8-K 1 file001.txt FORM 8-K ================================================================================ 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): DECEMBER 20, 2001 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.) 399 Park Avenue NEW YORK, NY 10022 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (201) 524-2000 ================================================================================ 2 Item 5. Other Events Fourth Quarter Earnings On December 20, 2001, Lehman Brothers Holdings Inc. (the "Registrant") issued a press release with respect to its earnings for the fourth fiscal quarter and full fiscal year 2001, ended November 30, 2001 (the "Earnings Release"). A copy of the Earnings Release follows as Exhibits 99.1 through 99.5 hereto. Item 7. Financial Statements and Exhibits (c) Exhibits The following Exhibits are filed as part of this Report. Exhibit 99.1 Press Release Relating to Fourth Quarter and Fiscal Year 2001 Earnings Exhibit 99.2 Selected Statistical Information (Preliminary and Unaudited) Exhibit 99.3 Consolidated Statement of Income (Three Months Ended November 30, 2001) (Preliminary and Unaudited) Exhibit 99.4 Consolidated Statement of Income (Twelve Months Ended November 30, 2001) (Preliminary and Unaudited) Exhibit 99.5 Segment Net Revenue Information (Three and Twelve Months Ended November 30, 2001) (Preliminary and Unaudited) 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. LEHMAN BROTHERS HOLDINGS INC. (Registrant) Date: December 20, 2001 By: /s/ David Goldfarb ------------------ David Goldfarb Chief Financial Officer (Principal Financial Officer) 3 EXHIBIT INDEX EXHIBIT NO. EXHIBIT ----------- ------- 99.1 Press Release Relating to Fourth Quarter and Fiscal Year 2001 Earnings 99.2 Selected Statistical Information (Preliminary and Unaudited) 99.3 Consolidated Statement of Income (Three Months Ended November 30, 2001) (Preliminary and Unaudited) 99.4 Consolidated Statement of Income (Twelve Months Ended November 30, 2001) (Preliminary and Unaudited) 99.5 Segment Net Revenue Information (Three and Twelve Months Ended November 30, 2001) (Preliminary and Unaudited) 4 EXHIBIT 99.1 LEHMAN BROTHERS Press Release -------------------------------------------------------------------------------- For Immediate Release MEDIA CONTACT: WILLIAM J. AHEARN 212-526-4379 INVESTOR CONTACT: SHAUN BUTLER 212-526-8381 LEHMAN BROTHERS REPORTS NET INCOME OF $201 MILLION, OR $0.73 PER COMMON SHARE (DILUTED), EXCLUDING THE IMPACT FROM SPECIAL CHARGE OF $71 MILLION RELATED TO THE EVENTS OF SEPTEMBER 11 FIRM REPORTS FULL-YEAR NET INCOME OF $1.326 BILLION, AND RETURN ON EQUITY OF 17.5%, EXCLUDING SPECIAL CHARGE NEW YORK, Dec. 20, 2001 - Lehman Brothers Holdings Inc. (NYSE: LEH) today reported net income of $201 million, or $0.73 per common share (diluted) for the fourth quarter ended November 30, 2001, excluding the impact of a special charge associated with the events of September 11. This compares with $399 million, or $1.46 per common share (diluted) in the fourth quarter of fiscal 2000. Fiscal 2001 fourth quarter results included a special charge of $127 million ($71 million after tax). Fourth quarter earnings, including the impact of the special charge, were $130 million, or $0.46 per common share (diluted). For the full year of fiscal 2001, the Firm reported net income of $1.326 billion (excluding the - more - Earnings/page 2 impact of the special charge), or $4.64 per common share (diluted), compared with $1.775 billion, or $6.38 per share, in fiscal 2000. Including the impact of the fourth-quarter special charge, net income for the fiscal year was $1.255 billion, or $4.38 per common share (diluted). The Firm's fourth quarter and full year results for fiscal 2001 were negatively impacted by the events of September 11, which resulted in the displacement and relocation of the Firm's New York employees located in lower Manhattan. The Firm recorded a $127 million special charge stemming from those events. This charge reflects all costs and asset write-offs associated with these events, net of related estimated insurance recoveries. The Firm is pursuing a claim with its insurance carriers for the property damage, incremental costs, and lost revenues from the business interruption resulting from these events. "Lehman Brothers faced tremendous challenges this year. Despite the difficult economic and market conditions and the direct impact of the tragic events of September 11, we continued to deliver solid financial performance," said Richard S. Fuld, Jr., Chairman and Chief Executive Officer. "Our people came together and showed the strength and resiliency of our culture. Our commitment to our clients, our shareholders, and each other will continue to help us deliver on our 'Best Operator' strategy." He pointed out that despite the impact of September 11 and unfavorable market conditions, Lehman Brothers reported its second best year ever in terms of revenues and net income in fiscal 2001, a return on equity (excluding the special charge) of 17.5% and pre-tax operating margin (excluding the special charge) of 27.8%, reflecting the benefits of the Firm's diversification across its businesses and geographic locations. Net revenues (total revenues less interest expense) for the fourth quarter were $1.203 billion, a decrease of 29 percent from $1.698 billion in the fourth quarter of fiscal 2000. For the full fiscal year of 2001, net revenues were $6.736 billion, a decrease of 13 percent from $7.707 billion in the 12 months of fiscal 2000. -- more -- Earnings/page 3 Nonpersonnel expenses for the fourth quarter of fiscal 2001 were $345 million, compared with $338 million in the previous fiscal year's fourth quarter. Compensation and benefits as a percentage of net revenues was approximately 51 percent. For the full 12 months of 2001, nonpersonnel expenses were $1,424 million, compared with $1,197 million in fiscal 2000. The foregoing exclude the effect of the special charge. For the fiscal 2001 fourth quarter, the Firm's pre-tax operating margin was 20.2 percent, excluding the special charge (9.6 percent including the special charge), compared with 32.6 percent in the fourth quarter of fiscal 2000. Return on common equity was 10.0 percent for the quarter ended November 30, 2001 excluding the special charge (6.3 percent including the special charge), compared with 22.4 percent a year ago. For the full 12 months of fiscal 2001, the Firm's pre-tax operating margin was 27.8 percent, excluding the special charge (26.0 percent including the special charge), compared with 33.5 percent for the full year of fiscal 2000. Return on common equity was 17.5 percent for the year ended November 30, 2001, excluding the special charge (16.5 percent including the special charge), compared with 27.4 percent in fiscal 2000. Return on common equity for all periods is calculated before adjusting for a special preferred dividend, where applicable. As of November 30, 2001, Lehman Brothers' stockholders' equity and trust preferred securities were $9.169 billion and total capital (stockholders' equity, trust preferred, and long-term debt) was approximately $47.5 billion. Book value per common share was $31.81. Earnings per share calculations for 2001 and 2000 include the impact of a special preferred dividend paid to American Express Company and to Nippon Life Insurance Company at fiscal 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. This special preferred dividend expires on May 31, 2002; since this reflects a half-year period, the dividend applies to 50 percent of the amount by which the Firm's net income in fiscal 2002 exceeds $200 million, up to a maximum of $25 million. -- more -- Earnings/page 4 Lehman Brothers (ticker symbol NYSE: LEH), an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high-net-worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private equity, and private client services. The Firm is headquartered in New York, London, and Tokyo and operates in a network of offices around the world. For further information about Lehman Brothers' services, products, and recruitment opportunities, visit our web site at www.lehman.com. Financial Statements Following CONFERENCE CALL A conference call to discuss the Firm's financial results and outlook will be held at 9:00 a.m. EST on Thursday, Dec. 20. Members of the public who would like to access the conference call should dial 888-843-7190 in the U.S., or 712-257-3681 outside the U.S. (passcode: BROTHERS). The conference call will also be accessible through the "Shareholders" section of the Firm's web site, www.lehman.com. For those unable to listen to the live broadcast, a replay will be available on the Firm's web site or by dialing 800-813-5529 in the U.S., or 402-280-1634 outside the U.S., beginning approximately one hour after the event, and remaining available until 5:00 p.m. on January 11, 2002. The passcode for the replay is "LEH." CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This press release may contain forward-looking statements. These statements are not historical facts but instead represent only the Firm's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. The Firm's actual results and financial condition may differ, perhaps materially, from the anticipated results and financial condition in any such forward-looking statements. For more information concerning the risks and other factors that could affect the Firm's future results and financial condition, see "Management's Discussion and Analysis of Financial Condition and Results of Operation" in the Firm's most recent Annual Report to Shareholders and most recent Quarterly Report on Form 10-Q. EXHIBIT 99.2 LEHMAN BROTHERS HOLDINGS INC. SELECTED STATISTICAL INFORMATION (PRELIMINARY AND UNAUDITED) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Twelve Months Ended --------------------------- 2001 2000 --------------------------- INCOME STATEMENT Net Revenues $ 6,736 $7,707 Non-Interest Expenses: Compensation and Benefits 3,437 3,931 Nonpersonnel Expenses 1,424 1,197 Net Income 1,255 1,775 Net Income Applicable to Common Stock 1,161 1,679 Earnings per Common Share Basic $4.77 $6.89 Diluted $4.38 $6.38 DILUTED (EXCLUDING SPECIAL CHARGE) $4.64 $6.38 FINANCIAL RATIOS (%) RETURN ON COMMON EQUITY (ANNUALIZED, EXCLUDING THE SPECIAL CHARGE AND SPECIAL PREFERRED DIVIDENDS, WHERE APPLICABLE)(a) 17.5 27.4 Return on Common Equity (annualized)(b) 15.9 26.6 PRETAX OPERATING MARGIN (EXCLUDING SPECIAL CHARGE) 27.8 33.5 Pretax Operating Margin 26.0 33.5 Compensation & Benefits/Net Revenues 51.0 51.0 EFFECTIVE TAX RATE (EXCLUDING SPECIAL CHARGE) 26.3 29.0 Effective Tax Rate 25.0 29.0 BALANCE SHEET Total Assets Total Assets Excluding Matched Book (c) Common Stockholders' Equity Total Stockholders' Equity + Preferred Securities Subject to Mandatory Redemption Total Capital (d) Book Value per Common Share (e) OTHER DATA (#s) Employees Common Stock Outstanding Average Shares Basic 243,129,154 243,762,511 Diluted (f) 265,257,554 264,163,612
Quarters Ended ------------------------------------------------------------------ 11/30/01 8/31/01 5/31/01 2/28/01 11/30/00 ------------------------------------------------------------------ INCOME STATEMENT Net Revenues $1,203 $1,628 $2,022 $1,883 $1,698 Non-Interest Expenses: Compensation and Benefits 615 830 1,032 960 806 Nonpersonnel Expenses 345 363 365 350 338 Net Income 130 309 430 387 399 Net Income Applicable to Common Stock 119 298 369 375 386 Earnings per Common Share Basic $0.49 $1.24 $1.51 $1.52 $1.60 Diluted $0.46 $1.14 $1.38 $1.39 $1.46 DILUTED (EXCLUDING SPECIAL CHARGE) $0.73 $1.14 $1.38 $1.39 $1.46 FINANCIAL RATIOS (%) RETURN ON COMMON EQUITY (ANNUALIZED, EXCLUDING THE SPECIAL CHARGE AND SPECIAL PREFERRED DIVIDENDS, WHERE APPLICABLE)(a) 10.0 16.2 23.4 21.2 22.4 Return on Common Equity (annualized)(b) 6.3 16.2 20.6 21.2 22.4 PRETAX OPERATING MARGIN (EXCLUDING SPECIAL CHARGE) 20.2 26.7 30.9 30.4 32.6 Pretax Operating Margin 9.6 26.7 30.9 30.4 32.6 Compensation & Benefits/Net Revenues 51.1 51.0 51.0 51.0 47.5 EFFECTIVE TAX RATE (EXCLUDING SPECIAL CHARGE) 11.5 25.8 29.0 30.0 25.5 Effective Tax Rate (24.4) 25.8 29.0 30.0 25.5 BALANCE SHEET Total Assets $248,000 $243,337 $235,936 $236,287 $224,720 Total Assets Excluding Matched Book (c) 165,000 156,393 152,890 155,766 143,478 Common Stockholders' Equity 7,759 7,411 7,279 7,047 7,081 Total Stockholders' Equity + Preferred Securities Subject to Mandatory Redemption 9,169 8,821 8,689 8,457 8,641 Total Capital (d) 47,500 48,157 46,425 44,769 43,874 Book Value per Common Share (e) 31.81 30.83 29.93 28.90 28.78 OTHER DATA (#s) Employees 13,090 13,281 12,426 11,925 11,326 Common Stock Outstanding 237,534,091 239,046,975 244,202,014 247,321,056 236,395,332 Average Shares Basic 241,933,119 240,414,784 243,852,453 246,154,488 241,873,653 Diluted (f) 261,545,485 261,755,211 266,878,412 270,689,336 265,421,298
(a) Return on common equity calculated using net income before adjusting for special charge and special preferred dividends, where applicable. (b) Return on common equity calculated using net income after adjusting for special charge and special preferred dividends, where applicable. (c) Matched book is defined as the lower of securities purchased under agreements to resell or securities sold under agreements to repurchase. (d) Total capital includes long-term debt, stockholders' equity and preferred securities subject to mandatory redemption. (e) This calculation includes restricted stock units granted under the Lehman Stock Award Programs included in stockholders' equity. (f) For the year and quarter ended November 30, 2000, the assumed conversion of Series A and B Convertible Preferred Stock into 2,438,375 common shares had the effect of decreasing diluted earnings per share by $0.03 and $0.01 respectively. EXHIBIT 99.3 LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (PRELIMINARY AND UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA)
Three Months Ended Percentage of ------------------------------------ -------------------------------------- Dollar Change Inc/(Dec) November 30 November 30 Dollar Change Excluding Special 2001 2000 Inc/(Dec) Charge --------------- ---------------- ------------------- ------------------ Revenues: Principal transactions $ 161 $ 659 Investment banking 461 552 Commissions 264 254 Interest and dividends 3,400 4,928 Other 14 21 --------------- ---------------- Total revenues 4,300 6,414 Interest expense 3,097 4,716 --------------- ---------------- Net revenues 1,203 1,698 (29)% (29)% --------------- ---------------- Non-interest expenses: Compensation and benefits 615 806 Technology and communications 125 91 Brokerage and clearance fees 76 76 Occupancy 59 38 Business development 36 57 Professional fees 26 56 Other 23 20 Special charge 127 - --------------- ---------------- Total non-interest expenses 1,087 1,144 (5)% (16)% Income before taxes and dividends on trust preferred securities 116 554 (Benefit) provision for income taxes (28) 141 Dividends on trust preferred securities 14 14 --------------- ---------------- Net income $ 130 $ 399 (67)% (50)% =============== ================ Preferred stock dividends 11 13 Net income applicable to common stock $ 119 $ 386 (69)% (51)% =============== ================ Earnings per common share Basic $ 0.49 $ 1.60 =============== ================ Diluted $ 0.46 $ 1.46 =============== ================ Earnings per common share (Diluted), excluding the special charge $ 0.73 ===============
EXHIBIT 99.4 LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (PRELIMINARY AND UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA)
Twelve Months Ended Percentage of ------------------------------------ -------------------------------------- Dollar Change Inc/(Dec) November 30 November 30 Dollar Change Excluding 2001 2000 Inc/(Dec) Special Charge ---------------- --------------- ------------------- ------------------ Revenues: Principal transactions $ 2,779 $ 3,713 Investment banking 2,000 2,216 Commissions 1,091 944 Interest and dividends 16,470 19,440 Other 52 134 ---------------- --------------- Total revenues 22,392 26,447 Interest expense 15,656 18,740 ---------------- --------------- Net revenues 6,736 7,707 (13)% (13)% ---------------- --------------- Non-interest expenses: Compensation and benefits 3,437 3,931 Technology and communications 501 341 Brokerage and clearance fees 308 264 Occupancy 198 135 Business development 183 182 Professional fees 152 184 Other 82 91 Special charge 127 - ---------------- --------------- Total non-interest expenses 4,988 5,128 (3)% (5)% Income before taxes and dividends on trust preferred securities 1,748 2,579 Provision for income taxes 437 748 Dividends on trust preferred securities 56 56 ---------------- --------------- Net income $ 1,255 $ 1,775 (29)% (25)% ================ =============== Preferred stock dividends 94 96 Net income applicable to common stock $ 1,161 $ 1,679 (31)% (27)% ================ =============== Earnings per common share Basic $ 4.77 $ 6.89 ================ =============== Diluted $ 4.38 $ 6.38 ================ =============== Earnings per common share (Diluted), excluding the special charge $4.64 ================
EXHIBIT 99.5 LEHMAN BROTHERS HOLDINGS INC. SEGMENT NET REVENUE INFORMATION (PRELIMINARY AND UNAUDITED) (IN MILLIONS)
Three Months Ended Twelve Months Ended ----------------------------------- ------------------------------------ November 30 November 30 November 30 November 30 2001 2000 2001 2000 --------------- ---------------- ---------------- ---------------- Investment Banking: Debt Underwriting $ 217 $ 166 $ 893 $ 585 Equity Underwriting 76 135 440 817 Merger and Acquisition Advisory 150 243 592 777 --------------- ---------------- ---------------- ---------------- Total 443 544 1,925 2,179 --------------- ---------------- ---------------- ---------------- Capital Markets: Fixed Income 378 657 2,227 2,060 Equities 199 329 1,797 2,629 --------------- ---------------- ---------------- ---------------- Total 577 986 4,024 4,689 --------------- ---------------- ---------------- ---------------- Client Services: Private Client 165 157 711 795 Private Equity 18 11 76 44 --------------- ---------------- ---------------- ---------------- Total 183 168 787 839 --------------- ---------------- ---------------- ---------------- Total Lehman $1,203 $1,698 $6,736 $7,707 =============== ================ ================ ================