-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Xg2J8zeqGxCFheIlbnIkalJf8Gknql3aN5zDiwZ0Al1pCmFnq7s79w5ofAUcBLKd NcHR8OtW9G4I6qQwBojz/Q== 0000950123-94-000404.txt : 19940225 0000950123-94-000404.hdr.sgml : 19940225 ACCESSION NUMBER: 0000950123-94-000404 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940124 ITEM INFORMATION: 5 ITEM INFORMATION: 7 FILED AS OF DATE: 19940224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEHMAN BROTHERS HOLDINGS INC CENTRAL INDEX KEY: 0000806085 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 133216325 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 34 SEC FILE NUMBER: 001-09466 FILM NUMBER: 94512375 BUSINESS ADDRESS: STREET 1: AMERICAN EXPRESS TWR STREET 2: 3 WORLD FINANCIAL CNTR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2122982000 MAIL ADDRESS: STREET 1: AMERICAN EXPRESS TOWER STREET 2: WORLD FINANCIAL CENTER ATTN GEN COUNSEL CITY: NEW YORK STATE: NY ZIP: 10283 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN HUTTON HOLDINGS INC DATE OF NAME CHANGE: 19901017 8-K 1 FORM 8-K 1 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 24, 1994 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.) Three World Financial Center New York, New York 10285 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (212) 298-2000 ________________________________________ 2 ITEM 5. OTHER EVENTS. FOURTH QUARTER AND YEAR-TO-DATE 1993 EARNINGS Filed herewith are the preliminary and unaudited Consolidated Statements of Operations of Lehman Brothers Holdings Inc. ("the Company"), for the quarter and year ended December 31, 1993, which Consolidated Statements of Operations will be superseded by information contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1993. All adjustments which are, in the opinion of management, necessary for a fair presentation of the Consolidated Statements of Operations for the periods presented have been included. Certain amounts for fourth quarter and year-to-date 1992 reflect reclassifications to conform to the current periods' presentation. In addition, filed herewith are unaudited pro forma Consolidated Statements of Operations for the years ended December 31, 1993 and 1992, respectively, which reflect, among other things, the elimination of revenues and expenses of certain of the Company's retail and asset management businesses, as well as certain other assets related to such businesses (the "SLBD Results of Operations"), the loss on the sale of such businesses and the sale of a non-core business. The presentation herein of historical information for 1993 (the "Current Presentation") differs from the presentations set forth in the Reports on Form 10-Q for the first, second and third quarters of 1993, which presentations reflect SLBD Results of Operations, the loss on the sale of such businesses and reserves for certain non-core businesses in one line item called "Retail/Asset Management." In the Current Presentation, SLBD Results of Operations are included in all applicable line items through July 31, 1993 (the date of the closing of the sale of the Company's retail and asset management businesses). LEHMAN BROTHERS HOLDINGS INC. TO BECOME INDEPENDENT CORPORATION On January 24, 1994, American Express Company ("American Express") announced plans to issue a special dividend to its common shareholders. Such special dividend will consist of the common shares of the Company which American Express owns immediately preceding such dividend, including common stock which it receives in exchange for the Company's $250 million Money Market Cumulative Preferred(sm) Stock. Prior to the issuance of such dividend, the Company's equity capital will increase by $1.25 billion, bringing its equity capital to approximately $3.3 billion. The additional equity will be the result of the purchase of i) $160 million of newly-issued Company common stock by the Company's employees, approximately $60 million of which would come from an employee ownership plan that was established in 1993; and ii) $200 million of newly-issued Company preferred stock and $890 million of newly-issued Company common stock, each by American Express. In addition, American Express' plan to spin-off the Company provides that American Express would receive 50% of any of the Company's net income in excess of $400 million per year, with a cap of $50 million per year, for each of the next eight years. Such plan also provides for American Express to receive certain contingent revenue and earnings related - 2 - 3 participations due to the Company from Travelers Corporation for a period of three and five years, respectively, in connection with the sale last year of the Company's retail and asset management businesses. Final terms of the proposed transaction, which is subject to certain conditions, have not yet been determined. The completion of the proposed transaction, which is expected to occur during the second quarter of 1994, would result in the Company emerging as an independent publicly owned corporation. Filed herewith is certain unaudited pro forma financial information which reflects, as stated above, the effects of the sales of certain businesses on such financial information, and is also presented in order to reflect the estimated effects of the proposed transaction. - 3 - 4 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (b) Pro Forma Financial Information: LEHMAN BROTHERS HOLDINGS INC. PRO FORMA FINANCIAL INFORMATION The unaudited pro forma financial information set forth in Exhibits 99.3, 99.4 and 99.5 is presented in order to illustrate the estimated effects of the proposed capital infusion by American Express and related actions (the "Current Transaction"), as well as the elimination of the SLBD Results of Operations, the loss on the sale of certain of the Company's retail and asset management businesses and the sale of a non-core business. The pro forma financial statements for the Company assume for statement of operations purposes that the Primerica Transaction (as hereinafter defined), the sale of Shearson Lehman Hutton Mortgage Corporation (the "SLHMC Transaction") and the Current Transaction were consummated as of the first day of the period reported and assume for balance sheet purposes that such Transactions were consummated on the last day of the period reported. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the Company's results of operations or financial position in the future or of what the Company's results of operations or financial position would have been had the Primerica Transaction, the SLHMC Transaction and the Current Transaction been consummated on or as of the dates referred to in the immediately preceding paragraph. The pro forma financial information should be read in conjunction with the consolidated financial statements of the Company and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1992. (c) Exhibits The following Exhibits are filed as a part of this Report. 99.1 Consolidated Statement of Operations (Three Months Ended December 31, 1993) (Preliminary and Unaudited) 99.2 Consolidated Statement of Operations (Year Ended December 31, 1993) (Preliminary and Unaudited) - 4 - 5 99.3 Historical and Pro Forma Consolidated Balance Sheets (At December 31, 1993) (Unaudited) 99.4 Historical and Pro Forma Consolidated Statements of Operations (Year Ended December 31, 1993) (Unaudited) 99.5 Historical and Pro Forma Consolidated Statements of Operations (Year Ended December 31, 1992) (Unaudited) The Exhibit Index to this Report is incorporated herein by reference. - 5 - 6 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/ ROBERT MATZA ------------------------- ROBERT MATZA CHIEF FINANCIAL OFFICER DATE: FEBRUARY 24, 1994 - 6 - 7 EXHIBIT INDEX
EXHIBIT NO. EXHIBIT ----------- ------- Exhibit 99.1 Consolidated Statement of Operations (Three Months Ended December 31, 1993) (Preliminary and Unaudited) Exhibit 99.2 Consolidated Statement of Operations (Year Ended December 31, 1993) (Preliminary and Unaudited) Exhibit 99.3 Historical and Pro Forma Consolidated Balance Sheets (At December 31, 1993) (Unaudited) Exhibit 99.4 Historical and Pro Forma Consolidated Statements of Operations (Year Ended December 31, 1993) (Unaudited) Exhibit 99.5 Historical and Pro Forma Consolidated Statements of Operations (Year Ended December 31, 1992) (Unaudited)
- 7 - EX-99.1 2 CONSOLIDATED STATEMENT OF OPERATIONS - 3 MONTHS 1 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS PRELIMINARY AND UNAUDITED (IN MILLIONS)
Three Months Ended December 31, --------------------------- Revenues 1993 1992 ---- ---- Market making and principal transactions $ 359 $ 365 Investment banking 246 169 Commissions 127 425 Interest and dividends 1,451 1,419 Other 20 182 ----- ----- Total Revenues 2,203 2,560 Interest Expense 1,326 1,271 ----- ----- Net Revenues 877 1,289 ----- ----- Non-interest expenses Compensation and benefits 442 785 Communications 48 96 Brokerage, commissions and clearance fees 42 35 Professional services 45 57 Occupancy and equipment 38 91 Advertising and market development 33 58 Depreciation and amortization 33 46 Other 33 410 ----- ----- Total non-interest expenses 714 1,578 ----- ----- Income (loss) from continuing operations before taxes 163 (289) Provision for (benefit from) income taxes 49 (102) ----- ----- Income (loss) from continuing operations 114 (187) Income from discontinued operations, net of taxes - 21 ------ ----- Net income (loss) 114 (166) Preferred stock dividend requirements (12) (12) ----- ----- Net income (loss) applicable to common shares $ 102 $ (178) ====== ======
EX-99.2 3 CONSOLIDATED STATEMENT OF OPERATIONS - 1 YEAR 1 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS PRELIMINARY AND UNAUDITED (IN MILLIONS)
Year Ended December 31, ------------------------- Revenues 1993 1992 ---- ---- Market making and principal transactions $1,967 $1,697 Commissions 1,316 1,677 Investment banking 972 892 Interest and dividends 5,840 5,661 Other 491 684 ------ ------ Total Revenues 10,586 10,611 Interest Expense 5,368 5,185 ------ ------ Net Revenues 5,218 5,426 ------ ------ Non-interest expenses Compensation and benefits 2,989 3,310 Communications 318 378 Occupancy and equipment 254 326 Professional services 203 212 Advertising and market development 161 205 Depreciation and amortization 157 185 Brokerage, commissions and clearance fees 140 117 Other 282 695 Loss on sale of SLBD 535 Reserves for non-core businesses 152 Computervision Writedown 245 -------- ------ Total non-interest expenses 5,191 5,673 ------ ------ Income (loss) from continuing operations before taxes and cumulative effect of changes in accounting principles 27 (247) Provision for (benefit from) income taxes 318 (54) ------ ------ Loss from continuing operations before cumulative effect of changes in accounting principles (291) (193) Income from discontinued operations, net of taxes Income from operations 24 77 Gain on disposal 165 ------ -------- 189 77 ------ ------- Loss before cumulative effect of changes in accounting principles (102) (116) Cumulative effect of changes in accounting principles (7) ------- ------ Net loss (102) (123) Preferred stock dividend requirements (48) (48) ------ ------ Net loss applicable to common shares $ (150) $ (171) ====== ======
EX-99.3 4 HIST. & PRO FORMA CONS. BALANCE SHEETS 12/31/93 1 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONSOLIDATED BALANCE SHEETS UNAUDITED (IN MILLIONS)
ASSETS December 31, 1993 ------------------------------------------------- Pro Forma ----------------------------- Historical Adjustments Total ---------- ----------- ----- Cash and cash equivalents $1,333 $1,333 Cash and securities segregated under federal and other regulations 1,073 1,073 Receivables: Brokers and Dealers 5,059 5,059 Customers 2,646 2,646 Other 2,693 2,693 Securities purchased under agreements to resell 26,046 26,046 Securities borrowed 4,372 4,372 Securities and commodities owned 35,699 35,699 Buildings, furnishings, equipment and leasehold improvements, at cost (net of accumulated depreciation and amortization of $438) 529 529 Deferred expenses and other assets 750 750 Excess of cost over fair value of net assets acquired (net of accumulated amortization of $107) 274 274 ------- --------- ------- $80,474 $80,474 ======= ========= =======
2 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONSOLIDATED BALANCE SHEETS UNAUDITED (IN MILLIONS)
LIABILITIES AND STOCKHOLDERS' EQUITY December 31, 1993 ---------------------------------------------- Pro Forma ------------------------------- Historical Adjustments Total ---------- ------------------ ------- Commercial paper and short-term debt $10,208 $(1,190) (f) $9,018 Payables: Brokers and dealers 1,385 1,385 Customers 4,130 4,130 Banks 722 722 Accrued liabilities and other payables 3,458 (60) (e) 3,398 Securities sold under agreements to repurchase 39,191 39,191 Securities loaned 1,116 1,116 Securities and commodities sold but net yet purchased 8,313 8,313 Term notes 7,779 7,779 Subordinated indebtedness 2,120 2,120 ------ -------- ------ Total liabilities 78,422 (1,250) 77,172 ------ ------- ------ Stockholders' equity: Preferred stock, $1 par value; 38,000,000 shares authorized: 5% Cumulative Convertible Voting, Series A, 13,000,000 shares authorized, issued and outstanding; $39.10 liquidation preference per share 508 508 Money Market Cumulative, 3,300 shares authorized; 250 shares issued and outstanding; $1,000,000 liquidation preference per share 250 (250) (a) Perpetual Voting Preferred 200 (b) 200 Common stock, $.10 par value; 300,000,000 shares authorized; 168,235,284 shares issued and outstanding 17 17 Additional paid-in capital 1,871 890 (c) 3,171 250 (a) 100 (d) 60 (e) Foreign currency translation adjustment (12) (12) Accumulated deficit (582) (582) ------- --------- ------- Total stockholders' equity 2,052 1,250 3,302 ------- ------- ------- $80,474 $80,474 ======= ========= =======
3 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS At December 31, 1993 a) Adjustment reflects the exchange of the existing $250 million of Money Market Cumulative Preferred Stock at a current rate of 9% for common equity. b) Adjustment reflects American Express' purchase of $200 million of newly-issued Perpetual Voting Preferred Stock at the prevailing market rate estimated to be approximately 8%. c) Adjustment reflects American Express' $890 million cash purchase of newly-issued Common Stock. d) Adjustment reflects $100 million of newly-issued Common Stock to be purchased by employees. e) Adjustment reflects $60 million of newly-issued Common Stock purchased by employees through an employee ownership plan established in 1993. f) Adjustment reflects the net proceeds received from adjustments (b), (c) and (d). When the number of shares of Common Stock to be issued as a result of the Current Transaction has been determined, a reclassification from additional paid in capital to common stock will be reflected equal to the number of Common Shares issued times the $.10 par value. On the effective date of the Current Transaction the Company will no longer be included in the consolidated U.S. income tax return of American Express. The Company does not anticipate any significant adverse tax consequences as a result of the completion of the Current Transaction. EX-99.4 5 HIST. & PRO FORMA CONS. STAT. OF OP. - 12/31/93 1 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED (IN MILLIONS)
Year Ended December 31,1993 ---------------------------------------------------------- Pro Forma Adjustments ----------------------------------- Revenues Historical SLBD SLHMC ---------- ---- ----- Market making and principal transactions $1,967 $(323)(a) Commissions 1,316 (828)(a) Investment banking 972 (170)(a) Interest and dividends 5,840 (148)(a) $ (13)(b) Other 491 (356)(a) (56)(b) ------- ------ ------ Total Revenues 10,586 (1,825) (69) Interest Expense 5,368 (116)(a),(d) (7)(b) ------ ------- ------- Net Revenues 5,218 (1,709) (62) ------ ------- ------- Non-interest Expenses Compensation and benefits 2,989 (1,147)(a) (17)(b) Communications 318 (126)(a) (4)(b) Occupancy and equipment 254 (104)(a) (3)(b) Professional services 203 (40)(a) (2)(b) Advertising and market development 161 (33)(a) (1)(b) Depreciation and amortization 157 (44)(a) Brokerage, commissions and clearance fees 140 32 (a) Other 282 (110)(a) (35)(b) Loss on sale of SLBD 535 (535)(a) Reserves for non-core businesses 152 (120)(c) ------ -------- ------- Total non-interest Expenses 5,191 (2,107) (182) ------ -------- ------- Income from continuing operations before taxes 27 398 120 Provision for income taxes 318 (157)(a),(f) 41 ------ ------- ------ (Loss) income from continuing operations $(291) $ 555 $ 79 ====== ====== ======
Year Ended December 31,1993 ---------------------------------------------------------- Pro Forma Adjustments ------------- Revenues Current Transaction Total ----------- ----- Market making and principal transactions $1,644 Commissions 488 Investment banking 802 Interest and dividends 5,679 Other 79 ------ ------- Total Revenues 8,692 Interest Expense (42)(e) 5,203 ------ ------ Net Revenues 42 3,489 ------ ------ Non-interest Expenses Compensation and benefits 1,825 Communications 188 Occupancy and equipment 147 Professional services 161 Advertising and market development 127 Depreciation and amortization 113 Brokerage, commissions and clearance fees 172 Other 137 Loss on sale of SLBD Reserves for non-core businesses 32 ------ ------- Total non-interest Expenses 2,902 ------ ------- Income from continuing operations before taxes 42 587 Provision for income taxes 17(f) 219 ------ ------ (Loss) income from continuing operations $ 25 $ 368 ====== ======
2 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA STATEMENTS OF OPERATIONS ADJUSTMENTS For the Year Ended December 31, 1993 Since The Boston Company, Inc. ("Boston") is reported as a discontinued operation in the Company's financial statements, its results are not reflected in the Company's 1993 results from continuing operations. The historical loss of $291 million from continuing operations before cumulative effect of changes in accounting principles represents: (i) income from the continuing core businesses of the Company of $376 million; (ii) the net income of SLBD of $63 million; (iii) the net loss on the sale of SLBD of $630 million; and (iv) the net reserve for non- core businesses of $100 million of which $21 million of such reserve is related to certain non-core partnership syndication activities in which the Company is no longer actively engaged. The pro forma adjustments to the statement of operations give effect to the items described below: a) Adjustment reflects the elimination of revenues and expenses of certain of the Company's retail and asset management businesses, as well as certain other assets related to such businesses ("SLBD") and the loss on the sale of such assets (the "Primerica Transaction"). Also eliminated is the income tax expense of $149 million related to these items. b) Adjustment reflects the elimination of revenues and expenses of SLHMC. c) Adjustment to reserves for non-core businesses reflects the elimination of the reserves related to the sale of SLHMC. Also eliminated is the income tax benefit of $41 million related to these items. Adjustments have not been made for reserves taken in the first quarter of 1993 related to certain non-core partnership syndication activities in which the Company is no longer actively engaged. d) Adjustment reflects reduced interest expense of approximately $52 million resulting from the utilization of cash proceeds (from the sales of Boston, SLBD and SLHMC) to reduce the Company's short-term debt and term notes, offset by interest expense of $72 million allocated to SLBD and SLHMC for the carrying costs of buildings, improvements and equipment and certain acquisition related debt, which is not directly eliminated by the Primerica Transaction or the sale of SLHMC other than through the utilization of available sales proceeds. e) Adjustment reflects reduced interest expense of approximately $42 million resulting from the utilization of the cash received of $1,090 million as capital infusion from American Express and the $100 million raised through the proposed sale of Common Stock to the Company's employees. f) Adjustments (d) and (e) are tax effected at a rate of 40%. 3 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA STATEMENTS OF OPERATIONS ADJUSTMENTS In recognition of its capital infusion, American Express will receive 50% of any of the Company's net income in excess of $400 million per year, with a cap of $50 million per year for each of the next eight years. This threshold would not have been achieved in 1993. In addition, American Express will receive certain contingent revenue and earnings related participations due to the Company from Travelers Corporation (previously Primerica Corporation) for a period of three and five years, respectively, in connection with the sale of SLBD. On the effective date of the Current Transaction the Company will no longer be included in the consolidated U.S. income tax return of American Express. The Company does not anticipate any significant adverse tax consequences as a result of a completion of the Current Transaction. EX-99.5 6 HIST. & PRO FORMA CONS. STAT. OF OP. - 12/31/92 1 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED (IN MILLIONS)
Year Ended December 31,1992 ------------------------------------------------------------------- Pro Forma Adjustments ------------------------------------------------- Revenues Historical SLBD SLHMC ---------- ---- ----- Market making and principal transactions $1,697 $ (575)(a) Commissions 1,677 (1,231)(a) Investment banking 892 (218)(a) Interest and dividends 5,661 (226)(a) $ (31)(b) Other 684 (531)(a) (88)(b) ------ ------- ------ Total Revenues 10,611 (2,781) (119) Interest Expense 5,185 (243)(a),(c) (24)(b) ------ ------ ------ Net Revenues 5,426 (2,538) (95) ------ ------- ------ Non-interest Expenses Compensation and benefits 3,310 (1,736)(a) (23)(b) Communications 378 (194)(a) (6)(b) Occupancy and equipment 326 (183)(a) (4)(b) Professional services 212 (66)(a) (3)(b) Advertising and market development 205 (84)(a) (2)(b) Depreciation and amortization 185 (89)(a) (1)(b) Brokerage, commissions and clearance fees 117 52 (a) Other 695 (136)(a) (61)(b) Computervision Writedown 245 ------ ------- ------- Total non-interest Expenses 5,673 (2,436) (100) ------ ------- ------- Income from continuing operations before taxes and cumulative effect of changes in accounting principles (247) (102) 5 (Benefit from) income taxes (54) (53)(a),(e) 2(b) ------- ------ ------ (Loss) income from continuing operations before cumulative effect of changes in accounting principles $(193) $ (49) $ 3 ====== ======= ======
Year Ended December 31,1992 ------------------------------------------------------------------- Pro Forma Adjustments ------------------------------------------------- Current Transaction Total ----------- ----- Market making and principal transactions $1,122 Commissions 446 Investment banking 674 Interest and dividends 5,404 Other 65 ------- ------ Total Revenues 7,711 Interest Expense $(42)(d) 4,876 ----- ------ Net Revenues 42 2,835 ------ ------ Non-interest Expenses Compensation and benefits 1,551 Communications 178 Occupancy and equipment 139 Professional services 143 Advertising and market development 119 Depreciation and amortization 95 Brokerage, commissions and clearance fees 169 Other 498 Computervision Writedown 245 ------- ------ Total non-interest Expenses 3,137 ------- ------ Income from continuing operations before taxes and cumulative effect of changes in accounting principles 42 (302) (Benefit from) income taxes 17(e) (88) ------ ------ (Loss) income from continuing operations before cumulative effect of changes in accounting principles $ 25 $(214) ====== ======
2 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES HISTORICAL AND PRO FORMA STATEMENTS OF OPERATIONS ADJUSTMENTS For the Year Ended December 31, 1992 Since Boston is reported as a discontinued operation in the Company's financial statements, its results are not reflected in the Company's 1992 results from continuing operations. The pro forma adjustments to the statement of operations give effect to the items described below: a) Adjustment reflects the elimination of revenues and expenses of SLBD. b) Adjustment reflects the elimination of revenues and expenses of SLHMC. c) Adjustment reflects reduced interest expense of approximately $112 million resulting from the utilization of cash proceeds to reduce the Company's short-term debt and term notes, offset by interest expense of $102 million allocated to SLBD and SLHMC for the carrying costs of buildings, improvements and equipment and certain acquisition related debt, which is not directly eliminated by the Primerica Transaction or the SLHMC Transaction other than through the utilization of available sales proceeds. d) Adjustment reflects reduced interest expense of approximately $42 million resulting from the utilization of the cash received of $1,090 million as capital infusion from American Express and the $100 million raised through the proposed sale of Common Stock to the Company's employees. e) Adjustments (c) and (d) are tax effected at a rate of 40%. -----END PRIVACY-ENHANCED MESSAGE-----