-----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, VsOWBuPHI4KAxLzURv3kbjBPb1nDYUQCw0/DzEBhmjSdId9AxbmNO5R1pE65F/1e V6N5SeQ3LCHdnM67xPuNsA== 0000806085-99-000002.txt : 19990108 0000806085-99-000002.hdr.sgml : 19990108 ACCESSION NUMBER: 0000806085-99-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981130 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990107 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: SEC FILE NUMBER: 001-09466 FILM NUMBER: 99501937 BUSINESS ADDRESS: STREET 1: AMERICAN EXPRESS TWR STREET 2: 3 WORLD FINANCIAL CNTR CITY: NEW YORK STATE: NY ZIP: 10285 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 INC. 4TH QUARTER 1998 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): January 7, 1999 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 Fourth Quarter Earnings On January 7, 1999 Lehman Brothers Holdings Inc. (the "Registrant") issued a press release with respect to its fourth quarter 1998 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 Fourth Quarter 1998 Earnings 99.2 Consolidated Statement of Income (Three Months Ended November 30, 1998) (Preliminary and Unaudited) 99.3 Consolidated Statement of Income (Twelve Months ended November 30, 1998) (Preliminary and Unadudited) 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/ John L. Cecil ------------------------- John L. Cecil Chief Financial Officer (Principal Financial Officer) Date: January 7, 1999 EXHIBIT INDEX Exhibit No. Exhibit Exhibit 99.1 Press Release Relating to Fourth Quarter 1998 Earnings Exhibit 99.2 Consolidated Statement of Income (Three Months Ended November 30, 1998) (Preliminary and Unaudited) Exhibit 99.3 Consolidated Statement of Income (Twelve Months ended November 30, 1998) (Preliminary and Unadudited) Exhibit 99.4 Selected Statistical Information [GRAPHIC OMITTED] For Immediate Release Media Contact: William J. Ahearn (212) 526-4379 Investor Contact: Shaun Butler (212) 526-8381 LEHMAN BROTHERS REPORTS RECORD 1998 EARNINGS OF $736 MILLION, UP 14% FROM 1997 Posts Fourth Quarter Earnings of $74 Million NEW YORK, January 7, 1999 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today reported that net income was a record $736 million for the full year of fiscal 1998, an increase of 14% from $647 million for fiscal 1997. For the full year, earnings per share were $5.19 (diluted), compared with $4.72 per share (diluted) in fiscal 1997. For the quarter ended November 30, 1998, net income was $74 million, or $0.51 per common share (diluted), compared with $185 million, or $1.30 per share (diluted), for the fourth quarter of fiscal 1997. "This was an excellent year for Lehman Brothers, despite the difficult market environment we faced throughout much of the second half of the fiscal year," said Richard S. Fuld, Jr., Chairman and Chief Executive Officer. "Even with unprecedented turmoil in the global debt markets that began in August, and a slower underwriting calendar in September and October, Lehman Brothers achieved higher revenues and earnings in 1998 than in any other year in the Firm's history." --more-- 1998 Earnings/2 He added: "In 1998, the Firm continued to successfully diversify its business mix, managed its risk profile extremely well throughout the year, and significantly raised its capital base. Lehman Brothers not only weathered the storms of the last few months, but also came through that period profitably, financially strong, and strategically well positioned for 1999." Mr. Fuld noted that, for the full year, Lehman Brothers posted record results in its investment banking, equities, and high net worth retail businesses, reflecting the continued success of the Firm's efforts to build these businesses and diversify its revenue mix. For the full fiscal year, net revenues (total revenues less interest expense) were $4.113 billion, an increase of 6 percent from $3.873 billion in fiscal 1997. Net revenues for the fourth quarter were $665 million, down from $1.023 billion in the fourth quarter of fiscal 1997, as extreme market volatility in September and October resulted in weaker prices on a broad range of fixed income products, decreased levels of customer trading activity, and significantly lower syndicate volume. For the full 12 months of fiscal 1998, non-interest expenses were $3.061 billion. Non-personnel expenses were $975 million, compared with $972 million in the 1997 fiscal year. Non-interest expenses for the fourth quarter were $571 million. Non-personnel expenses for the same period were $234 million, down from $239 million in the previous fiscal year's fourth quarter and from $251 million in the third quarter of fiscal 1998, despite continued investments in a number of key strategic businesses and increased technology expenditures related to the Year 2000 and European Monetary Union. Mr. Fuld noted that compensation and benefits as a percentage of net revenues remained at 50.7 percent for the 15th successive quarter. --more-- 1998 Earnings/3 For the full year, the Firm's pre-tax margin was 25.6 percent, compared with 24.2 percent for the 12 months of fiscal 1997. Return on common equity was 16.3 percent, compared with 17 percent in fiscal 1997, as common stockholders' equity grew by more than 12 percent over the course of fiscal 1998. For the fiscal 1998 fourth quarter, the Firm's pre-tax margin was 14.1 percent, compared with 25.9 percent in the fourth quarter of fiscal 1997. Return on common equity was 5.6 percent for the quarter ended November 30, 1998, compared with 18.3 percent for the fourth quarter of fiscal 1997. Return on common equity is calculated before any adjustments for special preferred dividends. As of November 30, 1998, Lehman Brothers stockholders' equity was $5.4 billion, and total capital (stockholders' equity and long-term debt) was $32.8 billion. Book value per common share was $37.06. Lehman Brothers is a global investment bank with leadership positions in corporate finance, advisory services, municipal finance and fixed income and equity 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. Financial Statements Attached LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (Preliminary and Unaudited) (In millions, except per share data) Three Months Ended Percentage of November 30 November 30 Dollar Change 1998 1997 Inc/(Dec) ------------ ------------- ------------- Revenues: Investment banking $ 246 $ 408 (40)% Principal transactions 90 357 (75) Commissions 135 124 9 Interest and dividends 3,307 3,704 (11) Other 19 16 19 ------ ------ Total revenues 3,797 4,609 (18) Interest expense 3,132 3,586 (13) ----- ----- Net revenues 665 1,023 (35) ------ ----- Non-interest expenses Compensation and benefits 337 519 (35) Brokerage, commissions and clearance fees 54 52 4 Professional services 37 42 (12) Communications 35 36 (3) Occupancy and equipment 36 37 (3) Business development 31 27 15 Depreciation and amortization 24 21 14 Other 17 24 (29) ----- ------ Total non-interest expenses 571 758 (25) ----- ------ Income before taxes 94 265 (65) Provision for income taxes 20 80 (75) ----- ------ Net income $ 74 $ 185 (60) ==== ====== Net income applicable to common stock $ 62 $ 160 (61) ==== ====== Average shares Basic 120.7 119.0 ===== ===== Diluted 122.5 123.0 ===== ===== Earnings per common share Basic $0.51 $1.34 ===== ===== Diluted $0.51 $1.30 ===== ===== LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (Preliminary and Unaudited) (In millions, except per share data) Twelve Months Ended Percentage of November 30 November 30 Dollar Change 1998 1997 Inc/(Dec) ------------- ------------ ----------- Revenues: Investment banking $ 1,582 $ 1,318 20% Principal transactions 1,232 1,418 (13) Commissions 513 423 21 Interest and dividends 16,542 13,635 21 Other 25 89 (72) ------ -------- Total revenues 19,894 16,883 18 Interest expense 15,781 13,010 21 ------ ------- Net revenues 4,113 3,873 6 ------ ------- Non-interest expenses: Compensation and benefits 2,086 1,964 6 Brokerage, commissions and clearance fees 229 224 2 Professional services 171 173 (1) Communications 146 141 4 Occupancy and equipment 138 141 (2) Business development 115 103 12 Depreciation and amortization 91 86 6 Other 85 104 (18) ------ ------- Total non-interest expenses 3,061 2,936 4 ------ ------ Income before taxes 1,052 937 12 Provision for income taxes 316 290 9 ------ ------- Net income $ 736 $ 647 14 ====== ====== Net income applicable to common stock $ 649 $ 572 13 ====== ====== Average shares Basic 120.9 118.2 ===== ===== Diluted 125.0 121.1 ===== ===== Earnings per common share Basic $5.37 $4.84 ===== ===== Diluted $5.19 $4.72 ===== ===== LEHMAN BROTHERS HOLDINGS INC. SELECTED STATISTICAL INFORMATION (Preliminary and Unaudited) (Dollars in millions, except per share data)
Twelve Months Quarters Ended -------------------------- ------------- -------------- -------------- -------------- ----------- 1998 1997 11/30/98 8/31/98 5/31/98 2/28/98 11/30/97 ------------ ------------- ------------- -------------- -------------- -------------- ----------- Income Statement Net Revenues $4,113 $3,873 $665 $930 $1,473 $1,045 $1,023 Non-Interest Expenses: Compensation and Benefits 2,086 1,964 337 472 747 530 519 Nonpersonnel Expenses 975 972 234 251 250 240 239 Net Income 736 647 74 151 324 187 185 Net Income Applicable to Common Stock 649 572 62 139 268 180 160 Earnings per Common Share (a) Basic $5.37 $4.84 $0.51 $1.15 $2.22 $1.49 $1.34 Diluted $5.19 $4.72 $0.51 $1.10 $2.12 $1.44 $1.30 Financial Ratios (%) Return on Common Equity (annualized) (b) 16.3 17.0 5.6 13.0 29.9 17.6 18.3 Return on Common Equity (annualized) (c) 15.2 15.6 5.6 13.0 25.2 17.6 16.4 Pretax Operating Margin 25.6 24.2 14.1 22.3 32.4 26.3 25.9 Compensation & Benefits/ Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7 50.7 Effective Tax Rate 30.0 30.9 20.5 27.0 32.0 32.0 30.0 Balance Sheet Total Assets $154,000 $191,074 $179,067 $175,643 $151,705 Total Assets Excluding Matched Book (d) 112,000 133,787 130,140 124,225 108,099 Common Stockholders' Equity 4,505 4,391 4,326 4,175 4,015 Total Stockholders' Equity 5,413 5,349 5,084 4,683 4,523 Total Capital (long-term debt plus stockholders' equity) 32,754 33,730 31,929 28,597 24,784 Book Value per Common Share (e) 37.06 36.35 35.93 34.56 33.39 Other Data (#s) Employees 8,873 8,839 8,387 8,314 8,340 Common Stock Outstanding 113,657,877 116,673,240 117,114,203 118,551,437 116,612,074 Average Shares Basic 120,909,920 118,162,896 120,726,366 121,523,227 120,633,663 120,638,144 118,976,492 Diluted 124,991,831 121,064,929 122,527,953 126,222,483 126,301,259 124,797,348 123,003,138
(a) Effective December 1997, basic and diluted earnings per share replaced the primary and fully diluted calculations in accordance with Statement of Financial Accounting Standards No. 128. (b) Return on common equity calculated using net income before adjusting for special preferred dividends. (c) Return on common equity calculated using net income after adjusting for special preferred dividends. (d) Matched book is defined as the lower of securities purchased under agreements to resell or securities sold under agreements to repurchase. (e) This calculation includes restricted stock units granted under the Lehman Stock Award Programs included in stockholders' equity. -----END PRIVACY-ENHANCED MESSAGE-----