-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DirDRzzv908f7jB1AnMtER8iP8U34UGMY6cM484N2/nRl2Onx+/NDE7CdW2q3+TN pTAS+PKdnuSacNt0Dc2lOA== 0000806085-96-000148.txt : 19960927 0000806085-96-000148.hdr.sgml : 19960927 ACCESSION NUMBER: 0000806085-96-000148 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960926 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960926 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEHMAN BROTHERS HOLDINGS INC CENTRAL INDEX KEY: 0000806085 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 133216325 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09466 FILM NUMBER: 96634871 BUSINESS ADDRESS: STREET 1: AMERICAN EXPRESS TWR STREET 2: 3 WORLD FINANCIAL CNTR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2125267000 MAIL ADDRESS: STREET 1: AMERICAN EXPRESS TOWER 15TH FL STREET 2: 2 WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN HUTTON HOLDINGS INC DATE OF NAME CHANGE: 19901017 8-K 1 LEHMAN BROTHERS HOLDINGS 8-K 1996 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): September 25, 1996 LEHMAN BROTHERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 1-9466 13-3216325 (Commission File Number) (IRS Employer Identification No.) 3 World Financial Center New York, New York 10285 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (212) 526-7000 Item 5. Other Events Second Quarter Earnings On September 25, 1996, Lehman Brothers Holdings Inc. (the "Registrant") issued a press release with respect to its third quarter 1996 earnings (the "Earnings Release"). Copy of the Earnings Release follows. Item 7. Financial Statements and Exhibits (c) Exhibits The following Exhibits are filed as part of this Report. 99.1 Press Release Relating to Third Quarter 1996 Earnings 99.2 Consolidated Statement of Operations (Three Months Ended August 31, 1996) (Preliminary and Unaudited) 99.3 Consolidated Statement of Operations (Nine Months ended August 31, 1996) (Preliminary and Unaudited) 99.4 Selected Statistical Information The Exhibit Index to this Report is incorporated herein by reference. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. LEHMAN BROTHERS HOLDINGS INC. By: /s/ Charles B. Hintz Charles B. Hintz Chief Financial Officer (Principal Financial Officer) Date: Sept 26, 1996 EXHIBIT INDEX Exhibit No. Exhibit Exhibit 99.1 Press Release Relating to Third Quarter 1996 Earnings Exhibit 99.2 Consolidated Statement of Operations (Three Months Ended August 31, 1996) (Preliminary and Unaudited) Exhibit 99.3 Consolidated Statement of Operations (Nine Months Ended August 31, 1996) (Preliminary and Unaudited) Exhibit 99.4 Selected Statistical Information EXHIBIT 99.1 LEHMAN BROTHERS News Release --------------------------- For Immediate Release MEDIA CONTACT: William J. Ahearn (212) 526-4379 INVESTOR CONTACT: Shaun Butler (212) 526-8381 LEHMAN BROTHERS REPORTS THIRD QUARTER EARNINGS OF $77 MILLION, UP 15 PERCENT PER SHARE NEW YORK, September 25, 1996 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today reported net income of $77 million, or $0.60 per common share, for the third quarter ended August 31, 1996. Net income increased by 8 percent over the third quarter of 1995, with net income per share increasing by 15 percent from the year-ago quarter. Results were lower than in the 1996 second quarter, in which net income was $108 million and net income per share was $0.89. For the first nine months of 1996, net income was $289 million, an increase of 66 percent from $174 million in net income for the first nine months of 1995. "Volatile conditions in the debt and equity markets, as well as seasonal softness in several businesses, interrupted the five consecutive quarters of higher revenues we had - more - Second Quarter 1996/page 2 posted," said Richard S. Fuld, Jr., Chairman and Chief Executive Officer. "However, the success of our efforts to enhance profitable growth and improve productivity are clearly evident in our results over the course of the first nine months of the year." Net revenues (total revenues less interest expense) for the third quarter were $722 million, down from $750 million in the third quarter of 1995 and from $833 million in the second quarter of 1996. For the first nine months of 1996, net revenues were $2.376 billion, an increase of 9 percent from $2.188 billion in the 1995 first nine months. Mr. Fuld noted that revenues in the third quarter were down in comparison with the 1996 second quarter due in large part to the effects of movements in interest rates on customer trading volumes, and to decisions by issuers to delay scheduled underwritings. The Firm's current forward equity calendar includes $1.9 billion in lead managed transactions, and its forward fixed income calendar includes $6.8 billion in offerings. For the third quarter, net revenues reflected continued strength in a number of the Firm's global businesses, particularly fixed income derivative activities, mortgage and asset-backed securities, and M&A advisory. Non-interest expenses for the quarter were $606 million. Nonpersonnel expenses for the same period were $240 million, a decrease of 8 percent from $261 million in the previous year's third quarter, and down from $242 million in the second quarter of 1996. Compensation and benefits as a percentage of net revenues remained at 50.7 percent for the sixth successive quarter. - more - Second Quarter 1996/page 3 "Our ability to maintain a consistent ratio of compensation and benefits to net revenues for well over a year now reflects the ongoing success of our Firmwide expense management efforts," Mr. Fuld said. "That effort is a key to consistent and sustainable improvement in the Firm's earnings and profitability. While quarterly revenue was off for a number of market-related and seasonal reasons, it is important to note that our discipline around expenses remained strong." For the 1996 first nine months, non-interest expense was $1.934 billion. Nonpersonnel expenses were $729 million, a decrease of 10 percent from $808 million in the first nine months of 1995. For the 1996 third quarter, the Firm's pre-tax margin was 16.0 percent, compared with 14.5 percent in the third quarter of 1995, and 20.2 percent in the 1996 second quarter. Return on common equity was 9.0 percent for the quarter ended August 31, 1996, compared with 8.5 percent for the third quarter of 1995, and 13.4 percent for the 1996 second quarter. For the first nine months of 1996, return on common equity was 11.5 percent. As of August 31, 1996, Lehman Brothers stockholders' equity was $3.741 billion and total capital (stockholders' equity and long-term debt) was $17.955 billion. Book value per common share was $27.74. Lehman Brothers is a global investment bank with leadership positions in corporate finance, advisory services, municipal finance and securities sales, trading and research. Lehman Brothers serves the financial needs of corporate, government and institutional clients, and high-net-worth individuals through offices in major financial centers worldwide. # # # EXHIBIT 99.2 LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF OPERATIONS (Preliminary and Unaudited) (In millions, except per share data) Three Months Ended Percentage of August August Dollar Change 31, 1996 31, 1995 Inc/(Dec) ----------- ---------- ---------- Revenues: Principal transactions $ 303 $ 245 24% Investment banking 237 251 (6) Commissions 77 116 (34) Interest and dividends 2,964 2,830 5 Other 4 11 (64) ------ ------ Total revenues 3,585 3,453 4 Interest expense 2,863 2,703 6 ----- ----- Net revenues 722 750 (4) ------ ------ Non-interest expenses: Compensation and benefits 366 380 (4) Brokerage, commissions and clearance fees 62 59 5 Occupancy and equipment 37 44 (16) Communications 35 43 (19) Professional services 38 39 (3) Business development 23 27 (15) Depreciation and amortization 22 26 (15) Other 23 23 ------ ------ Total non-interest expenses 606 641 (5) ------ ------ Income before taxes 116 109 6 Provision for income taxes 39 38 3 ------ ------- Net income $ 77 $ 71 8 ====== ======= Net income applicable to common stock $ 71 $ 60 18 ====== ======= Average common and common equivalent shares outstanding 117.2 116.2 ===== ===== Earnings per common share $0.60 $0.52 ===== ===== EXHIBIT 99.3 LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF OPERATIONS (Preliminary and Unaudited) (In millions, except per share data) Nine Months Ended Percentage of August 31, August 31, Dollar Change 1996 (Note 1) 1995 Inc/(Dec) -------------- ---------- ------------- Revenues: Principal transactions ..................$ 1,114 $ 959 16% Investment banking ...................... 671 540 24 Commissions ............................. 267 342 (22) Interest and dividends .................. 8,369 7,986 5 Other ................................... 27 36 (25) ------- ------- Total revenues ....................... 10,448 9,863 6 Interest expense ..................... 8,072 7,675 5 ------- ------- Net revenues ..................... 2,376 2,188 9 ------- ------- Non-interest expenses: Compensation and benefits ............... 1,205 1,111 8 Brokerage, commissions and clearance fees 176 183 (4) Occupancy and equipment ................. 114 134 (15) Communications .......................... 114 137 (17) Professional services ................... 111 123 (10) Business development .................... 75 84 (11) Depreciation and amortization ........... 68 80 (15) Other ................................... 71 67 6 ------- ------- Total non-interest expenses ........... 1,934 1,919 1 ------- ------- Income before taxes ...................... 442 269 64 Provision for income taxes ........... 153 95 61 ------- ------- Net income .............................. $ 289 $ 174 66 ======= ======= Net income applicable to common stock .. $ 265 $ 142 87 ======= ======= Average common and common equivalent shares outstanding ........ 116.3 112.2 ======= ======= Earnings per common share ................ $ 2.28 $ 1.27 ======= ======= Note 1: Certain amounts have been reclassified to conform to the current presentation. EXHIBIT 99.4 LEHMAN BROTHERS HOLDINGS INC. SELECTED STATISTICAL INFORMATION (Preliminary and Unaudited) (Dollars in millions, except per share data) Quarters Ended 8/31/96 5/31/96 2/29/96 11/30/95 (a) 8/31/95 5/31/95 Income Statement Net Revenues $722 $833 $821 $755 $750 $ 731 Non-Interest Expenses: Compensation and Benefits 366 422 416 383 380 371 Nonpersonnel Expenses (b) 240 242 246 254 261 270 Net Income from Operations Excluding Special Items 77 108 104 80 71 58 Net After-Tax Gain from Sale of Omnitel 47 Special Charges (after-tax): Restructuring Charge (58) Net Income 77 108 104 69 71 58 Net Income Applicable to Common Stock 71 102 93 58 60 48 Earnings per Common Share $0.60 $0.89 $0.79 $0.49 $0.52 $0.43 Financial Ratios (%) (c) Return on Common Equity (annualized) 9.0 13.4 12.6 9.3 8.5 7.0 Pretax Operating Margin 16.0 20.2 19.2 15.6 14.5 12.3 Compensation & Benefits/ Net Revenues (d) 50.7 50.7 50.7 50.7 50.7 50.7 Effective Tax Rate (e) 33.6 36.0 34.0 32.5 35.0 35.5 Balance Sheet Total Assets $126,000 $133,725 $128,702 $115,303 $117,518 $123,421 Total Assets Excluding Matched Book (f) 90,000 89,864 84,608 79,069 80,345 83,115 Common Stockholders' Equity (g) 3,233 3,058 3,015 2,990 2,923 2,767 Total Stockholders' Equity (h) 3,741 3,566 3,523 3,698 3,631 3,475 Total Capital (long-term debt plus stockholders' equity) 17,955 17,135 16,994 16,463 16,528 16,257 Book Value per Common Share (i) 27.74 27.29 26.41 25.67 25.23 25.16 f Other Data (#s) Employees 7,762 7,794 7,703 7,771 8,069 8,195 Common Stock Outstanding 100,027,645 100,398,499 102,443,232 104,565,875 104,558,121 104,524,685 Average Common and Common Equivalent Shares Outstanding 117,205,775 114,788,688 116,932,697 117,090,034 116,157,865 110,248,747
(a) Net revenues and non-interest expenses exclude the effects of the sale of Omnitel. (b) Excludes special items of $97 million relating to real estate- and occupancy-related expenses and severance payments in the quarter ended November 30, 1995. (c) Financial ratios exclude special items and Omnitel. (d) The actual Compensation & Benefits/Net Revenues ratio, including gross proceeds and the $50 million expense related to the sale of Omnitel, was 49.0% for the quarter ended November 30, 1995. (e) The actual tax rate, including the effects of the sale of Omnitel and the restructuring charge, was 31.3% for the quarter ended November 30, 1995. (f) Matched book is defined as securities purchased under agreements to resell. (g) The increase in common stockholders' equity at 8/31/96 and 8/31/95, reflects an increase in common stock issuable due to restricted stock units granted under the Lehman Stock Award Program effective July 1. (h) In February 1996, the Company repurchased the $200 million 8.44% Cumulative Preferred Stock owned by American Express with the proceeds from the issuance of $200 million of Quarterly Income Capital Securities Series A Subordinated Debentures with an interest rate of 8.3% maturing in 2035. The repurchase of the Preferred Stock included a premium of $2 million over the par value, which represents a one-time decrease in income available to common shareholders for purposes of calculating earnings per share. (i) This calculation includes restricted stock units granted under the Lehman Stock Award Programs included in stockholders' equity. -----END PRIVACY-ENHANCED MESSAGE-----