-----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, CIZinbE7/uBOwraTG/FwtSLiNzcDQn+KTVE9ywIfAF/Z8jLy6Mue+STHzfuTOVIn 5gjn0ubb8L+mY3/Qc3Tx5A== 0000806085-99-000088.txt : 19990623 0000806085-99-000088.hdr.sgml : 19990623 ACCESSION NUMBER: 0000806085-99-000088 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990531 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990622 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: 99650113 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. 2ND QUARTER 1999 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): June 22, 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 Second Quarter Earnings On June 22, 1999 Lehman Brothers Holdings Inc. (the "Registrant") issued a press release with respect to its second quarter 1999 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 Second Quarter 1999 Earnings 99.2 Consolidated Statement of Income (Three Months Ended May 31, 1999) (Preliminary and Unaudited) 99.3 Consolidated Statement of Income (Six Months Ended May 31, 1999) (Preliminary and Unaudited) 99.4 Selected Statistical Information 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 and Administrative Officer (Principal Financial Officer) Date: June 22, 1999 EXHIBIT INDEX Exhibit No. Exhibit Exhibit 99.1 Press Release Relating to Second Quarter 1999 Earnings Exhibit 99.2 Consolidated Statement of Income (Three Months Ended May 31, 1999) (Preliminary and Unaudited) Exhibit 99.3 Consolidated Statement of Income (Six Months Ended May 31, 1999) (Preliminary and Unaudited) Exhibit 99.4 Selected Statistical Information [GRAPHIC OMITTED] EXHIBIT 99.1 For Immediate Release Media Contact: William J. Ahearn (212) 526-4379 Investor Contact: Shaun Butler (212) 526-8381 LEHMAN BROTHERS REPORTS RECORD EARNINGS OF $330 MILLION IN SECOND QUARTER Return on Equity Rises to 26.3%; Six Month Earnings a Record $540 Million NEW YORK, June 22, 1999 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today reported net income of $330 million, or $2.09 per common share (diluted), for the second quarter ended May 31, 1999. The quarter's performance represented the highest quarterly earnings Lehman Brothers has ever posted, surpassing the $324 million earned in the fiscal 1998 second quarter, and increasing by 56% from the $211 million earned in the first quarter of 1999. For the first six months of fiscal 1999, net income was a record $540 million, an increase of 6 percent from $511 million in net income for the first half of fiscal 1998. - more - Second Quarter 1999/page 2 Net income applicable to common shareholders was unchanged from the second quarter of fiscal 1998; however, it increased by 35 percent over the 1999 first quarter. Earnings per share decreased slightly from the $2.12 (diluted) posted in the year earlier quarter, but increased by 33 percent from $1.57 (diluted) in the fiscal 1999 first quarter. "As the numbers indicate, this was a terrific quarter and first six months for Lehman Brothers," said Richard S. Fuld, Jr., Chairman and Chief Executive Officer. "In the second half of 1998, we showed that the Firm could be profitable in difficult market conditions. In the second quarter just ended, we demonstrated that Lehman Brothers can be among the top performers in the industry in good market conditions." Mr. Fuld noted that the strong performance in revenues, operating margin, net income, and return on equity in the fiscal 1999 second quarter reflected the continuing successful shift in the Firm's business mix to high-return, franchise-based activities, particularly equities and M&A advisory. Net revenues (total revenues less interest expense) for the second quarter were $1.455 billion, down slightly from $1.473 billion in the second quarter of fiscal 1998. Mr. Fuld noted that the quarter was the second best the Firm had ever posted in terms of net revenues, reflecting across-the-board strength in Lehman Brothers' investment banking, equities, and fixed income businesses. In particular, the Firm's Global Equities business posted its best quarter ever, which was indicative of an active syndicate calendar, record revenues in derivatives, and strong sales and trading activity in the U.S. and Europe. Investment banking activity also remained strong, particularly in Europe and in M&A advisory around the world. For the first six months of fiscal 1999, net revenues were a record $2.573 billion, - more - Second Quarter 1999/page 3 compared with $2.518 billion in the fiscal 1998 first half. Non-interest expenses for the second quarter were $989 million. Nonpersonnel expenses for the same period were $251 million, essentially the same as in the previous fiscal year's second quarter, despite continued investments in a number of key strategic businesses. Compensation and benefits as a percentage of net revenues remained at 50.7 percent for the 17th successive quarter. For the fiscal 1999 first half, non-interest expenses were $1.798 billion. Nonpersonnel expenses were $493 million, compared with $490 million in the first six months of fiscal 1998. For the fiscal 1999 second quarter, the Firm's pre-tax margin was 32.0 percent, relatively unchanged from the second quarter of fiscal 1998, and up from 27.6 percent in the first quarter of fiscal 1999. Return on common equity was 26.3 percent for the quarter ended May 31, 1999, compared with 29.9 percent a year ago and 17.2 percent in the current year's first quarter. For the first six months of fiscal 1999, the Firm's pre-tax margin was 30.1 percent, compared with 29.8 percent for the first six months of fiscal 1998; for the same period, return on common equity was 21.8 percent, compared with 23.9 percent in fiscal 1998. (Return on common equity for the second fiscal quarter and six months of both 1999 and 1998 is calculated using net income before adjusting for a special preferred dividend.) As of May 31, 1999, Lehman Brothers stockholders' equity and trust preferred securities were $6.5 billion and total capital (stockholders' equity, trust preferred, and long-term debt) was $34.9 billion. Book value per common share was $40.58. - more - Second Quarter 1999/page 4 As a result of the level of earnings Lehman Brothers attained in the first six months of 1999 and 1998, earnings per share calculations include the impact of a special preferred dividend of $50 million expected to be paid to American Express Company and to Nippon Life Insurance Company at year end. American Express and Nippon Life are entitled to receive an annual non-cumulative preferred dividend equal to 50 percent of the amount by which the Firm's net income for the full fiscal year exceeds $400 million, up to a maximum of $50 million per year, through mid-year 2002. 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 EXHIBIT 99.2 LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (Preliminary and Unaudited) (In millions, except per share data)
Three Months Ended Percentage of May 31 May 31 Dollar Change 1999 1998 Inc/(Dec) -------------- ------------- --------------- Revenues: Principal transactions $663 $588 13% Investment banking 467 495 (6) Commissions 168 124 35 Interest and dividends 3,627 4,307 (16) Other 7 40 (83) -------- ------- Total revenues 4,932 5,554 (11) Interest expense 3,477 4,081 (15) ----- ----- Net revenues 1,455 1,473 (1) ----- ----- Non-interest expenses Compensation and benefits 738 747 (1) Technology and communications 81 79 3 Brokerage and clearance 61 63 (3) Business development 30 29 3 Occupancy 28 28 Professional fees 28 25 12 Other 23 26 (12) ------ -------- Total non-interest expenses 989 997 (1) ----- ------- Income before taxes and dividends on trust preferred securities 466 476 (2) Provision for income taxes 126 152 (17) Dividends on trust preferred securities 10 - ------- -------- Net income $330 $324 2 ==== ==== Net income applicable to common stock $268 $268 ==== ==== Earnings per common share Basic $2.19 $2.22 ====== ===== Diluted $2.09 $2.12 ====== =====
EXHIBIT 99.3 LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (Preliminary and Unaudited) (In millions, except per share data)
Six Months Ended Percentage of May 31 May 31 Dollar Change 1999 1998 Inc/(Dec) -------------- ------------- --------------- Revenues: Principal transactions $1,189 $1,011 18% Investment banking 788 843 (7) Commissions 314 241 30 Interest and dividends 7,208 7,981 (10) Other 24 58 (59) ------- --------- Total revenues 9,523 10,134 (6) Interest expense 6,950 7,616 (9) ----- ----- Net revenues 2,573 2,518 2 ----- ----- Non-interest expenses Compensation and benefits 1,305 1,277 2 Technology and communications 163 160 2 Brokerage and clearance 119 120 (1) Business development 58 53 9 Occupancy 56 58 (3) Professional fees 50 49 2 Other 47 50 (6) ------- ------- Total non-interest expenses 1,798 1,767 2 ----- ----- Income before taxes and dividends on trust preferred securities 775 751 3 Provision for income taxes 222 240 (8) Dividends on trust preferred securities 13 - ------- -------- Net income $540 $511 6 ==== ==== Net income applicable to common stock $466 $448 4 ==== ==== Earnings per common share Basic $3.82 $3.71 ======= ===== Diluted $3.66 $3.57 ======= =====
EXHIBIT 99.4 LEHMAN BROTHERS HOLDINGS INC. SELECTED STATISTICAL INFORMATION (Preliminary and Unaudited) (Dollars in millions, except per share data)
Quarters Ended ------------ --- --------------- --------------- ------------- -------------- --------------- 5/31/99 2/28/99 11/30/98 8/31/98 5/31/98 2/28/98 ------------ --- --------------- --------------- ------------- -------------- --------------- Income Statement Net Revenues $1,455 $1,118 $665 $930 $1,473 $1,045 Non-Interest Expenses: Compensation and Benefits 738 567 337 472 747 530 Nonpersonnel Expenses 251 242 234 251 250 240 Net Income 330 211 74 151 324 187 Net Income Applicable to Common Stock 268 198 62 139 268 180 Earnings per Common Share (a) Basic $2.19 $1.62 $0.51 $1.15 $2.22 $1.49 Diluted $2.09 $1.57 $0.51 $1.10 $2.12 $1.44 Financial Ratios (%) Return on Common Equity (annualized) (b) 26.3 17.2 5.6 13.0 29.9 17.6 Return on Common Equity (annualized) (c) 22.1 17.2 5.6 13.0 25.2 17.6 Pretax Operating Margin 32.0 27.6 14.1 22.3 32.4 26.3 Compensation & Benefits/ Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7 Effective Tax Rate 27.0 31.0 20.5 27.0 32.0 32.0 Balance Sheet Total Assets $192,000 $179,305 $153,890 $191,074 $179,067 $175,643 Total Assets Excluding Matched Book (d) 129,000 121,881 111,509 133,787 130,140 124,225 Common Stockholders' Equity 4,935 4,731 4,505 4,391 4,326 4,175 Total Stockholders' Equity+Trust Preferred 6,453 5,964 5,413 5,349 5,084 4,683 Securities Total Capital (e) 34,915 32,682 32,754 33,730 31,929 28,597 Book Value per Common Share(f) 40.58 38.72 37.06 36.35 35.93 34.56 Other Data (#s) Employees 8,511 8,695 8,873 8,839 8,387 8,314 Common Stock Outstanding 119,700,830 118,977,746 113,657,877 116,673,240 117,114,203 118,551,437 Average Shares Basic 122,144,018 121,942,892 120,726,366 121,523,227 120,633,663 120,638,144 Diluted (g) 130,364,705 125,776,277 122,527,953 126,222,483 126,301,259 124,797,348
(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) Total capital includes long-term debt and stockholders' equity, as well as, Trust Preferred Securities, where applicable. (f) This calculation includes restricted stock units granted under the Lehman Stock Award Programs included in stockholders' equity. (g) For the quarter ended May 31, 1999, reflects assumed conversion of Series A and B Convertible Preferred Stock into 2,912,505 common shares which had the effect of decreasing diluted earnings per share by $0.01. -----END PRIVACY-ENHANCED MESSAGE-----