe• rur.i and under the
income and eqw� re,urbtr and dill, pmN ides m,erl in n; toexpanlo t wldl tncop•ni:tC ,-f Ib, nee Texa: of- pri iou-v anr01111, d vt,tk bip:dl pn Cram.I
Met advisory .ervi, es. IN h to it c l onpum' regi tarty frev and the l:,nmnnw.•atlh art Pcoltr a,giasibons it Bffe.U• c um• U, ] 00:4 it e fo.A .if dlrctL,n .Vnla ere
parb,panic, inth. trad:neaf acme dvrn ali, c +cunhtro lilt h.•nln. lx and North Carol.na. re-ril adt rn•-I ,r-iu , s l.x k rpld l he nu rpIle :; Ilit .L . k vpd
I L- .0 v 4'm er= til - trade ng is I of a major r,rb on of Ibe Opt rating txper,r= irnearee � i o in :i=, :I 1904 Near le al,aw ill =h.rehold,•-- :, nartl, Ipat r the
I�cmpanye }u: nt ... Thelon pain is not mo.vet Aitb fr ,n :154,443,000 G, S . F1111�9,Ihhl Am
ppxrnetr
ly Conti ink r outg on
:al dung n r tto pia sea al y=mv
b :lIvielu +rlm4, ihndttnvr. - vninLincan ACT 5° , r h: incmas,• was ,o paatirnwhrhincreasd anuli n. reaa Ihr :ashd % idld.
idler that limas•nerl feels real not lit arnrpriab• for fr,n .` IiIU )42+.(111114, S1 'S xllS,llllll lir 14"+ ant .•,r- Told ac:et; of It,, l orpal% w re S31I_nS3.000
the -upturn s rba491, appnacl. mspmd. :oalb the tn.rcavv npr,uL. Kon •eN Inner for nichtI at In x 31. 11147: I11m, 1494. wn:h Ill, eco most
%ru fa.unaffrli the C it tpan ': riven ars incl td lit the Year, = golf],alln,lmdkr-r ..,ming it 'VL a over roo,idled for
.hanecs in xv,n ,nit cnndtiol = i ,nttr/- v n]Inent the Edonn, pCr sedan fill fi=.al ILIUS Aere II , wlLl ecu al.,-tperp, of < I U(1 ?Uu,lloo and set anter
leu•Iand %olabllh . flnletstrater, letalit n. pdt ,at war :.It) p•r =}aerlt== 'ban rhernyardearnirg' per -ham 11kcred ,dS42,1471ILI. Rtpu-.hardaereene:t ne,dlor
omnis, and ,,,mptGnn. At tinkle faster: are h•ennd (he of fiscal 191, 4. Th; increasing it r=• raU f ,I moa of An , xcl.,s6e Ix•oefd rf ,us'amers owed, r ni c
c;mpan% : conba. and xxra In expanse= arm nladn J'v du sear cea4entxl in,- mark,L live.ting i n h,wor.- ,nrii ntrearc] dut L, the „lit sp, td lit m.rcave lit palahll =
fixed tarnngstal si&ificar� dy tan Eleni year 6• vow n - cion mxtnuc and =ab,untalk I-"r noetbnn'. yanking a :ua.,me•r
Cardless of rrxnav•ment'r rrl/ort= u, enhance ren r e and huriness. m=u'tng in Ile carnngr des bn, ole Coni L.Iahil ben mis deed 5101 I4L(1,12 front do pre% ,,,.I
.orttvl tar L. plan ., :oi truexpan=.on of it, lea tel office and to Near . L'"I of $445.h44 AV 1In naj,mh 4Iht ill-
In,not, ng co^,pt bbol Iron commerna rarIs and gno in the =outheaitvnt : e'a•d Stater. c-care war Ui.3� : 111111 In p,Nallr: 'a• curL,morr dw
thnfl it vbh boi v I, arb, ipaW as ter c nv]'mhon= Ive Liquidil) and Capita{ Resources. ?"., :t ill ;lie a, ar ,,red= ng curtrm n haze ant. add b wat see, outs
gin 4, olFer ire, , -Imi nanl rg ant f nal is =ere ,e- i onrany = asrels are laghh I quid, :onsi=hni naln x of l,ptntvl In m:4mer= t m.,ry r„ txt menthe pal for tract=
wb ill %one in e, n.sh ;It to'ft red In rd.v ober firn=. cavil. ora:rlty msnLilN mint Ails int , tar 1. ry arsets ander ;le r :ce rrA i with rt III ;,rvednrn,
]-he coirpan% anhcipaler In,n ailng n4u at or. in he re- are Finan-eJ In elm c„rpanee tgai? , apial. =n. o-tlnn Iarh need in financing aux riber war 54: 02v 1100n
canArs ntuat-y, ria Inns: til it .onirujJ ..mnphanirim hanklnan.. a,mm:rrcal papeq repmrhacagrremrnls ant hscal . UU^, a= tllx \nmlunr ua ] :hurl-arm Ill nes
he more tiffi�ull alit erms'h Al person L the compars other pal ahlrs. Aar st•r In Ile amnLnl of wcanht•y ,w nal III knan,a it vent,n ar d olhe• op••a],mr.
unable 4l, prolyl tie talent x rlaret,s trot nae ht Y” by lite lonpamv and , u,00nnt and l,roltr m,rlta+Ie= cash u.ed in n,erinn ax5x ter rcna:nol ab-.II Iht
acted or the elfe, ' on tm ecrz pmtr'r Intone" affect d rectlythe amnuni of til; k",al . f na no ng -c_ rant I I lW and 1 * 4. Prlmar, e,pc td tura tc: 1005
Tyecornryr.x - Iong-t••tn ,lan istocnntintetr Craw q"urcnitns. w, ntheu,nlin edde• x.orientol Ile ccrmunications
tiling) walkmlt •aat ando;ber service= in :he sA,tbcarl- 'he con pony e nroltl
r r dealt r = = thatN sruhlal 4• and cat Iahn rent nt A kJ begat In 199? and In and
,rnI 'nl•d Sabi )r r ns tl a las: yea-. L k'onvnr b as requimmvnb n{ 'die ?ecu-ihu and l.x,hanp c„Tri=_ evpvn=,•r
ft„vw•da'tlit, mAlnaaet. North c:rol•na and .etas' sinnann the Sew A•c:krwlrlix:hangw -riatingmlqud L1 vi linflation. ] ar.onpany = awb :rcpdma-
ReaJrf of 01 enol ioncTc• Conlpanywasfa dwd, Ito anucapa stand"Lls. Itltarh4rlca,ll oprrah•Iw.•ll nMnwan consisting of call aru•b ,ryctrbhle Into
ir.0
Iecril ttl:n•rl •a1•: and ul.ertan marlet C. nuh "v" in lose=s , f lilt nor mum requ r:merle At lull 31. . a=y, •:cu-iKes ow net] and re,-enalles. llecax.+ of heir
for mndc! fts.al l W� Teal revenecl of Fllii3O 2,000 ]spe ]he in lcap:al of -ht Cnml,any v broker dealer Aub- Iql ld h. d one asset, am v-t =iintlid illy e({o,lot he :n
were S3p4P,0110 ;rev than f:real ; 0444 when Filet wvr° sidiarv . x:.rt•dru lilt , r In ntmum regain rent hY Katon. \Ian agvmrnlhtl ;vrr >hal -,q•a:em, nto,sho{ ftu-
ord S ill'. "woo I-I lid NN oLwnie= were mon tha-I kl l .hh'. A-VI whirb Is v111:110l Iesv than thin tinm, ryugn ort and haselle a imp-ncenenls vi!i not
buoyed by a so-.,rg narkeHrr noel of fiscal 1494 al-ice Slik 1.010,000 at }I: cud of tar', endo c„ntinLed I xpan- :uarnafv afferl it, rations 'Irwxxrl, the rob of inf ation
=urpaermI the flrta. IUU3 , prttl. uv hI[lI if pilin Is net Lxp.ted 4• hate a : Cnihcarl ad. eut nary-, a-f„-k tbeeompanl r mumbler. ruck ar 11,111 foremr ol.re
52044.1415 th10 h% 1522,525.000' on liquidly cr car al. Full axailabb• from npr-anon= mmpnsab„n and c.mmu neat v I. Ali may ant be
]m eslmcul hanking lin or uee I fiscal 19++5 "f are III or of ,redo sl,ndd nn,N de, suffVuent rouse: n, maiih re,,xa •ahlc n bre pnr d Arc.e, 4, lite INN tilt
545394.000 wI in $l ?h 31A. 000 less than 1094 al, - mrel ,apial noir of Lyr b.nv..ablt fu'm'e. l'onpnn.
•nae
t co1555.F' ..000. 2hi, der,ireisprimanbahnb-
ut•d t, his, Neoral v market , ntd bon for equity =.+ a- The tibio blow =Lmrar let ter Learns in e111 mat r , ata=. atr 4 it ter.ars and enp•nw. i.,r 'ht pxrl three I3, lears.
ntit e anal c,mtinl .•d wealnees n the taxablt dlrol sen in-
tit = markr: d.rnnghw1995Ink ,+trnenr banking rex - — _• •• - . ..
rnues for hv.al 1004 bad in.•ear;d :_4.^^4.Ot'.' or Rexenua 1993t4 1444 I W4 .• I W 3
44P cue L, ouaantinec4lb icy 'd,tbanker {sr, at- ' . . • • -
denriling =b,ckr d rear eraL i merbn, n: into-] wIn,h conniveinns S 1. 21
SI
PrIrauvator- ,'31
iretpa 13'1 I ill : 3,ill ❑1':`i
alll,wedarbaltgperlormance •orallifhr.al1tx14. In,evbnenllaling 1: :;31;, t 'PI Ul '.o
Retb fill a. 10'•15 and lista, NU aw cops in r:renu, InWrcrl 11 BRn Syn, e + ?11 2s) t,,
I
rom principal In xaranns. 3 a fill 144^ and 13't, for xnrktr 11 Nitle 111 ' I I M4 12t,e
] W4, All ,leatl.e n hoot trans %at did, b- It der xdl- 21 d ,^,4R' I yo, I I ; for
am: and trade tg ,ties Inters sl i to ,Inc I limit
S] 2188il lfit ^''10 0,x-in liscal loi* after a :5."_0. 1-xpenses:
I
5 ' i +lel li' P,!` , 14
or 200 , increas, rt fi=:al ' US4 l he to nwases m=alaxl 7,.n ail„laoalo and clear,ntr 115: 11) 1 ' 4 ]11 12? •
=rmn grauua.h ii rea= ng Iatt n bqh year= at Anti as C1,MLns:amen '- 110 15 , -,gill ]Sec
nigher CcILMtrh,nowyngs. 1
i Iter . dere, ,veli ted I I n T"%of a nd pronouti,ma: 134
or S1,211 ,.011 . 511, S2u111111rerp.l ill `ram a dr- Ok,lupe dry and et,aiprrrll alb 1,j,kt 1 0 1^
�ea't in :villain fns-Ian •d uacamt whin war adxerstb Inieresl
affect,h yN the pea marktt. Taker. I 4h,r than mmne oxer L12n ?T'
ner o,wrat ng , +p•I 33 I
Ill ;Uig 1 ,1T, .
p^ab14ns •irosn
irra=vd :Uh45.11l111 "r xl
r,
fu,a1 . 995oterl •.-a] IOU: -1 ht idrp .vl ,otnrodn wan ; '
12
\ , it I IIu , 11 ,11I 111 ,Inc iaI I n l ori n.Ilion ll I ,t nr � ilcr� )
Morgan Keegan, Inc. and Subsidiaries (In thousands, except per share aruounm)
Summary of Quarterly Results
Frst Semnd Third Fnurt6
Quarter Quardr Quarter Quarter
Fiscal 1995
Revenues $56,206 $55,267 $50,147 $66,452
Income before income taxes 10,971 9,537 6,960 10,880
Net income 6,771 5,937 4,360 080
Net income per share 0.33 0.29 0.22 0.33
Fiscal 1994
Revenues $57,664 $60,125 $56,294 $57,637
Income before income taxes 13,732 14,310 1057 12,942
Net income 8432 8,810 6,657 7,942
Net income per share 0.39 0.40 0.30 0.37
Fiscal 1993 - - - --
Revenues $47,047 $49,397 $55312 $57,439
Income before income taxes 11,207 11,270 13,235 13,990
Net income 6,808 7,170 8,085 8,639
Net income per share 0.33 0.34 0.38 0.40
Fiscal 1992 --
Revenues $37,923 $48,094 $50,837 $45,810
Income before income taxes 7,697 11,126 12,665 10,703
Net income 41772 6,701 7315 6,603
Net income per share 0.24 0.33 0.37 0.31
• Fiscal 1991
Revenues $21,830 $27,598 $33,573 $33,516
Income (loss) before income taxes (18) 1,960 5,055 5,207
Setincome 32 1,310 3J80 3J82
Set income per share 0.01 0.07 0.15 015
Statistical Comparison of Production
1995 1994 1993 1992 1991
Total production $160,335,704 $168,350,637 $154,251,186 $136,760,330 $86,440,943
Percentage change in production -4.8% +91% +12.8% +58.3% X28.7%
Number of tickets 558967 480,564 439,006 376,128 273,288
(Average commissions per ticket $ 287 $ 350 $ 351 $ 363 $ 316
Number of investment brokers 551 492 438 409 396
Number of investment brokers
(over 1 yr.) 438 436 403 379 326
Total number of employees 1,335 1,218 1,088 969 878
Average commissions per
investment broker (over 1 yr.) $ 334,555 $ 346,274 $ 359,817 $ 327,096 $ 233,328
Number of new accounts opened 29559 25,861 21,451 25,322 17,789
•
13
c J .3 C: ,I a'ltn'1 III Of IIlk 11111a'
Morgan Keegan, loci and Suheldiaries (;n tb msar J: excapt Ehare amnunU: •
Year ended Jnly 31 1995 1994 1993
12evenues
Commisa:nne I� 46,162 .''+ 4(3,637 43,739
Principal trarsactions 87,110 89,422 103J33
lnvestmerl banking 45,194 56.832 29,.'.78
Interest 37,780 24,894 IQ.,
N ler 11 ,826 15,0315 13,3;1
228,072 23L120 209J 95
xpensee
Campensahcn 120,795 126.2115 109.748
flax brokerage and A arance 3,724 3,8/5 6,296
Cummunica6nns 15962 1 3,862 : ',1112
Travel and promotional 5,855 6„' 21 4,241
.�.ccn:pan" and equipn not costs 9,716 8,320 8J63
Interest 23,600 14.393 1386
'Taxes, other than inmme taxes 6,298 4,97 2 4,199
Other operating expenses 3,774 ;,741 4.669
189,724 180107L) 159.493
Income Before Income Taxes 38,348 x%041 49.702
l ncome Tax Expense 14.500 19,S1A1 19.000
Net Income $ 23,848 5 31,641 $ 30 702
Net l ncome Per Share 1 ,17 :.4h 146
Average shares outstanding 20,390.767 :?:786.861 "L217209
See acannpanying notes.
l : 1 11 1 it , Ir, l ^Lticnts' nl • 1f � I , rt � rn1�1�. r• l lI ' lily •
:Morgan Keegan. Inr_ and S uhsidiaries lir thouem,de, r.,rrt share am.,unal
.ommor Ccmmcn Additional Stwr-
St.r6 ct„-k Paid-In nrta,ned holder
rhara Amoent Capital Famines Egwh
Balance at August 1 . 1992 9286 962 $ 6,804 $16377 $ 55,70() C 7f-,.690
Stitch split affected in the form of a stock dividend 4,643080 2.901 12.901 )
Issuance of restricted stall 208,8;4 Al : 131) '
Issuance of Common Stxk 183;''49 i16 1339 1454
Dindende pain ($J5 pee share) 12,03;1 (2,937;
Retirement of Common Stock ;49,6321 (31 ) (365) 13961
Amortization of restricted sti,rk 822 822
Net income 30,702 301/02
Balance at July 31, 199 3 14,2.71993 8.920 : 3,941 83,474 106,335
1ssuanee of restricted stmt 219,073 137 1137)
Issuance Of Common Stsxh 553:171 346 6,078 h 424
Dividends paid ($39 per share) 14,037) (4,C37)
Retirement of Common Stixk fL-;40326) 1838; 115,940) (1 h,778)
Amortization of restricted sbeck L580 1580
Net income 3 ,841 31,841
Balance at July 31, 1994 13.."'04.1111 $565 51522 111.27S 125.366
Stock split effected in the form of a stock Ividend (3,862,0176 4,283 I8i ) (4.202:
Issuance of re•tncted stock 298,072 1St (186)
Issuance of Common Slide 344,924 216 20: 7 3,21 ;
Dividends paid (5.22 per share) (4 4401 :4.44(1) •
Retirement .f Common Smak (1030,309) (645) 18,3601 13441 :9,349)
:A,morSzation A restricted stock :.8011 LBIP
Net income 23,848 13,848
Balance at We 31, 1995 2Q168,703 $17.,605 $ 712 �12h,14k
See arcampany mg nntYs.
14
Cunsulidated 'State incnL- ol Pinanciad Contrition
Morgan Keegan, Inc. and Subsidiaries ([n ihoumnia)
July 31 1995 1994
Assets
Cash $ 22,287 $ 12,854
Securities segregated for regulatory purposes, at market 226,000 35,701
Deposits with clearing organizations and others 7,655 2.591
Receivable from brokers and dealers and clearing organizations 25,046 29,945
Rereivahles from customers 2600707 236,764
Securities purchased under agreements to resell 91 ,861 62,811
Securities mvned, at market 209915 167,568
Memberships in exchanges, at cost (market value-
$2,367,000 at July 31, 1995; $2,310,000 at July 31, 1994) 719 678
Furniture, equipment and leasehold improvements,
(less allowances for depreciation and amortization
$12,159,000 at July 31, 1995; $12,296,000 at July 31, 1994) 13,037 9,353
Other assets 25,065 12,744
$882,292 $57L009
Liabilities andStmkholders Equity
Short-term borrowings $127,649 $ 16,500
Commercial paper 7,468 10,593
Payable to hrokers and dealers and clearing organizations 5,387 13,581
Payable 4> customers 438518 241,141
• Customer drafts payable 13,774 10,950
Securities sold under agreements to repurchase 35,360 61,849
Securities sold, not yet purchased, at market 68,430 35,985
Other liabilities 46,249 55,045
742,835 445,644
Stockholders equity
Common Stack, par value $.625 per share:
authorized 100,000,000 shares;
20168,703 shares issued and outstanding
at July 31, 1995; 13,704,011 at July 31, 1994 12,605 8,565
Additional paid-in capital 712 $`5'22
Retained earnings 126,140 11 L278
139,457 125,365
$882,292 $57L009
. cc accompanying notes.
•
15
Xior�an Ml can. :nu, and Subeidianca Ilr d .,umand-)
Tear encly 1.ly 3t 1995 14+44 I _ IQQ3
Casts Flows From Geral in¢ Actix•it ie.
Not income X23.848 $ 31 .841 $311„l;2
Adjestirrmu to rewmrile not income t, rash prmided by luny: ir.) ope raline alt rlticr:
Apinuoahom and amortization 3,501 ;331 2.543
I)elemvi ina.mr taxes ( 1 .900) 10581 All
Amortzarrn of ret tri, L-d ?SSI. 1 .811♦ ] SRII $?2
21,249 38 .. 84 331(1(1
(IncmamIclo reaseinoperalingacscls:
Fen k able from borders and dr.ale" and r:earinc oieanizations 4,899 3 312
Recckablr from tsiomers 123.943) WI ; 1 129,NXY
Securitil • segreCaA-dfarreeul"in purpwe, at ma.64 1190,299) 3.1(it ?9,lxX1i
Dep cl6 ni lh arca r6rc otzanizatiions and olbers 155,0(14) I : 271 1.704
Secunlir, ovnod at market 442,347) ??.1 .4 15+.11431
tither a.eL, ( 10.462) :4.2401 19771
(I ecr e) incnasc noperalinQliahililim
Payable t , hrcla,ra ar d doalers and cicarinc orcanbatioly ($, 194) 13 QI Q: 114.2071
Pal ahlrc customers 197.377 h3934 60135.
C us'tlru r craft= payable 2.824 ;,077 1 00
Securitrs sola n.rtyel pur:hased. atrra•iiel 32.445 :U.9}} I :h ;041
tither liabilities (21.196) 11.924 8, 108
151 ,760) 1=,384 Il L98i1
Cash provided by (vs;A in)operalin4activitics 124, 311f 613(16 ?1..:4
Cash Flows From Fi nancinoAot ivil im
Commercial pale: 13, 125) 641 4 5)1
11. L ..�I
Issuance 4 l'nmmon SLxh 2,233 (1424 1.454 •
Retiiraml nt of Common herb 19,349) 6,i ti) 13!81'5
Divi lcnar paid 14,440) 14,113.. 1 12937;
Short-lean Lrncinc� 111 ,149) IFL61181 SQ6
Securifiu purehacec order aenrmenl ti retell (29,050) 2^,8?7 (2,.4"Y21
Sccuntic•s sold, under a4momerl to mpurchase (26,489) (16. )?51 15.908
(aehprovidedhylusedin) finamingaclivilies 40,929 ?8.658) 113.370)
Cash Flows From InvMinQ Ad ivitim —
Payments for furniture, equipmerl and lraeeh.A improvements (7, 185) 14 515; 14 300)
ncreaae (decrease) in cash 9,433 12,005; _ 3,6:10
(ash al beginning of period 12,854 14.859 11.3`9
Cash A end of period 522287 $12.854 $1 :.850
Ir,i=e tax paemcnts trialed $14,hE1,(1110 in I1W. $17,7696100 in :094 and $19.300,Ik10 in :993. interest payments
totaled $23,448,000 in : M9 , $14.419,1X10 1n 1994 and $: 1,161..000 in 1993
Sec aavmpanyny rams.
16
Nolc� lo Lon4od dalvd I -inan( ial NIalcmcnls
Morgan Keegan, Inc., and Subsidiaries
July 31, 1995
NOTE 1—SIGNIFICANTACCOI'NTING POLICIES
Basis of Presentation: The consolidated financial state- Repurchase Agreements) and securities sold under agree-
ments include the accounts of Morgan Keegan, Inc. and its ments to repurchase (Repurchase Agreements) arc carried
subsidiaries (collectively referred to as the Company). All at the amounts at which the securities will ho suhsequendv
significant intercompany balances and transactions have resold or reacquired as specified in the respective agr c-
lseen eliminated in consolidation. The Company is in one ments. Government securities segregated in a special
principal line of business, that of providing investment reserve hank account for the benefit of customers under rule
services. 15c3-3 of the Securities and Exchange Commission relate
Financial Assets and Liabilities: Substantially all of to a Reverse Repurchase Agreement of $226,000,000
the Company's financial assets and liabilities are carried and $35,701,000 at July 31, 1995 and 1994, respectively.
at market value or at amounts which because of the short- Income Taxes: The parent and its subsidiaries file a con-
term nature of the financial instruments, approximate cur- solidated income tax return. Deferred income taxes reflect
rent fair value. the net tax effects of temporary differences between the
Securities Transactions: Securities transactions and re- carrying amounts of assets and liabilities for financial
lated commission revenue and expense am recorded on a reporting purposes and the amounts used for income tax
settlement date basis, generally the third business day purposes,
following the transaction date, which is not materially Net Income Per Share: Net income per share is com-
different from a trade date basis. puled based on the weighted average number of shares
Securities: Securities owned are carried at market value, outstanding, including shares Issuable under stork options,
and unrealized gains and losses are reflected in revenues. when dilutive. All earnings per share data included in the
Investment Bankino: Management fees on investment consolidated financial statements and notes tlmreto have
banking transactions and selling concessions are recorded been adjusted tie give effect to all stock splits,
oil settlement date, which is not materially different from Amounts with Customers: Accounts with customers
a trade date basis. Underwriting fees am generally recorded include amounts arising from uncompleted transactions
on the date the underwriting syndicate is closed. and margin balances. Securities which are owned by
Furniture, Equipment and Leasehold Improve- customers but held as collateral for receivables from
mends: Furniture,equipment and leasehold improvements customers are not included in the consolidated financial
are carried at cost Depreciation and amortization are pro- statements.
vided on a straight-line basis over the estimated useful Restricted Stock: Amortization of restricted stick is
lives of the assets. provided on the straight-line basis over the life of the
Repurekase and Reverse Repurchase Agreements: restriction, which is four or five years.
I
ecurities purchased under agreements tir resell (Reverse
v'OTE 2—SHORT-TERM BORROWINGS July 31 1995 1994
Short-tens borrowings represent hank loans payable Rim,-owned securities $ 170,322 $55, 173
.m demand used tiv, finance clearance of securities and to Customer-owned securities 12,581 0
Larry customers' margin accounts and firm positions. $ 182,903 $55, 173
These notes bear interest at the broker loan rate, which was _
6.5% at July 31, 1995.The notes were collateralized by se- The Company also issues its awn commercial paper to in-
curities with approximate market values as follows, in vestors at fluctuating interest rates (5.50%, at July 31,
thousands;
1995). The paper matures over various terms not to
exceed nine months.
t
•
17
\, . , I ( „ 1 . 31 J .1t , J l 11 ' u IJ -1, r . Ilnntinued)
Morgan Keepan, Inc., and :u6si manes
NOTE 3—CEO RITIE-F
Jnvitie= owned for trading purposes omeisf of the follow- apprnximat Far market .ague of $4.;14,000 at 6nth ;vly
ing. in Ihouwr.ds 3I. 1Q06 ane 1944, as determined by manacemenl ,d the
lulu ;; 995 994 I omp any. 4muntiee sold. not yet pnmhased fm tiadmg
purpose:. oment of the follow-.ng, in thousand•.
I .S. pwernmemobagations $94,814 $104210
State and men;ipal obligations 72,389 43440 July 31 1995 ', 094
Corpnair bends 32,058 9 '_03 1' S govemmrnlohligatnns :+58.057 5113.84'_
stocks 10,627 10.499 `tate and rn, cipal obligation, 2,276 249
l;ankere ampances 27 it, \nrxnatr horde 1 ,758 1.02p
$209,915 $167,46F `t,;ks 6.339 :0.841:
Banken' acceptances 0 1C
Sumi and mur is pal othoafione inc,ude an irsu. with a par
A ala, o: $12,7Lk).000 which has been written down t, an 568,43(1 --"3 944
NOTE 4—LEASE
7'helompany leasesoffice epave,famiture and equipment Aggregate future annual minimum renal armmitments,
under mnacancellahle leases expiring thmogh 2000.wnlh excluding escalafinm. for die rears ending la y 31 am as
options fir, renew the leasee for up to five years.Toal renal follows, u, tl (m.ands:
expense for each of the years ended )uh 31 was as follows loo() j e 422
in thousands: 1997 ^,343
199' 1998 4,840
1994 h,729 1990 4321
1999 6,383 2000 3,446
Thersafter 8,3:4
ff 31.44 •
NOT F 5—COk1MI'j'!•iFNTb AND i:OMINCENl IE: ceedmgs and claims m.idenal to ib securitier has.cess.
Al 6.1v 31, 1994. the Company was obligated under com- While the ultimate resolution of pending litigatnn aril
menial letters of credit of appmx,maaly $12,$00,000 claims ranrnt be predicted with rerainfy, bases upon the
drawn in favorof certain clearing organizatons which were inromration currently known. management i. rf the opin-
cnilaaral12ed by customer-owned securities of $yJ 4 ;,231 inni that it has mrntonous defenses to ibese c.aims and has
and fir:-owned securities of $6,500,000. These n611pa- instr .ard its w9mseto ngorouslc defend such lawsuits
tions normally settle through the clearance o: the relates and r,aims, and that liabihh, it am, resr.lting from all .Iti-
securities transachors with the respertive organizatrous, gation wil. have ro material aeaerre eect nn the
The Cempany is narcec in and subject m earioce pec- l ompam• s results A operations or financial a-ndition.
1
•
tZ
Voles to Con solid atcd Fina tic ial Statements (Continued)
Morgan Keegan, Inc., and Subsidiaries
NOTE 6-INCOME TAX EXPENSE (CREDIT)
Significant components of the provision (credit) for income taxes are as follows at July 31, in thousands:
Liability Method Deferred Method
1995 1994 1993
Federal:
Current $ 14,000 $17,458 $ 16,750
Deferred (1,900) (958) (900)
12400 16,500 15,850
State 2,400 3,300 3,150
$ 14,500 $19,800 $19,000
The principal reasons for the difference between the effective rate and the federal statutory income tax rate for the years
ended July 31 are as follows, in thousands:
Liability Method Deferred Method
1995 1994 1993
Amount Percent Amount Percent .amount Percent
Federal Statutory rate applied
to pretax earnings $ 13,422 35.0% $ 18,074 35.0% $ 17,396 35.0%
State and local taxes, less federal
income tax benefit L560 4.0 2,145 4.2 2,048 41
Non-taxable interest, less non-
deductible Interest (404) (10) (410) (0.8) (393) (0.8)
Other - net (78) (.2) (9) (01) (51) (0.1)
• $ 14,500 378% $ 19,800 38.3% $19,000 38.2%
The components of the deferred tax provision (credit) for the years ended July 31 arc as follows, in thousands:
1995 1994 1993
Depreciation and other building related items $ (675) $ (324) $ 162
Deferred Compensation (73) (27) (20)
Restricted Stack (311) (75) (288)
Non-deductible reserves (356) (281) (279)
Trade date prolit (178) 24 (25)
Insurance and benefits (341) (377) (408)
Other - net 34 102 (42)
$(1,900) $ (958) $(900)
Significant components of the Company's deferred tax assets and liabilities as of July 31 are as follows, in thousands:
1995 1994
Deferred tax assets:
Deferred compensation and restricted shock $ L234 $ 850
Non-deductible reserves 1,695 L339
Insurance and benefits 1,541 1,199
Trade date profit 226 48
Other 20 24
4,716 3,460
Deferred tax liabilities:
Depreciation and other building related items 1,241 1,916
Other 225 194
1,466 2,110
Net deferred tax assets $ 3,250 $ 1,350
19
(C nhnuedl
Morgan Ku van :ne., and `uhsidi arieA
Tne R... ofDirectes bas res,-rxxl h,: 12 609) shares for n{ bra-itThere ware appmvmatq L800,000remaininC
issuance underl{:elompanv's Reshrrted StickanC In- s�aame s'ai�alrle {o he Cranbv{ al �ul) 3:, 1005
.entre Soxk llptun Plans .,E 1083 and 1UA5. 1 'nder pre- The :lcianl of Dnvctvrs bas aa:{.cnzeo 450 000 ."arer
visions of the R, =b td Stack anu :fie Innen Ger , a.k Lr be Granted to nor.-rm pinrre dire,m in lna fom o1 in-
1 on Plans. lxnetG mae bo Cralat\l baler offimr. and err- cenGrc sta:kophrns As A lute $. P>95. 1484}0 on
pin) ees in eit{:eq or a aombinatnn af, rc irdrr •txk or- lion= Acre outstandine at a , airrap prier of . i.11l.
dons or nrelnetvd sbxb awarde Incerr her eLwL nptnns are Emplovee stock ontion acli. ity s summanzee as
erarle,l at the lai- market slue of dic stxk at the hme 1•1110ws
Shares 11nce Acereeaty I_xvrogaVe
,Outstanding at AIipust :, ]992 91,075 5 276 8 '15,338
F icercised 21.450 304 8b 4: 1
la
uttn,linC at lu:e 31, 1993 h8.625 21.5 IA1,91(1 —
6-ant-d 1 9140'• 8 35 2n2,Illt1 1014_1000
I1\PrC1Altl 16.8? F ' 15 3n., Z3
OatstancinG at Jule ii. 1994 e3 1F'. 4.41 407,3::
iiranteil F87511 1995-'001
E,e- nPd I11,I 15 i 55 ''S.o r 3
I; ePiW M133 fl., 4 115,651
aluhtandiu a: lulu ;1. 1996 : 11,649 a 1) 8 3 , e'] "14
The Compam has approximately 1 3h3,0tA) sharer of restrict+n et,ck included in common sLaL uislanuinc which
was issued at the far. market value at :he ,lab „{ Grant-
,de- at, Emplova Aick Purchase Ilan, ,ZF60•000 Ju MF tiara' been rese T, A bi itlowempinvoes i, purr base en -r-
pam shares at a 151b dv' ount not La excvtJ 22F,0(10 snares to all smpkCyeas 1n ane rear after fiscal : 995. it
naUOl72clean•swereissuavlunnerthepimi,243,hi^ wen issaedin 19U3. and. 1488� wrn i uedlnl'>94. 3 '1 .i49 •
Acreissued in : 995, baring 1.448,914 =hares available for future Crani, at Iu11 31, 199E
NOIE 8 RUVROL\A; i A\Il REVERSE Rl---PVV BASE A -RE:L-MENTr
Thel,-mpany enhaoint., sales of secnrites anderaCrec -epi rnha=e acreemente are mat,had wish a -eaerse
menu. oa reparchaw , with die obliotnn n• repamhaae The rspit rebase aCrvi men:
se'unGe= sold n•fleated as a liab:lih in the mnso,iu asu Repur ttav aereemeri in-ormaton as of ;1111 31A?0S
statement of financial „mdibon. The majorih of the r- sumnarize4 a• follow: in tboasands
Assets Sulu R,qu-caase bahilih
Canvinc Market Intm=1
Amount Value \mount Rale _
I )emr nd
Morteape-hacker certfica4_ '4132 ? 2128 Ei ' - - - F.45'}.
I 'p t. 30, uavA
>L rtcao-ha;k,.l ar<ficat. $ v.2t:,2 E y'n» ? 9aoF 5 Rtr r _ t, ;0
I ' S 'rcasan =erundcs 4 F1'7 +,Fob },8113 1 35' : - Rh5 '„
S 13,.114
Ml ix 911 da, •:
Morr¢aCc-backed cerlihea'rs :0.490 ; 14505 IF.7UU 2.80" . _ 3r:5' r
;5,88h X35.980 ci5,3n11
Rapwalaase aCrecmenl tif,:rm,don ae ,a{ Julr 311994 is summarized as follows. in thousands
Asee to Sole -Rerurrnase Liability
Car-ving Market Interut
Amount Value amount Rai:
i 'p to 30 uays: •
?1n1 gage-barknl certificates :13..`71 ; 13 h ?', 5 ; 3,: F 4 500r
1 '.S Treasary aocLnneE 48 69; 46.9:7 »6,60 t hl' r - 4.111'
Eh, 2711 $1'.,544 SA1.84o
20
NS'ulc> 10CO H Jid.t l ed I �iHaHcia1 SlatemeHL (Continued)
Morgan Keegan, Inc., and Subsidiaries
The Company also enters into purchases of securities un- ing in the Company's name. Should the market value of
der agreements to resell (reverse repurchase agreements). the underlying securities decrease below the amount re-
The amounts advanced under these agreements represent corded, the counterparty is required 4o place an equivalent
short-term loans and are reflected as a receivable in the amount of additional securities in safekeeping in the name
consolidated statement of financial condition. Securities of the Company.
purchased under agreements to resell are held in safekeep-
NOTE9- EMPLOYEE BENEFIT PLAYS
The Company makes discretionary contributions to its Total provisions for expanses under all plans for each of
401K defined contribution plan and its profit sharing plan the years ended July 31, 1995, 1994 and 1993 totaled
covering substantially all employees. The Company also $974,000, $916,000 and X17,000, respectively
has a defined retirement plan covering certain executives.
NOTE 10 -REGULATORY REQUIREMENTS
The Company's broker/dealer subsidiary, Morgan Keegan may prohibit a member firm from expanding its business
& Company, Inc,is subject to the Securities and Exchange and declaring cash dividends if its net capital is less than
Commissions (SEC) uniform net capital rule. The 5% of aggregate debit balances.
subsidiary broker/dealer company has elected ho operate At July 31, 1995, the subsidiary had net capital of
under the alternate method of the rule, which prohibits a $87,185,586 whicb was 32% of its aggregate debit bal-
hrokeddealer from engaging in any securities transactions ances and $81,657,792 in excess of the 2% net capital
when its net capital is less than 2% of its aggregate debit requirement AtJuly 31,1994, the subsidiary bad netcapi-
balances, as defined, arising from customer transactions. tal of$89,849,110 which was 36% of its aggregate debit
The SEC may also require a member to reduce its busi- balances and $84,811,408 in excess of the 2% netcapiLal
nese and restrict withdrawal of subordinated capital if its requirement
net capital is less than 4% of aggregate debit balances, and
• NOTE 11- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Company's activi- considered necessary, the Company requires a deposit
ties involve the execution, settlement and financing of of additional collateral, or a reduction of securities posi-
various securities transactions. These activities may expose tions.
the Company to risk in the event the customer is unable In the normal course of business, the Company enters
L) fulfill its contractual obligations. The Company main- into underwriting, and forward and future commitments.
tains cash and margin accounts for its customers located At July 31, 1995, the contract amount of future contracts
throughout the United States but primarily in the to both purchase and sell U.S. government securities was
Southeast. approximately $7 million each. AtJuly 31,1994,the am-
The Company, as part of its normal brokerage activi- tract amount of future contracts to both purchase and sell
fies, assumes short positions on securifies. The establish- U.S. govemmentsecurities was approximately $20 million
ment of short positions exposes the Company to off-bal- and $11 million, respectively. The Company typically
ance sheet risk in the event prices change, as the settles its position by entering into equal but opposite con-
Company may he obligated In ewer such positions at a loss. tracts and,as such, the contract amounts do not necessar-
The Company manages its exposure to these instruments ily represent future cash requiremenL Transactions relat-
by entering into offsetting or other positions in a variety ing to such commitments were subs quendy settled and
Of financial instruments. had no material effect on financial position. While the
As a securities hrokerldealey a substantial portion of the Company regularly participates in the trading of some de-
Company's transactions are collaterahzed.The Company's rivative securities for its customers, this trading is not a
exposure to credit risk associated with nonperformance in significant portion of the Companv s business.
fulfilling contractual obligations pursuant to securities
transactions can be directly impacted by volatile trading
markets which may impair the customers or contra party's
ability to satisfy their obligations to the Company. Where
is
21
N4 ,1 ( - to Con>Sol IlI .11ed I i 11 .1114 iaI Cla: enl. r lS (C..nlmoecl
Keegan.eegan. Inc. and Suisrdranes
•
NOTE L?-LI ARTERll' RL'S11TEOF 0PE.RATIC\S Il 'ti.Al T1;7-L']ll
(In Lhousands, except per scare amount;
Ca. rter Ended Octnher 31 )�anuary 31 .lpril 30 Ldp 31
1995:
Revenues $5h 200 .. SS,Ihe $50047 $hb 452
Expenses 46,235 r45,i 30 41187 66 6i2
Iocnme brlor. .rmme taxes X.971 4,637 b,9M1 111,880
Net incnmr ti TA 5,917 4,36() h,i BO
N.I imome per sham 11 33 0?9 0 22 11 33
111\ Idends per :pare 0.05 0,05 005 0.11
St4ufx prize• range
I1ign 4 8.75 10.67 13.13
Rab i.E1 RF0 10d2
1994:
Rexenues $57,h64 :61:.1 '5 $56,294 :67.631
Expenses 41,932 45,815 4;,63: 44,645
h n'me lwfom lneoma ares 13.7 32 14,3111 10.66; 12 942
Not urarme 8.432 8.8111 6bS7 7.942
Not tncwme pr snare (1,39 l'. 40 (1, 3(1 11.3,
Dividends pr sham 0.04 006 0.05 006
Sbvx price range:
Ii;gi 109 2S e63 8 75
Low. 808 7.83 R R
COWI S SIWK PER: RMANCE i;RAPII 1
The folsewing grapi onmpams The Companv s a.mula- Analllical Brokerage S 4eF Pore Index ( Lipper Re-
bA v "I ehamlrolcer rt turn on i1: l n-rmor S bwk far a gional 1: over [he same grind lassuming the imesvnent
frcc Tear period IAu.W et 1. 1990 Li gulp 31. 1996) v-,Ila of $ 100 in each on August 1, 19417. ane lie reinve=tmenl
die :umulahvc b.tl return of the Standard N Pmr • 500 of all b—ilmdsl. Tnc Lippr R timnal is c.impnsed of 15
Sbx. Index and tic Regiora, Sub-Index of the Lipper puhlicn•-held reginna securities firms
xlore.a N..y... ♦ I: sw• R..b.•aal �— SNP 509
ar
salxl
sial
Final
Ssal
49.11
go
S31x1
>za7 40
$11x1
WI
14911 19V1 149? 1993 1994 199-5
Fiscal near Fnded Iul ), 31 ,
22
Deport of Independent Auditors
Board of Directors
Morgan Keegan, Inc.
We have audited the accompanying consolidated statements of financial condition of Morgan Keegan, Inc. and
subsidiaries as of July 31, 1995 and 1994, and the related consolidated statements of income, stockholders equity,
and cash flows for each of the three years in the period ended July 31, 1995. These linancial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements teased on our audits.
We conducted our audita in accordance with generally accepted auditing standards. These standards require that
we plan and perform an audit to obtain reasonable assurance ahout whether the financial statements are free of ma-
terial misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presenta9on. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all material respects, the consoli-
dated financial position of Morgan Keegan, Inc. and subsidiaries at July 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in the period ended July 31, 1995 in con-
formity with generally accepted accounting principles. - -1 fl�07
WtMemphis. Tennessee
September 19, 1995
23