-----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, TX8EfECNEdHPWtH6BL1MDxtNd7Sy52xHJ0yJSrK9g6+1SGEwWxnmbsw0ZvaM8O8r Qd//MXBfffArKerrLU0TLA== 0000950123-98-006328.txt : 19980630 0000950123-98-006328.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950123-98-006328 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971230 FILED AS OF DATE: 19980629 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: 11-K SEC ACT: SEC FILE NUMBER: 001-09466 FILM NUMBER: 98656664 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 11-K 1 FORM 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE COMMISSION For the fiscal year ended December 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______. Commission file number 1-7657 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: LEHMAN BROTHERS HOLDINGS INC. TAX DEFERRED SAVINGS PLAN Lehman Brothers Holdings Inc. 3 World Financial Center New York, NY 10285 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Lehman Brothers Holdings Inc. 3 World Financial Center New York, NY 10285 2 Financial Statements and Supplemental Information Lehman Brothers Holdings Inc. Tax Deferred Savings Plan For the years ended December 30, 1997 and 1996 with Report of Independent Auditors 3 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Financial Statements and Supplemental Information For the years ended December 30, 1997 and 1996 CONTENTS Report of Independent Auditors ....................................................................... 1 Financial Statements Statements of Net Assets Available for Plan Benefits, With Fund Information .......................... 2 Statements of Changes in Net Assets Available for Plan Benefits With Fund Information ............................................................................. 4 Notes to Financial Statements ........................................................................ 6 Supplemental Information Schedule I Schedule of Investments Held ......................................................... 14 Schedule II Schedule of Series of Transactions in Excess of Five Percent of Net Assets Available for Plan Benefits at Beginning of Year ..................................... 15
A schedule of single transactions in excess of five percent of net assets available for plan benefits at the beginning of the year has not been presented because there were no single transactions in excess of five percent of net assets during fiscal year 1997, which require disclosure under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and for which there are no statutory or administrative exemptions. A schedule of party-in-interest transactions has not been presented because there were no party-in-interest transactions which are prohibited by Section 406 of Employee Retirement Income Security Act of 1974, as amended ("ERISA") and for which there are no statutory or administrative exemptions. 4 [ERNST & YOUNG LLP LETTERHEAD] Report of Independent Auditors The Employee Benefits Plans Committee Lehman Brothers Holdings Inc. We have audited the accompanying statements of net assets available for plan benefits of the Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the "Plan") as of December 30, 1997 and 1996, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material 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 presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 30, 1997 and 1996, and the changes in its net assets available for plan benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of investments held as of December 30, 1997, and series of transactions in excess of five percent of net assets available for plan benefits for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The fund information in the statements of net assets available for the plan benefits and the statements of changes in net assets available for plan benefits are presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ERNST & YOUNG LLP May 1, 1998 1 5 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Statement of Net Assets Available for Plan Benefits, With Fund Information December 30, 1997 Investment Funds
AMERICAN LEHMAN EXPRESS BROTHERS FIXED COMPANY HOLDINGS INC. AMERICAN SHORT-TERM INCOME COMMON COMMON CENTURY ULTRA INTEREST FUND FUND STOCK FUND STOCK FUND INVESTORS FUND ------------- ------------- ------------- ------------- ------------- ASSETS Institutional Contracts (at cost plus interest) $ 120,784,299 Investments at fair value: American Express Company Common Stock Fund 440,443 shares (cost: $10,122,019) $ 38,593,823 Lehman Brothers Holdings Inc. Common Stock Fund 703,642 shares (cost: $15,659,963) $ 35,138,123 American Century Ultra Investors Fund 2,329,416 shares (cost: $56,928,938) $ 63,499,886 Prime Value Obligations Fund 16,716,816 shares (cost: $16,716,816) Templeton Foreign Fund 3,713,252 shares (cost: $36,051,442) Income Fund of America 1,340,881 shares (cost: $20,187,646) Fidelity Capital & Income Fund 2,063,971 shares (cost: $19,392,385) Vanguard Index Trust 500 Portfolio 516,381 shares (cost: $31,062,694) PIMCO Total Return Fund 972,301 shares (cost: $9,938,846) Brandywine Blue Fund 79,718 shares (cost: $2,300,525) Vanguard Fixed Income Long-Term Corporate Portfolio 1,063,658 shares (cost: $9,218,984) ------------- ------------- ------------- ------------- ------------- -- 120,784,299 38,593,823 35,138,123 63,499,886 Cash and short-term investments $ 324,335 2,328 -- 100,427 -- Interest and dividends receivable 1,512 3 99,240 287 2 Other receivables 10,084 10,839 79,678 1,702,188 4,137 Net Inter-fund transfers (payable) receivable 7,648 (1,937,644) (141,038) 28,870 (69,856) ------------- ------------- ------------- ------------- ------------- Total assets 343,579 118,859,825 38,631,703 36,969,895 63,434,169 LIABILITIES Accrued liabilities -- 49,860 12,375 77,833 21,586 Other liabilities -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- Total liabilities -- 49,860 12,375 77,833 21,586 ------------- ------------- ------------- ------------- ------------- Net assets available for plan benefits $ 343,579 $ 118,809,965 $ 38,619,328 $ 36,892,062 $ 63,412,583 ============= ============= ============= ============= =============
PRIME VALUE INCOME FIDELITY VANGUARD OBLIGATIONS TEMPLETON FUND OF CAPITAL & INDEX TRUST FUND FOREIGN FUND AMERICA INCOME FUND 500 PORTFOLIO ------------- ------------- ------------- ------------- ------------- ASSETS Institutional Contracts (at cost plus interest) Investments at fair value: American Express Company Common Stock Fund 440,443 shares (cost: $10,122,019) Lehman Brothers Holdings Inc. Common Stock Fund 703,642 shares (cost: $15,659,963) American Century Ultra Investors Fund 2,329,416 shares (cost: $56,928,938) Prime Value Obligations Fund 16,716,816 shares (cost: $16,716,816) $ 16,716,816 Templeton Foreign Fund 3,713,252 shares (cost: $36,051,442) $ 36,946,857 Income Fund of America 1,340,881 shares (cost: $20,187,646) $ 23,800,644 Fidelity Capital & Income Fund 2,063,971 shares (cost: $19,392,385) $ 20,598,427 Vanguard Index Trust 500 Portfolio 516,381 shares (cost: $31,062,694) $ 46,531,049 PIMCO Total Return Fund 972,301 shares (cost: $9,938,846) Brandywine Blue Fund 79,718 shares (cost: $2,300,525) Vanguard Fixed Income Long-Term Corporate Portfolio 1,063,658 shares (cost: $9,218,984) ------------- ------------- ------------- ------------- ------------- 16,716,816 36,946,857 23,800,644 20,598,427 46,531,049 Cash and short-term investments -- -- -- -- -- Interest and dividends receivable -- -- 1 -- 1 Other receivables -- 150 1,307 -- 10,557 Net Inter-fund transfers (payable) receivable (348,666) (287,693) 160,679 (8,801) 510,638 ------------- ------------- ------------- ------------- ------------- Total assets 16,368,150 36,659,314 23,962,631 20,589,626 47,052,245 LIABILITIES Accrued liabilities 6,987 13,308 7,866 7,417 13,119 Other liabilities 117,404 -- -- 4,058 -- ------------- ------------- ------------- ------------- ------------- Total liabilities 124,391 13,308 7,866 11,475 13,119 ------------- ------------- ------------- ------------- ------------- Net assets available for plan benefits $ 16,243,759 $ 36,646,006 $ 23,954,765 $ 20,578,151 $ 47,039,126 ============= ============= ============= ============= =============
VANGUARD FIXED INCOME LONG-TERM PIMCO TOTAL BRANDYWINE CORPORATE RETURN FUND BLUE FUND PORTFOLIO TOTAL ------------- ------------- ------------- ------------- ASSETS Institutional Contracts (at cost plus interest) $ 120,784,299 Investments at fair value: American Express Company Common Stock Fund 440,443 shares (cost: $10,122,019) 38,593,823 Lehman Brothers Holdings Inc. Common Stock Fund 703,642 shares (cost: $15,659,963) 35,138,123 American Century Ultra Investors Fund 2,329,416 shares (cost: $56,928,938) 63,499,886 Prime Value Obligations Fund 16,716,816 shares (cost: $16,716,816) 16,716,816 Templeton Foreign Fund 3,713,252 shares (cost: $36,051,442) 36,946,857 Income Fund of America 1,340,881 shares (cost: $20,187,646) 23,800,644 Fidelity Capital & Income Fund 2,063,971 shares (cost: $19,392,385) 20,598,427 Vanguard Index Trust 500 Portfolio 516,381 shares (cost: $31,062,694) 46,531,049 PIMCO Total Return Fund 972,301 shares (cost: $9,938,846) $ 10,539,748 10,539,748 Brandywine Blue Fund 79,718 shares (cost: $2,300,525) $ 2,105,351 2,105,351 Vanguard Fixed Income Long-Term Corporate Portfolio 1,063,658 shares (cost: $9,218,984) $ 9,881,380 9,881,380 ------------- ------------- ------------- ------------- 10,539,748 2,105,351 9,881,380 425,136,403 Cash and short-term investments -- -- -- 427,090 Interest and dividends receivable 1 -- -- 101,047 Other receivables -- -- 1,367 1,820,307 Net Inter-fund transfers (payable) receivable 200,681 1,562,248 322,934 -- ------------- ------------- ------------- ------------- Total assets 10,740,430 3,667,599 10,205,681 427,484,847 LIABILITIES Accrued liabilities 3,998 114 3,469 217,932 Other liabilities 946 3 -- 122,411 ------------- ------------- ------------- ------------- Total liabilities 4,944 117 3,469 340,343 ------------- ------------- ------------- ------------- Net assets available for plan benefits $ 10,735,486 $ 3,667,482 $ 10,202,212 $ 427,144,504 ============= ============= ============= =============
See accompanying notes. 2 6 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Statement of Net Assets Available for Plan Benefits, With Fund Information December 30, 1996 Investment Funds
AMERICAN LEHMAN EXPRESS BROTHERS COMPANY HOLDINGS INC. TWENTIETH SHORT-TERM FIXED INCOME COMMON COMMON CENTURY ULTRA INTEREST FUND FUND STOCK FUND STOCK FUND INVESTORS FUND ------------- ------------- ------------- ------------- ------------- ASSETS Institutional Contracts (at cost plus interest) $ 126,138,571 Investments at fair value: American Express Company Common Stock Fund 523,614 shares (cost: $12,033,409) $ 30,042,353 Lehman Brothers Holdings Inc. Common Stock Fund 624,363 shares (cost: $11,363,000) $ 19,589,389 Twentieth Century Ultra Investors Fund 1,829,588 shares (cost: $41,439,988) $ 52,015,185 Prime Value Obligations Fund 16,757,626 shares (cost: $16,757,626) Templeton Foreign Fund 3,175,898 shares (cost: $29,764,390) Income Fund of America 1,134,086 shares (cost: $16,197,319) Fidelity Capital & Income Fund 1,866,652 shares (cost: $17,459,339) Vanguard Index Trust 500 Portfolio 431,688 shares (cost: $23,244,493) PIMCO Total Return Fund 941,665 shares (cost: $9,750,046) Vanguard Fixed Income Long-Term Corporate Portfolio 929,657 shares (cost: $7,958,488) ------------- ------------- ------------- ------------- ------------- -- 126,138,571 30,042,353 19,589,389 52,015,185 Cash and short-term investments $ 263,792 598,115 472 43,781 101,091 Interest and dividends receivable 1,658 750,574 93 -- -- Other receivables 11,173 5,039 43,932 1,818,875 10,297 Net Inter-fund transfers (payable) receivable 47,878 (266,836) (411,102) (407,841) 143,106 ------------- ------------- ------------- ------------- ------------- Total assets 324,501 127,225,463 29,675,748 21,044,204 52,269,679 LIABILITIES Accrued liabilities -- 40,422 8,490 5,199 15,789 Other liabilities -- -- -- -- 101,091 ------------- ------------- ------------- ------------- ------------- Total liabilities -- 40,422 8,490 5,199 116,880 ------------- ------------- ------------- ------------- ------------- Net assets available for plan benefits $ 324,501 $ 127,185,041 $ 29,667,258 $ 21,039,005 $ 52,152,799 ============= ============= ============= ============= =============
PRIME VALUE VANGUARD INDEX OBLIGATIONS TEMPLETON INCOME FUND OF FIDELITY CAPITAL TRUST 500 FUND FOREIGN FUND AMERICA & INCOME FUND PORTFOLIO ------------- ------------- ------------- ------------- ------------- ASSETS Institutional Contracts (at cost plus interest) Investments at fair value: American Express Company Common Stock Fund 523,614 shares (cost: $12,033,409) Lehman Brothers Holdings Inc. Common Stock Fund 624,363 shares (cost: $11,363,000) Twentieth Century Ultra Investors Fund 1,829,588 shares (cost: $41,439,988) Prime Value Obligations Fund 16,757,626 shares (cost: $16,757,626) $ 16,757,626 Templeton Foreign Fund 3,175,898 shares (cost: $29,764,390) $ 32,711,752 Income Fund of America 1,134,086 shares (cost: $16,197,319) $ 18,882,528 Fidelity Capital & Income Fund 1,866,652 shares (cost: $17,459,339) $ 17,434,530 Vanguard Index Trust 500 Portfolio 431,688 shares (cost: $23,244,493) $ 30,377,873 PIMCO Total Return Fund 941,665 shares (cost: $9,750,046) Vanguard Fixed Income Long-Term Corporate Portfolio 929,657 shares (cost: $7,958,488) ------------- ------------- ------------- ------------- ------------- 16,757,626 32,711,752 18,882,528 17,434,530 30,377,873 Cash and short-term investments 27 57,707 21,006 31,523 79,873 Interest and dividends receivable -- -- -- -- -- Other receivables 1,584 400 1,544 -- 7,441 Net Inter-fund transfers (payable) receivable 635,063 (95,782) (153,304) 5,800 449,454 ------------- ------------- ------------- ------------- ------------- Total assets 17,394,300 32,674,077 18,751,774 17,471,853 30,914,641 LIABILITIES Accrued liabilities 5,478 9,704 5,610 5,246 7,610 Other liabilities 108,309 57,707 21,006 33,782 79,873 ------------- ------------- ------------- ------------- ------------- Total liabilities 113,787 67,411 26,616 39,028 87,483 ------------- ------------- ------------- ------------- ------------- Net assets available for plan benefits $ 17,280,513 $ 32,606,666 $ 18,725,158 $ 17,432,825 $ 30,827,158 ============= ============= ============= ============= =============
VANGUARD FIXED INCOME LONG-TERM PIMCO TOTAL CORPORATE RETURN FUND PORTFOLIO TOTAL ------------- ------------- ------------- ASSETS Institutional Contracts (at cost plus interest) $ 126,138,571 Investments at fair value: American Express Company Common Stock Fund 523,614 shares (cost: $12,033,409) 30,042,353 Lehman Brothers Holdings Inc. Common Stock Fund 624,363 shares (cost: $11,363,000) 19,589,389 Twentieth Century Ultra Investors Fund 1,829,588 shares (cost: $41,439,988) 52,015,185 Prime Value Obligations Fund 16,757,626 shares (cost: $16,757,626) 16,757,626 Templeton Foreign Fund 3,175,898 shares (cost: $29,764,390) 32,711,752 Income Fund of America 1,134,086 shares (cost: $16,197,319) 18,882,528 Fidelity Capital & Income Fund 1,866,652 shares (cost: $17,459,339) 17,434,530 Vanguard Index Trust 500 Portfolio 431,688 shares (cost: $23,244,493) 30,377,873 PIMCO Total Return Fund 941,665 shares (cost: $9,750,046) $ 9,953,400 9,953,400 Vanguard Fixed Income Long-Term Corporate Portfolio 929,657 shares (cost: $7,958,488) $ 8,320,428 8,320,428 ------------- ------------- ------------- 9,953,400 8,320,428 362,223,635 Cash and short-term investments 9,999 14,708 1,222,094 Interest and dividends receivable -- -- 752,325 Other receivables -- 975 1,901,260 Net Inter-fund transfers (payable) receivable 39,015 14,549 -- ------------- ------------- ------------- Total assets 10,002,414 8,350,660 366,099,314 LIABILITIES Accrued liabilities 3,028 2,687 109,263 Other liabilities 10,908 14,708 427,384 ------------- ------------- ------------- Total liabilities 13,936 17,395 536,647 ------------- ------------- ------------- Net assets available for plan benefits $ 9,988,478 $ 8,333,265 $ 365,562,667 ============= ============= =============
See accompanying notes. 3 7 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Statement of Changes in Net Assets Available for Plan Benefits, With Fund Information Year ended December 30, 1997 Investment Funds
---------------------------------------------------------------------------------- AMERICAN LEHMAN EXPRESS BROTHERS COMPANY HOLDINGS INC. AMERICAN SHORT-TERM FIXED INCOME COMMON COMMON CENTURY ULTRA INTEREST FUND FUND STOCK FUND STOCK FUND INVESTORS FUND ------------- ------------- ------------ ------------ ------------ Investment Income: Interest and dividends $ 19,078 $ 8,639,070 $ 537,266 $ 167,428 $ 24,548 Net realized and unrealized appreciation (depreciation) in fair value of investments -- -- 12,205,160 12,234,246 11,186,103 ------------ ------------- ------------ ------------ ------------ 19,078 8,639,070 12,742,426 12,401,674 11,210,651 Contributions: Employer -- -- -- 1,722,065 -- Participants -- 3,313,957 -- 1,904,278 6,042,414 Rollovers -- 73,357 -- 346,569 885,332 ------------ ------------- ------------ ------------ ------------ -- 3,387,314 -- 3,972,912 6,927,746 Net Inter-fund transfers (out) in -- (6,365,374) (1,380,654) 1,862,026 (1,171,441) Administrative fees -- (122,050) (29,555) (25,684) (50,500) Participant withdrawals -- (13,914,036) (2,380,147) (2,357,871) (5,656,672) Transfer (to) from other plans -- -- -- -- -- ------------ ------------- ------------ ------------ ------------ -- (20,401,460) (3,790,356) (521,529) (6,878,613) ------------ ------------- ------------ ------------ ------------ Net increase (decrease) 19,078 (8,375,076) 8,952,070 15,853,057 11,259,784 Net assets available for plan benefits, beginning of year 324,501 127,185,041 29,667,258 21,039,005 52,152,799 ------------ ------------- ------------ ------------ ------------ Net assets available for plan benefits, end of year $ 343,579 $ 118,809,965 $ 38,619,328 $ 36,892,062 $ 63,412,583 ============ ============= ============ ============ ============
--------------------------------------------------------------------------------- PRIME VALUE FIDELITY CAPITAL VANGUARD OBLIGATIONS TEMPLETON INCOME FUND & INCOME INDEX TRUST FUND FOREIGN FUND OF AMERICA FUND 500 PORTFOLIO ------------ ------------ ------------ ------------ ------------ Investment Income: Interest and dividends $ 976,869 $ 1,328,608 $ 1,142,260 $ 1,358,842 $ 757,961 Net realized and unrealized appreciation (depreciation) in fair value of investments -- 1,159,175 2,899,941 1,307,405 9,834,067 ------------ ------------ ------------ ------------ ------------ 976,869 2,487,783 4,042,201 2,666,247 10,592,028 Contributions: Employer -- -- -- -- -- Participants 1,258,054 3,903,768 1,459,306 2,316,102 5,070,556 Rollovers 237,325 700,351 207,136 518,134 1,128,887 ------------ ------------ ------------ ------------ ------------ 1,495,379 4,604,119 1,666,442 2,834,236 6,199,443 Net Inter-fund transfers (out) in (113,136) 133,272 962,039 (838,733) 2,664,068 Administrative fees (14,775) (31,568) (18,081) (16,901) (35,445) Participant withdrawals (3,381,091) (3,154,266) (1,422,994) (1,499,523) (3,208,126) Transfer (to) from other plans -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ (3,509,002) (3,052,562) (479,036) (2,355,157) (579,503) ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (1,036,754) 4,039,340 5,229,607 3,145,326 16,211,968 Net assets available for plan benefits, beginning of year 17,280,513 32,606,666 18,725,158 17,432,825 30,827,158 ------------ ------------ ------------ ------------ ------------ Net assets available for plan benefits, end of year $ 16,243,759 $ 36,646,006 $ 23,954,765 $ 20,578,151 $ 47,039,126 ============ ============ ============ ============ ============
---------------------------------------------------------------- VANGUARD FIXED INCOME LONG-TERM PIMCO TOTAL BRANDYWINE CORPORATE RETURN FUND BLUE FUND PORTFOLIO TOTAL ------------ ----------- ------------ ------------- Investment Income: Interest and dividends $ 649,540 $ -- $ 596,346 $ 16,197,816 Net realized and unrealized appreciation (depreciation) in fair value of investments 273,864 (206,749) 436,086 51,329,298 ------------ ----------- ------------ ------------- 923,404 (206,749) 1,032,432 67,527,114 Contributions: Employer -- -- -- 1,722,065 Participants 793,294 22,709 759,110 26,843,548 Rollovers 85,395 -- 178,619 4,361,105 ------------ ----------- ------------ ------------- 878,689 22,709 937,729 32,926,718 Net Inter-fund transfers (out) in (392,051) 3,851,778 788,206 -- Administrative fees (8,750) (256) (7,229) (360,794) Participant withdrawals (654,284) -- (882,191) (38,511,201) Transfer (to) from other plans -- -- -- -- ------------ ----------- ------------ ------------- (1,055,085) 3,851,522 (101,214) (38,871,995) ------------ ----------- ------------ ------------- Net increase (decrease) 747,008 3,667,482 1,868,947 61,581,837 Net assets available for plan benefits, beginning of year 9,988,478 -- 8,333,265 365,562,667 ------------ ----------- ------------ ------------- Net assets available for plan benefits, end of year $ 10,735,486 $ 3,667,482 $ 10,202,212 $ 427,144,504 ============ =========== ============ =============
See accompanying notes. 4 8 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Statement of Changes in Net Assets Available for Plan Benefits, With Fund Information Year ended December 30, 1996 Investment Funds
-------------------------------------------------------------------- AMERICAN LEHMAN EXPRESS BROTHERS COMPANY HOLDINGS INC. SHORT-TERM FIXED INCOME COMMON COMMON INTEREST FUND FUND STOCK FUND STOCK FUND ------------ ------------- ------------ ------------ Investment Income: Interest and dividends $ 19,411 $ 9,326,533 $ 536,067 $ 134,879 Net realized and unrealized appreciation (depreciation) in fair value of investments -- -- 8,942,664 6,382,929 ------------ ------------- ------------ ------------ 19,411 9,326,533 9,478,731 6,517,808 Contributions: Employer -- -- -- 1,829,783 Participants -- 3,982,268 -- 1,332,461 Rollovers -- 134,831 -- 160,079 ------------ ------------- ------------ ------------ -- 4,117,099 -- 3,322,323 Net Inter-fund transfers (out) in -- (2,057,350) (1,982,537) (850,253) Administrative fees -- (61,495) (13,103) (8,943) Participant withdrawals -- (12,724,436) (3,568,012) (1,783,659) Transfer (to) from other plans -- (208,682) (170,188) (33,131) ------------ ------------- ------------ ------------ -- (15,051,963) (5,733,840) (2,675,986) ------------ ------------- ------------ ------------ Net increase (decrease) 19,411 (1,608,331) 3,744,891 7,164,145 Net assets available for plan benefits, beginning of year 305,090 128,793,372 25,922,367 13,874,860 ------------ ------------- ------------ ------------ Net assets available for plan benefits, end of year $ 324,501 $ 127,185,041 $ 29,667,258 $ 21,039,005 ============ ============= ============ ============
------------------------------------------------------------------------------- TWENTIETH CENTURY PRIME VALUE FIDELITY ULTRA INVESTORS OBLIGATIONS TEMPLETON INCOME FUND OF CAPITAL FUND FUND FOREIGN FUND AMERICA & INCOME FUND ------------ ------------ ------------ ------------ ------------ Investment Income: Interest and dividends $ 1,011 $ 919,531 $ 856,000 $ 964,379 $ 1,449,302 Net realized and unrealized appreciation (depreciation) in fair value of investments 7,163,514 -- 3,972,698 1,718,857 355,639 ------------ ------------ ------------ ------------ ------------ 7,164,525 919,531 4,828,698 2,683,236 1,804,941 Contributions: Employer -- -- -- -- -- Participants 5,632,595 1,632,992 3,693,459 1,360,245 2,279,015 Rollovers 772,818 336,682 524,518 71,573 426,623 ------------ ------------ ------------ ------------ ------------ 6,405,413 1,969,674 4,217,977 1,431,818 2,705,638 Net Inter-fund transfers (out) in 339,031 (443,195) 1,068,291 83,558 (519,343) Administrative fees (26,153) (7,931) (15,740) (9,226) (8,356) Participant withdrawals (5,179,526) (3,622,291) (3,477,019) (1,500,889) (1,665,853) Transfer (to) from other plans (236,880) (118,128) (131,310) (52,292) (14,858) ------------ ------------ ------------ ------------ ------------ (5,103,528) (4,191,545) (2,555,778) (1,478,849) (2,208,410) ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 8,466,410 (1,302,340) 6,490,897 2,636,205 2,302,169 Net assets available for plan benefits, beginning of year 43,686,389 18,582,853 26,115,769 16,088,953 15,130,656 ------------ ------------ ------------ ------------ ------------ Net assets available for plan benefits, end of year $ 52,152,799 $ 17,280,513 $ 32,606,666 $ 18,725,158 $ 17,432,825 ============ ============ ============ ============ ============
---------------------------------------------------------------- VANGUARD FIXED INCOME VANGUARD INDEX LONG-TERM TRUST 500 PIMCO TOTAL CORPORATE PORTFOLIO RETURN FUND PORTFOLIO TOTAL ------------ ----------- ------------ ------------- Investment Income: Interest and dividends $ 509,242 $ 580,338 $ 543,227 $ 15,839,920 Net realized and unrealized appreciation (depreciation) in fair value of investments 4,987,516 (128,978) (433,708) 32,961,131 ------------ ----------- ------------ ------------- 5,496,758 451,360 109,519 48,801,051 Contributions: Employer -- -- -- 1,829,783 Participants 3,334,129 876,072 855,438 29,978,674 Rollovers 948,487 193,738 105,738 3,675,087 ------------ ----------- ------------ ------------- 4,282,616 1,069,810 961,176 30,483,544 Net Inter-fund transfers (out) in 5,106,198 (80,036) (664,364) -- Administrative fees (13,127) (4,814) (4,295) (173,183) Participant withdrawals (1,478,919) (682,915) (652,215) (36,335,734) Transfer (to) from other plans (79,241) (380) (3,663) (1,048,753) ------------ ----------- ------------ ------------- 3,534,911 (768,145) (1,324,537) (37,557,670) ------------ ----------- ------------ ------------- Net increase (decrease) 13,314,285 753,025 (253,842) 41,726,925 Net assets available for plan benefits, beginning of year 17,512,873 9,235,453 8,587,107 323,835,742 ------------ ----------- ------------ ------------- Net assets available for plan benefits, end of year $ 30,827,158 $ 9,988,478 $ 8,333,265 $ 365,562,667 ============ =========== ============ =============
See accompanying notes. 5 9 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements December 30, 1997 and 1996 1. DESCRIPTION OF THE PLAN GENERAL The Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the "Plan") is a defined contribution plan. The Plan became effective January 1, 1984, was amended and restated effective January 1, 1989 and was subsequently amended through March 16, 1998. Under the terms of the Plan, qualified employees of Lehman Brothers Holdings Inc. ("Lehman") and its participating subsidiaries (collectively, the "Company") are eligible to become Plan participants as soon as administratively possible upon employment. Prior to July 1, 1995, there was a 12 month service requirement for plan participants. The Plan is subject to the provisions of the ERISA. A complete description of the Plan is contained in the Plan document available to all participants from the Plan Administrator. CONTRIBUTIONS Upon enrollment, a participant may elect to contribute, on a pre-tax basis, between one and fifteen percent of the participant's annual compensation, as defined in the Plan document. The Company may make a contribution, in Company stock or cash, on behalf of eligible participants who have completed 12 months of service and are employees on the last day of the Plan year. The amount of the Company contribution, if any, will be determined by the Company's Board of Directors. If a Company contribution is made it will be allocated as follows: 1. Participants whose compensation is below $37,800 per year and are not Investment Representatives, Investment Representative Trainees, Branch Managers, or Institutional Salespeople will receive a Company contribution of $400 plus a matching contribution of 100 percent of the first $600 of the employee's Before-Tax contributions. 2. Participants whose compensation is between $37,800 and $100,000 per year will receive a matching contribution of up to 100 percent of the first $1,000 of the employee's Before-Tax contributions. Company contributions to participants whose compensation is between $37,800 and $100,000 per year will be made only if there are funds remaining after contributions are made for participants making less than $37,800 per year. 6 10 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN-CONTINUED 3. Company contributions will not be made for participants whose compensation exceeds $100,000 per year. In 1997 and 1996, Company contributions were made in cash. Boston Safe Deposit & Trust Company ("Boston Safe"), the Plan's custodian, used cash to purchase the Company's common stock. A participant's Before-Tax Contributions will not be subject to tax until distribution. The Code provides that Before-Tax Contributions (and any elective deferrals to other plans containing a cash or deferred arrangement) will be included in a participant's gross income to the extent such contributions exceed the statutory limitation, which is indexed for inflation. In both 1997 and 1996, the maximum limitation amount was $9,500. For 1998 the maximum limitation amount is $10,000. The Company's contributions on behalf of a participant, as well as the income and appreciation on amounts invested in the investment funds offered under the Plan, are not includable in the participant's taxable income until distributed. Rollover contributions arise from contributions to the Plan of certain assets previously held on behalf of participants by other qualified plans. VALUATION OF PARTICIPANT ACCOUNTS Separate accounts are maintained for each participant whereby the participant's account is credited for contributions and investment income and credited or charged, as appropriate, for investment appreciation or depreciation. Participant accounts are charged for withdrawals. The periodic allocation of investment income and investment appreciation or depreciation is based upon the participant's beneficial interest in each of the investment funds at the valuation date. INVESTMENTS Participant's contributions can be invested in any of the funds listed below. Investments of contributions among the investment funds can be made in increments of 10%, with a maximum of 50% of contributions permitted to be invested in the Lehman Brothers Holdings Inc. Common Stock Fund. Participants can elect to change their contribution rate and investment direction of new contributions on a monthly basis. Participants may also elect to transfer existing fund balances among the investment funds on a monthly basis. 7 11 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN-CONTINUED The following is a general description of each investment fund in which the Plan invested since January 1996, as directed by participants: Fixed Income Fund: This fund invests its assets with one or more insurance companies or financial institutions (collectively, "institutions") which issue contracts ("contracts") providing for the repayment of principal with a specified annual rate of interest for a specified period. The fund is currently invested in contracts negotiated with the following institutions:
CARRYING VALUE AT MATURITY INTEREST DECEMBER 30, DATE RATE (%) 1997 1996 -------- -------- ------------ ------------ Metropolitan Life Insurance Co. Contract #24565 12/15/01 7.30 $ 11,140,578 $ 9,946,912 Contract #12865 03/31/97 8.10 - 5,401,713 Contract #13955 06/15/99 8.25 12,373,979 17,035,023 Allstate Life Insurance Company Contract #GICGA5584 12/15/00 7.30 14,055,623 17,365,463 Contract #GICGA5806 07/05/00 6.81 7,081,548 8,792,551 John Hancock Mutual Life Insurance Co. Contract #5565 09/30/97 9.60 - 5,488,257 Prudential Asset Management Group Contract #7430-211 12/15/99 6.52 9,729,580 9,086,741 American International Life Assurance Company of New York Contract #18180T 10/01/98 5.45 14,120,693 13,332,607 People's Security Insurance Co. Contract #BDA00473FR 08/15/01 8.20 12,693,416 11,655,780 Contract #BDA00568FR 12/15/01 6.85 11,200,343 10,425,516 Aetna Life Insurance Co. Contract #014005 12/30/97 8.80 - 4,597,936 The Principal Financial Group Contract #4-08804-01 12/15/00 6.15 5,360,200 5,024,934 Contract #4-08804-02 12/15/02 6.40 10,599,252 7,985,138 New York Life Insurance Company Contract #30727 6/14/02 6.52 7,376,078 - Transamerica Life Insurance Company Contract #51499 12/15/02 6.02 5,053,009 - ------------ ------------- $120,784,299 $126,138,571 ============ =============
8 12 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN-CONTINUED The present value of the contracts approximates their fair value as of December 30, 1997 and 1996. Present value was estimated using an analysis based on the Plan's current investment rate for a similar contract. American Express Company Common Stock Fund: This fund invests solely in the common stock of American Express. As of May 31, 1994, this fund has been closed to any new contributions, dividend reinvestments, or transfers in from other funds. Lehman Brothers Holdings Inc. Common Stock Fund: This fund invests solely in the common stock of the Company. American Century Ultra Investors Fund (Formerly known as Twentieth Century Ultra Investors Fund): The primary objective of this fund is to provide a high level of capital appreciation by investing primarily in medium and small-sized companies with above average growth potential. Prime Value Obligations Fund : The objective of this short-term fixed income money market fund is to provide current income and stability of principal. Prior to November 15, 1996, this fund was called the Lehman Brothers Prime Value Money Market Fund. Templeton Foreign Fund: The primary objective of this fund is to provide long-term growth of capital by investing primarily in securities of companies located outside the United States. Income Fund of America: The fund's objective is to provide current income by investing in debt securities and capital appreciation by investing in equity securities. Fidelity Capital & Income Fund: The primary objective of this fund is to provide a high total return of capital growth and income. The fund invests primarily in lower rated debt securities and securities of companies with uncertain financial position. Vanguard Index Trust 500 Portfolio/S&P 500 Index Fund: This equity fund's objective is to replicate the investment performance of the Standard & Poor's 500 Index. 9 13 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN-CONTINUED PIMCO Total Return Fund: This fund is an intermediate term, fixed income fund whose objective is to provide a high level of current income with reasonable risk by investing in a diversified portfolio of fixed income securities of varying maturities. Brandywine Blue Fund: This fund invests in high quality blue chip stocks with the objective of providing long-term growth. This fund was established and began accepting contributions on November 1, 1997. Vanguard Fixed Income Long-Term Corporate Portfolio: This fund invests in a diversified portfolio of long-term corporate and government bonds with the objective of providing a high level of current income. In addition to the funds described above, a short-term interest fund provides overnight investments in money market funds of Boston Safe for temporarily invested cash. While cash for withdrawals is disbursed from this fund, withdrawals are recorded in the investment fund from which the participant withdrew. INVESTMENTS IN EXCESS OF 5% OF NET ASSETS AVAILABLE FOR PLAN BENEFITS The following is a schedule of investments held in excess of 5% of the net assets available for plan benefits at the end of 1997.
PAR VALUE/ MARKET VALUE NUMBER AT DECEMBER FUNDS OF SHARES 30, 1997 - --------------------------------------------- ----------- ------------- American Express Company common stock 440,443 $ 38,593,823 Lehman Brothers Holdings Inc. common stock 703,642 35,138,123 American Century Ultra Investors Fund 2,329,416 63,499,886 Templeton Foreign Fund 3,713,252 36,946,857 Vanguard Index Trust 500 Portfolio 516,381 46,531,049 Income Fund of America 1,340,881 23,800,644
10 14 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN-CONTINUED BENEFITS A participant may elect, after attaining the age of 59-1/2, to withdraw all or any portion of the value of his accounts, provided that each withdrawal is at least $1,000 (or is 100% of the value of his account if less than $1,000). Withdrawals by participants before the age of 59-1/2 are permitted only after meeting specified financial hardship criteria and after obtaining approval by the Employee Benefit Plans Committee of the Company. Effective April 1, 1996, a participant can elect to withdraw all or a part of their rollover contribution made to the Plan, as long as the partial withdrawal of their rollover contribution is at least $1,000 (or is 100% of the value of his account if less than $1,000). However a participant can elect to withdraw all or part of their rollover contribution only once during any consecutive 12-month period. Although hardship and rollover withdrawals are allowed, a participant may be subject to an additional 10 percent tax imposed by the Code. If a participant's employment with the Company terminates for a reason other than death, the balance in the participant's account is paid to the participant in a lump-sum payment. However, if the balance in his account exceeds $3,500 ($5,000, effective 1/1/98), payment will not be made without the participant's consent. Upon death of the participant, the balance in the participant's account is paid to the designated beneficiary (as provided by the Plan) in a lump-sum payment. BENEFITS PAYABLE Benefits payable to those participants who have elected to withdraw from the Plan but have not yet been paid was $5,173,739 and $4,508,758 in 1997 and 1996, respectively. VESTING Plan participants are 100 percent vested in all amounts in their respective Plan accounts. 11 15 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN-CONTINUED INCOME TAX STATUS The Internal Revenue Service ("IRS") made a favorable determination in a letter dated February 14, 1995 that the Plan is qualified under Sections 401(a) and 401(k) of the Code and that the related trust established as part of the Plan is, therefore, exempt from federal income taxes under the provisions of Section 501(a) of the Code. It is not anticipated that amendments to the Plan after the date of the IRS determination letter will affect the qualified and tax-exempt status of the Plan and trust. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES VALUATION OF INVESTMENTS Investments in mutual funds are valued at the quoted redemption prices on the last business day of the Plan year; investments in the common stock of American Express and the Company are valued at the quoted market price on the last business day of the Plan year; short-term investments and deposits with insurance companies in connection with contracts are valued at cost plus accrued interest. Purchase and sales of securities are reflected on a trade-date basis. OTHER Dividend income is recorded on the ex-dividend date. Income from other investments is recorded on the accrual basis. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 12 16 Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Notes to Financial Statements (continued) 3. ADMINISTRATIVE FEES Except to the extent paid by the Company, all expenses of the Plan are paid by the Plan. In 1997 and 1996, the Plan was charged $360,794 and $173,183 for administrative expenses incurred during the respective years. The Company paid all expenses not directly relating to the administration of the Plan, as well as all expenses paid to affiliated investment managers. 4. PLAN TERMINATION While it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time subject to the provisions set forth in ERISA and the Code. 5. RELATED PARTY TRANSACTIONS On November 15, 1996, the Company sold the Lehman Brothers Prime Value Money market Fund to Federated Investors. 6. TRANSFER TO OTHER PLAN Prior to May 31, 1994, the Company was a subsidiary of the American Express Company ("American Express"). On May 31, 1994, American Express completed the distribution of a special dividend (the "Spin-off") to its shareholders of all the common stock of the Company held by American Express. As a result of the Spin-off, the Company was no longer a subsidiary of American Express. The account balances associated with former employees of the company, who transferred to American Express prior to May 31, 1994 were transferred to the American Express Incentive Savings Plan in 1996. 13 17 SUPPLEMENTAL INFORMATION 18 Schedule I Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Schedule of Investments Held December 30, 1997
PAR VALUE/ CURRENT VALUE COST NUMBER AT DECEMBER AT DECEMBER OF SHARES 30, 1997 30, 1997 ----------- ------------- ------------ CONTRACTS ISSUED BY INSTITUTIONS Metropolitan Life Insurance Co. Contract #24565 11,140,578 $ 11,140,578 $ 11,140,578 Contract #13955 12,373,979 12,373,979 12,373,979 Allstate Life Insurance Co. Contract #GICA5584 14,055,623 14,055,623 14,055,623 Contract #GICA5806 7,081,548 7,081,548 7,081,548 Prudential Asset Management Group Contract #7430-211 9,729,580 9,729,580 9,729,580 American Internal Life Assurance Company of New York Contract 18180T 14,120,693 14,120,693 14,120,693 People's Security Insurance Co. Contract #BDA00473FR 12,693,416 12,693,416 12,693,416 Contract #BDA00568FR 11,200,343 11,200,343 11,200,343 The Principal Financial Group Contract #4-08804-01 5,360,200 5,360,200 5,360,200 Contract #4-08804-02 10,599,252 10,599,252 10,599,252 New York Life Contract Contract #30727 7,376,078 7,376,078 7,376,078 TransAmerica Life Insurance Co. Contract #51499 5,053,009 5,053,009 5,053,009 ------------- ------------ $120,784,299 $120,784,299 ============= ============ STOCK FUNDS American Express Company Common Stock Fund 440,443 $ 38,593,823* $ 10,122,019 Lehman Brothers Holdings Inc. Common Stock Fund 703,642 35,138,123* 15,659,963 ------------- ------------ $ 73,731,946 $ 25,781,982 ============= ============ MUTUAL FUNDS American Century Ultra Investors Fund 2,329,416 $ 63,499,886* $ 56,928,938 Prime Value Obligations Fund 16,716,816 16,716,816 16,716,816 Templeton Foreign Fund 3,713,252 36,946,857* 36,051,442 Income Fund Of America 1,340,881 23,800,644* 20,187,646 Fidelity Capital & Income Fund 2,063,971 20,598,427 19,392,385 Vanguard Index Trust 500 Portfolio 516,381 46,531,049* 31,062,694 PIMCO Total Return Fund 972,301 10,539,748 9,938,846 Vanguard Fixed Income Long-Term Corporate Portfolio 1,063,658 9,881,380 9,218,984 Brandywine Blue Fund 79,718 2,105,351 2,300,525 ------------- ------------ $230,620,158 $201,798,276 ============= ============
* Investment in excess of five percent of Net Assets Available for Plan Benefits at end of Plan year. 14 19 Schedule II Lehman Brothers Holdings Inc. Tax Deferred Savings Plan Schedule of Series of Transactions in Excess of Five Percent of Net Assets Available for Plan Benefits at Beginning of Year For the year ended December 30, 1997
CONTRACT COST OF PROCEEDS FROM DESCRIPTION OF ASSET NUMBER PURCHASES SALES GAIN (LOSS) - -------------------------------- ---------- ----------- ------------- ----------- American Century Ultra Investors $19,120,824 American Century Ultra Investors $ 8,104,234 $ 2,195,555 The Principal Financial Group 4-08804-02 $15,266,798 The Principal Financial Group 4-08804-02 $12,652,684 $ - New York Life Contract 30727 $12,971,820 New York Life Contract 30727 $ 5,595,742 $ -
15 20 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the Lehman Brothers Holdings Inc. Employee Benefit Plans Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. LEHMAN BROTHERS HOLDINGS INC. TAX DEFERRED SAVINGS PLAN By: /s/Wendy Kleinschmidt --------------------------- Wendy Kleinschmidt Lehman Brothers Holdings Inc. Employee Benefit Plans Committee June 29, 1998 21 EXHIBIT INDEX Exhibit No. Description (23) Consent of Experts EX-23 2 CONSENT OF EXPERTS 1 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement of Lehman Brothers Holdings Inc. (Form S-8, File No. 333-07875), pertaining to the Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the "Plan"), of our report dated May 1, 1998, with respect to the financial statements and supplemental schedules of the Plan included in the Plan's Annual Report (Form 11-K) for the year ended December 30, 1997. /s/ Ernst & Young LLP New York, New York June 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----