EX-99.1 2 a07-30473_33ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Press Release

 

For Immediate Release

 

 

Media Contact:

 

Hannah Burns
212-526-4064

 

 

 

 

 

 

 

 

Investor Contact:

 

Shaun Butler
212-526-8381
Ed Grieb
212-526-0588

 

LEHMAN BROTHERS REPORTS RECORD NET REVENUES,

NET INCOME AND EARNINGS PER SHARE FOR FISCAL 2007

 

-Reports Net Income of $886 Million and Net Revenues of $4.4 Billion

for the Fourth Quarter of Fiscal 2007-

 

NEW YORK–  December 13, 2007 – Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $886 million, or $1.54 per common share (diluted), for the fourth quarter ended November 30, 2007, representing decreases of 12% and 10%, respectively, from net income of $1.0 billion, or $1.72 per common share (diluted), reported for the fourth quarter of fiscal 2006.  For the third quarter of fiscal 2007, net income was $887 million, or $1.54 per common share (diluted).

 

For the 2007 full fiscal year, net income and earnings per common share (diluted) increased 5% and 7%, respectively, to a record $4.2 billion and $7.26, respectively, compared to $4.0 billion and $6.81, respectively, in fiscal 2006.  The 2006 results include an after-tax gain of $47 million, or $0.08 per common share (diluted), from the cumulative effect of a change in accounting principle associated with the Firm’s adoption of SFAS 123R on December 1, 2005.

 

-more-

 



 

Full Year Business Highlights

 

·      Reported record net revenues, net income and earnings per common share (diluted) for the fourth consecutive year

 

·      Achieved record net revenues across all three business segments

 

·      Reported record non-U.S. net revenues, which accounted for 50% of overall Firm net revenues for the year, and a record 62% of Firmwide net revenues in the fourth quarter

 

·      Grew assets under management to a record $282 billion

 

·      Ranked #1 “Most Admired Securities Firm” by Fortune

 

·      Ranked #1 in both Equity and Fixed Income Research by Institutional Investor’s “All-America Research” polls for the fifth consecutive year; ranked #1 “Most Shareholder-Friendly Company,” Brokers and Asset Management category by Institutional Investor

 

Chairman and Chief Executive Officer Richard S. Fuld, Jr. said, “Despite what continues to be a difficult operating environment, the Firm’s results for the quarter highlight our ability to perform across market cycles and deliver value to our shareholders.  Our global franchise and brand have never been stronger, and our record results for the year reflect the continued diversified growth of our businesses.  As always, our people remain committed to managing risk and providing the best solutions to our clients.”

 

Net revenues (total revenues less interest expense) for the fourth quarter of fiscal 2007 were $4.4 billion, a decrease of 3% from $4.5 billion reported in the fourth quarter of fiscal 2006 and an increase of 2% from $4.3 billion reported in the third quarter of fiscal 2007.  Capital Markets net revenues decreased 10% to $2.7 billion in the fourth quarter of fiscal 2007 from $3.0 billion in the fourth quarter of fiscal 2006.  Fixed Income Capital Markets reported net revenues of $860 million, a decrease of 60% from $2.1 billion in the fourth quarter of fiscal 2006, due to the very challenging markets experienced during the period, although strong results from client activity were reported in the Foreign Exchange and Commodities businesses.  Fixed Income Capital Markets recorded negative valuation adjustments on trading assets, principally in the Firm’s Securitized Products and Real Estate businesses.  These valuation adjustments were offset, in part, by valuation gains on economic hedges and liabilities, as well as realized gains from the sale of certain leveraged loan positions, resulting in a net revenue reduction in Fixed Income

 

2



 

Capital Markets of approximately $830 million.  Equities Capital Markets reported record net revenues of $1.9 billion, more than double the $900 million reported in the fourth quarter of fiscal 2006.  This performance was driven by solid customer flow activities as well as gains from private equity and the Firm’s investment in GLG Partners.  These results represent the fourth straight quarter that Equities Capital Markets has surpassed $1 billion in net revenues.  Investment Banking reported net revenues of $831 million, a decrease of 3% from $858 million in the fourth quarter of fiscal 2006, driven by declines in debt and equity origination revenues, which decreased 38% and 6%, respectively, from the prior year’s period. Merger and acquisition advisory reported its second-highest net revenue quarter, an increase of 52% from the fourth quarter of fiscal 2006.  Investment Management reported record net revenues of $832 million in the fourth quarter of fiscal 2007, an increase of 30% from $640 million in the fourth quarter of fiscal 2006.  This performance was driven by record revenues in Asset Management and strong revenues in Private Investment Management.  Assets under management grew to a record $282 billion.

 

For the full 2007 fiscal year, net revenues increased 10% to a record $19.3 billion, from $17.6 billion for fiscal 2006, with record net revenues in each business segment. For fiscal 2007, non-U.S. revenues grew 49% to a record $9.6 billion, representing 50% of Firmwide net revenues.

 

Non-interest expenses for the fourth quarter of fiscal 2007 were $3.2 billion, compared to $3.0 billion in the fourth quarter of fiscal 2006 and $3.1 billion in the third quarter of fiscal 2007.  Compensation and benefits as a percentage of net revenues was 49.3% during the fourth quarter of fiscal 2007, consistent with both the fourth quarter of fiscal 2006 and the third quarter of fiscal 2007.  For the full 2007 fiscal year, compensation and benefits as a percentage of net revenues remained at 49.3% compared to fiscal 2006.  Non-personnel expenses in the fourth quarter of fiscal 2007 were $996 million, compared with $979 million in the third quarter of fiscal 2007 and $809 million in the fourth quarter of fiscal 2006, reflecting continued investments in growing the franchise.  Non-personnel expenses for the full year of fiscal 2007 were $3.8 billion, compared with $3.0 billion in fiscal 2006.

 

The Firm’s pre-tax margin was 28.0% for the fourth quarter of fiscal 2007 and 31.2% for the full 2007 fiscal year, compared to 32.8% for the fourth quarter of fiscal 2006 and 33.6% for the full

 

3



 

2006 fiscal year.  Return on average common equity was 16.6% for the fourth quarter of fiscal 2007, compared with 22.3% for the fourth quarter of fiscal 2006.  For the full 2007 fiscal year, return on average common equity was 20.8%, compared with 23.4% for fiscal 2006.  Return on average tangible common equity was 20.6% for the fourth quarter of fiscal 2007, compared with 27.6% for the fourth quarter of fiscal 2006.  For the full 2007 fiscal year, return on average tangible common equity was 25.7%, compared with 29.1% for fiscal 2006.

 

As of November 30, 2007, Lehman Brothers’ total stockholders’ equity was $22.5 billion, and total long-term capital (stockholders’ equity and long-term borrowings, excluding any borrowings with remaining maturities of less than twelve months) was approximately $145.7 billion.  Book value per common share was $39.45.

 

Lehman Brothers (ticker symbol: 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 investment management, asset management and private equity.  The Firm is headquartered in New York, with regional headquarters in 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 the Firm’s Web site at www.lehman.com.  Lehman Brothers Inc. is a member of SIPC.

 

Conference Call

 

A conference call, to discuss the Firm’s financial results and outlook, will be held today at 10:00 a.m. ET.  The call will be open to the public. Members of the public who would like to access the conference call should dial, from the U.S., 888-323-4182 or, from outside the U.S., 517-623-4500 at least ten minutes prior to the start of the conference call.  The pass code for all callers is LEHMAN.  The conference call will also be accessible through the “Shareholders” section of the Firm’s Web site under the subcategory “Webcasts.”  For those unable to listen to the live broadcast, a replay will be available on the Firm’s Web site or by dialing 800-685-0230 (domestic) or 203-369-3628

 

4



 

(international).  The replay will be available approximately one hour after the event and will remain available on the Lehman Brothers Web site and by phone until 11:59 p.m. ET on January 13, 2008.

 

Please direct any questions regarding the conference call to Shaun Butler at 212-526-8381, sbutler@lehman.com, Ed Grieb at 212-526-0588, egrieb@lehman.com, or Elizabeth Besen at 212-526-2733, ebesen@lehman.com.

 

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, which may include risks and uncertainties relating to market fluctuations and volatility, industry competition and changes in the competitive environment, investor sentiment, liquidity and credit ratings, credit exposures, operational risks and legal and regulatory matters.  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 and, accordingly, readers are cautioned not to place undue reliance on such statements.  The Firm undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.  For more information concerning the risks and other factors that could affect the Firm’s future results and financial condition, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Firm’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

 

# # #

 

5



 

LEHMAN BROTHERS HOLDINGS INC.

SELECTED STATISTICAL INFORMATION

(Preliminary and Unaudited)

(Dollars in millions, except share data)

 

 

 

At or for the
Year Ended

 

At or for the Quarter Ended

 

 

 

 

 

 

 

Nov 30,

 

Aug 31,

 

May 31,

 

Feb 28,

 

Nov 30,

 

 

 

2007

 

2006

 

2007

 

2007

 

2007

 

2007

 

2006

 

Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

19,257

 

$

17,583

 

$

4,390

 

$

4,308

 

$

5,512

 

$

5,047

 

$

4,533

 

Non-Interest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and Benefits

 

9,494

 

8,669

 

2,164

 

2,124

 

2,718

 

2,488

 

2,235

 

Non-personnel Expenses

 

3,750

 

3,009

 

996

 

979

 

915

 

860

 

809

 

Income Before Cumulative Effect of Accounting Change

 

4,192

 

3,960

 

886

 

887

 

1,273

 

1,146

 

1,004

 

Cumulative Effect of Accounting Change

 

 

47

 

 

 

 

 

 

Net Income

 

4,192

 

4,007

 

886

 

887

 

1,273

 

1,146

 

1,004

 

Net Income Applicable to Common Stock

 

4,125

 

3,941

 

870

 

870

 

1,256

 

1,129

 

987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Basic Common Share: (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before Cumulative Effect of Accounting Change

 

$

7.63

 

$

7.17

 

$

1.60

 

$

1.61

 

$

2.33

 

$

2.09

 

$

1.83

 

Cumulative Effect of Accounting Change

 

 

0.09

 

 

 

 

 

 

Earnings per Basic Common Share

 

$

7.63

 

$

7.26

 

$

1.60

 

$

1.61

 

$

2.33

 

$

2.09

 

$

1.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Diluted Common Share: (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before Cumulative Effect of Accounting Change

 

$

7.26

 

$

6.73

 

$

1.54

 

$

1.54

 

$

2.21

 

$

1.96

 

$

1.72

 

Cumulative Effect of Accounting Change

 

 

0.08

 

 

 

 

 

 

Earnings per Diluted Common Share

 

$

7.26

 

$

6.81

 

$

1.54

 

$

1.54

 

$

2.21

 

$

1.96

 

$

1.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Common Stockholders’ Equity (annualized) (b)

 

20.8

%

23.4

%

16.6

%

17.1

%

25.8

%

24.4

%

22.3

%

Return on Average Tangible Common Stockholders’ Equity (annualized) (c)

 

25.7

%

29.1

%

20.6

%

21.1

%

31.6

%

29.9

%

27.6

%

Pre-tax Margin

 

31.2

%

33.6

%

28.0

%

28.0

%

34.1

%

33.7

%

32.8

%

Compensation and Benefits/Net Revenues

 

49.3

%

49.3

%

49.3

%

49.3

%

49.3

%

49.3

%

49.3

%

Effective Tax Rate

 

30.3

%

32.9

%

27.9

%

26.4

%

32.3

%

32.5

%

32.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Condition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

 

 

$

691,000

 

$

659,216

 

$

605,861

 

$

562,283

 

$

503,545

 

Net Assets (d) (j)

 

 

 

 

 

372,873

 

357,102

 

337,667

 

300,797

 

268,936

 

Common Stockholders’ Equity (e)

 

 

 

 

 

21,399

 

20,638

 

20,034

 

18,910

 

18,096

 

Total Stockholders’ Equity (e)

 

 

 

 

 

22,494

 

21,733

 

21,129

 

20,005

 

19,191

 

Total Stockholders’ Equity Plus Junior Subordinated Notes (f)

 

 

 

 

 

27,471

 

26,647

 

25,650

 

23,018

 

21,929

 

Tangible Equity Capital (f)

 

 

 

 

 

23,107

 

22,164

 

21,881

 

19,487

 

18,567

 

Total Long-Term Capital (g)

 

 

 

 

 

145,739

 

142,064

 

121,948

 

110,780

 

100,369

 

Book Value per Common Share (h)

 

 

 

 

 

39.45

 

38.29

 

37.15

 

35.15

 

33.87

 

Leverage Ratio (i)

 

 

 

 

 

30.7

x

30.3

x

28.7

x

28.1

x

26.2

x

Net Leverage Ratio (j)

 

 

 

 

 

16.1

x

16.1

x

15.4

x

15.4

x

14.5

x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data (#s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees (k)

 

 

 

 

 

28,556

 

28,783

 

28,323

 

27,090

 

25,936

 

Assets Under Management (in billions)

 

 

 

 

 

$

282

 

$

275

 

$

263

 

$

236

 

$

225

 

Common Stock Outstanding (in millions)

 

 

 

 

 

531.9

 

529.4

 

530.2

 

534.9

 

533.4

 

Weighted Average Shares (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

540.6

 

543.0

 

542.6

 

540.4

 

538.2

 

540.9

 

539.2

 

Diluted

 

568.3

 

578.4

 

563.7

 

565.8

 

568.1

 

575.4

 

573.1

 

 

See Footnotes to Selected Statistical Information on page 7.

 

6



 

LEHMAN BROTHERS HOLDINGS INC.

FOOTNOTES TO SELECTED STATISTICAL INFORMATION

(Preliminary and Unaudited)

 


(a)

Earnings per share amounts for the year ended November 30, 2006 have been restated to reflect the two-for-one stock split on April 28, 2006.

(b)

Return on average common stockholders’ equity is computed by dividing annualized net income applicable to common stock for the period by average common stockholders’ equity. See the reconciliation on page 11.

(c)

Return on average tangible common stockholders’ equity is computed by dividing annualized net income applicable to common stock for the period by average tangible common stockholders’ equity. Average tangible common stockholders’ equity equals average common stockholders’ equity less average identifiable intangible assets and goodwill. See the reconciliation on page 11. Management believes tangible common stockholders’ equity is a meaningful measure because it reflects the common stockholders’ equity deployed in our businesses.

(d)

We calculate net assets by excluding from total assets: (i) cash and securities segregated and on deposit for regulatory and other purposes; (ii) collateralized lending agreements; and (iii) identifiable intangible assets and goodwill. See reconciliation on page 13. Net assets as presented are not necessarily comparable to similarly-titled measures provided by other companies in the securities industry because of different methods of presentation.

(e)

Effective December 1, 2006, we adopted both Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements, and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. The aggregate impact to opening retained earnings from the adoption of these standards was an after-tax increase of approximately $67 million (approximately $113 million pre-tax).

(f)

We calculate tangible equity capital by including stockholders’ equity and junior subordinated notes and excluding identifiable intangible assets and goodwill. These measures may not be comparable to similarly-titled calculations by other companies as a result of different calculation methodologies. Our definition for tangible equity capital limits the amount of junior subordinated notes and preferred stock included in the calculation to 25% of tangible equity capital. The amounts excluded were approximately $237 million, $375 million and $117 million in the fourth, third and second quarters of 2007, respectively; no amounts were excluded in prior periods. We believe tangible equity capital to be a more meaningful measure of our equity base as it includes stockholders’ equity and junior subordinated notes (which we consider to be equity-like instruments due to their subordinated and long-term nature) and excludes identifiable intangible assets and goodwill (which we do not consider available to support our remaining net assets). See the reconciliation on page 13.

(g)

Total long-term capital includes long-term borrowings (excluding any borrowings with remaining maturities within one year of the financial statement date) and total stockholders’ equity. We believe total long-term capital is useful to investors as a measure of our financial strength.

(h)

The book value per common share calculation includes amortized restricted stock units granted under employee stock award programs, which have been included in total stockholders’ equity.

(i)

Leverage ratio is defined as total assets divided by total stockholders’ equity.

(j)

Net leverage ratio is defined as net assets (see note (d) above) divided by tangible equity capital (see note (f) above). We believe net leverage based on net assets to be a more useful measure of leverage, because it excludes certain low-risk, non-inventory assets and utilizes tangible equity capital as a measure of our equity base. Net leverage as presented is not necessarily comparable to similarly-titled measures provided by other companies in the securities industry because of different methods of presentation.

(k)

Headcount at August 31, 2007 reflects reductions related to the restructuring of the Firm’s global residential mortgage origination business announced during the quarter, including the closure of BNC Mortgage LLC.

 

 

7



 

LEHMAN BROTHERS HOLDINGS INC.

CONSOLIDATED STATEMENT OF INCOME

(Preliminary and Unaudited)

(In millions, except per share data)

 

 

 

Quarter Ended

 

% Change from

 

 

 

Nov 30,
2007

 

Aug 31,
2007

 

Nov 30,
2006

 

Aug 31,
2007

 

Nov 30,
2006

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Principal transactions

 

$

1,698

 

$

1,612

 

$

2,504

 

 

 

 

 

Investment banking

 

831

 

1,071

 

858

 

 

 

 

 

Commissions

 

688

 

674

 

521

 

 

 

 

 

Interest and dividends

 

11,136

 

10,910

 

8,898

 

 

 

 

 

Asset management and other

 

459

 

472

 

379

 

 

 

 

 

Total revenues

 

14,812

 

14,739

 

13,160

 

 

 

 

 

Interest expense

 

10,422

 

10,431

 

8,627

 

 

 

 

 

Net revenues

 

4,390

 

4,308

 

4,533

 

2

%

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

2,164

 

2,124

 

2,235

 

 

 

 

 

Technology and communications

 

311

 

282

 

261

 

 

 

 

 

Brokerage, clearance and distribution fees

 

240

 

224

 

167

 

 

 

 

 

Occupancy

 

173

 

170

 

131

 

 

 

 

 

Professional fees

 

120

 

128

 

118

 

 

 

 

 

Business development

 

103

 

91

 

90

 

 

 

 

 

Other (a)

 

49

 

84

 

42

 

 

 

 

 

Total non-interest expenses

 

3,160

 

3,103

 

3,044

 

2

%

4

%

Income before provision for income taxes

 

1,230

 

1,205

 

1,489

 

 

 

 

 

Provision for income taxes

 

344

 

318

 

485

 

 

 

 

 

Net income

 

$

886

 

$

887

 

$

1,004

 

 

(12

)%

Net income applicable to common stock

 

$

870

 

$

870

 

$

987

 

 

(12

)%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.60

 

$

1.61

 

$

1.83

 

(1

)%

(13

)%

Diluted

 

$

1.54

 

$

1.54

 

$

1.72

 

 

(10

)%

 


(a)   For the quarters ended November 30, 2007 and August 31, 2007, respectively, approximately $18 million and $44 million, respectively, of costs associated with the restructuring of the Firm’s global residential mortgage origination business have been included in other expenses.

 

8



 

LEHMAN BROTHERS HOLDINGS INC.

CONSOLIDATED STATEMENT OF INCOME

(Preliminary and Unaudited)

(In millions, except per share data)

 

 

 

Year Ended Nov 30,

 

% Change from

 

 

 

2007

 

2006

 

Nov 30, 2006

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Principal transactions

 

$

9,119

 

$

9,802

 

 

 

Investment banking

 

3,903

 

3,160

 

 

 

Commissions

 

2,471

 

2,050

 

 

 

Interest and dividends

 

41,693

 

30,284

 

 

 

Asset management and other

 

1,739

 

1,413

 

 

 

Total revenues

 

58,925

 

46,709

 

 

 

Interest expense

 

39,668

 

29,126

 

 

 

Net revenues

 

19,257

 

17,583

 

10

%

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

Compensation and benefits

 

9,494

 

8,669

 

 

 

Technology and communications

 

1,145

 

974

 

 

 

Brokerage, clearance and distribution fees

 

859

 

629

 

 

 

Occupancy

 

641

 

539

 

 

 

Professional fees

 

466

 

364

 

 

 

Business development

 

378

 

301

 

 

 

Other (a)

 

261

 

202

 

 

 

Total non-interest expenses

 

13,244

 

11,678

 

13

%

Income before taxes and cumulative effect of accounting change

 

6,013

 

5,905

 

 

 

Provision for income taxes

 

1,821

 

1,945

 

 

 

Income before cumulative effect of accounting change

 

4,192

 

3,960

 

 

 

Cumulative effect of accounting change

 

 

47

 

 

 

Net income

 

$

4,192

 

$

4,007

 

5

%

Net income applicable to common stock

 

$

4,125

 

$

3,941

 

5

%

 

 

 

 

 

 

 

 

Earnings per basic common share:

 

 

 

 

 

 

 

Before cumulative effect of accounting change

 

$

7.63

 

$

7.17

 

 

 

Cumulative effect of accounting change

 

 

0.09

 

 

 

Earnings per basic common share

 

$

7.63

 

$

7.26

 

5

%

 

 

 

 

 

 

 

 

Earnings per diluted common share:

 

 

 

 

 

 

 

Before cumulative effect of accounting change

 

$

7.26

 

$

6.73

 

 

 

Cumulative effect of accounting change

 

 

0.08

 

 

 

Earnings per diluted common share

 

$

7.26

 

$

6.81

 

7

%

 


(a)     For the year ended November 30, 2007, approximately $62 million of costs associated with the restructuring of the Firm’s global residential mortgage origination business has been included in other expenses.

 

9



 

LEHMAN BROTHERS HOLDINGS INC.

SEGMENT NET REVENUE INFORMATION

(Preliminary and Unaudited)

(In millions)

 

 

 

Quarter Ended

 

% Change from

 

 

 

Nov 30,
2007

 

Aug 31,
2007

 

Nov 30,
2006

 

Aug 31,
2007

 

Nov 30,
2006

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Markets:

 

 

 

 

 

 

 

 

 

 

 

Fixed Income

 

$

860

 

$

1,063

 

$

2,135

 

 

 

 

 

Equities

 

1,867

 

1,372

 

900

 

 

 

 

 

Total

 

2,727

 

2,435

 

3,035

 

12

%

(10

)%

 

 

 

 

 

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

 

 

 

 

Global Finance – Debt

 

233

 

350

 

378

 

 

 

 

 

Global Finance – Equity

 

210

 

296

 

224

 

 

 

 

 

Advisory Services

 

388

 

425

 

256

 

 

 

 

 

Total

 

831

 

1,071

 

858

 

(22

)%

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management:

 

 

 

 

 

 

 

 

 

 

 

Asset Management

 

533

 

468

 

368

 

 

 

 

 

Private Investment Management

 

299

 

334

 

272

 

 

 

 

 

Total

 

832

 

802

 

640

 

4

%

30

%

 

 

 

 

 

 

 

 

 

 

 

 

Total Net Revenues

 

$

4,390

 

$

4,308

 

$

4,533

 

2

%

(3

)%

 

 

 

Year Ended Nov 30,

 

% Change from

 

 

 

 

 

 

 

2007

 

2006

 

Nov 30, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Markets:

 

 

 

 

 

 

 

 

 

 

 

Fixed Income

 

$

5,977

 

$

8,447

 

 

 

 

 

 

 

Equities

 

6,280

 

3,559

 

 

 

 

 

 

 

Total

 

12,257

 

12,006

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

 

 

 

 

Global Finance – Debt

 

1,551

 

1,424

 

 

 

 

 

 

 

Global Finance – Equity

 

1,015

 

815

 

 

 

 

 

 

 

Advisory Services

 

1,337

 

921

 

 

 

 

 

 

 

Total

 

3,903

 

3,160

 

24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management:

 

 

 

 

 

 

 

 

 

 

 

Asset Management

 

1,877

 

1,432

 

 

 

 

 

 

 

Private Investment Management

 

1,220

 

985

 

 

 

 

 

 

 

Total

 

3,097

 

2,417

 

28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Net Revenues

 

$

19,257

 

$

17,583

 

10

%

 

 

 

 

 

10



 

LEHMAN BROTHERS HOLDINGS INC.

RECONCILIATION OF AVERAGE STOCKHOLDERS’ EQUITY TO

AVERAGE TANGIBLE COMMON STOCKHOLDERS’ EQUITY

(Preliminary and Unaudited)

(In millions)

 

 

 

Quarter Ended

 

 

 

Nov 30,
2007

 

Aug 31,
2007

 

May 31,
2007

 

Feb 28,
2007

 

Nov 30,
 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

Average stockholders’ equity

 

$22,114

 

$21,431

 

$20,567

 

$19,632

 

$18,794

 

Less: average preferred stock

 

(1,095

)

(1,095

)

(1,095

)

(1,095

)

(1,095

)

Average common stockholders’ equity

 

21,019

 

20,336

 

19,472

 

18,537

 

17,699

 

Less: average identifiable intangible assets and goodwill

 

(4,118

)

(3,880

)

(3,592

)

(3,447

)

(3,363

)

Average tangible common stockholders’ equity

 

$16,901

 

$16,456

 

$15,880

 

$15,090

 

$14,336

 

 

 

 

Year Ended Nov 30,

 

 

 

 

 

 

 

 

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average stockholders’ equity

 

$

20,910

 

$

17,971

 

 

 

 

 

 

 

Less: average preferred stock

 

(1,095

)

(1,095

)

 

 

 

 

 

 

Average common stockholders’ equity

 

19,815

 

16,876

 

 

 

 

 

 

 

Less: average identifiable intangible assets and goodwill

 

(3,756

)

(3,312

)

 

 

 

 

 

 

Average tangible common stockholders’ equity

 

$

16,059

 

$

13,564

 

 

 

 

 

 

 

 

11



 

LEHMAN BROTHERS HOLDINGS INC.

ASSETS UNDER MANAGEMENT

(Preliminary and Unaudited)

(In billions)

 

 

 

At

 

 

 

Nov 30,

 

Aug 31,

 

Nov 30,

 

Composition of Assets Under Management

 

2007

 

2007

 

2006

 

 

 

 

 

 

 

 

 

Equity

 

$

107

 

$

104

 

$

95

 

Fixed Income

 

75

 

72

 

61

 

Money Markets

 

66

 

69

 

48

 

Alternative Investments

 

34

 

30

 

21

 

Assets Under Management

 

$

282

 

$

275

 

$

225

 

 

 

 

 

 

 

 

Quarter

 

 

 

Year Ended

 

Ended

 

 

 

Nov 30,

 

Nov 30,

 

Nov 30,

 

Assets Under Management Rollforward

 

2007

 

2006

 

2007

 

 

 

 

 

 

 

 

 

Opening balance

 

$

225

 

$

175

 

$

275

 

Net additions

 

41

 

35

 

2

 

Net market appreciation

 

16

 

15

 

5

 

Total increase

 

57

 

50

 

7

 

Ending balance

 

$

282

 

$

225

 

$

282

 

 

12



 

LEHMAN BROTHERS HOLDINGS INC.

LEVERAGE and NET LEVERAGE CALCULATIONS

(Preliminary and Unaudited)

(In millions)

 

 

 

At

 

 

 

Nov 30,
2007

 

Aug 31,
2007

 

May 31,
2007

 

Feb 28,
2007

 

Nov 30,
2006

 

Net assets:

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

691,000

 

$

659,216

 

$

605,861

 

$

562,283

 

$

503,545

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Cash and securities segregated and on deposit for regulatory and other purposes

 

(13,000

)

(10,579

)

(7,154

)

(6,293

)

(6,091

)

Collateralized lending agreements

 

(301,000

)

(287,427

)

(257,388

)

(251,662

)

(225,156

)

Identifiable intangible assets and goodwill

 

(4,127

)

(4,108

)

(3,652

)

(3,531

)

(3,362

)

Net assets

 

$

372,873

 

$

357,102

 

$

337,667

 

$

300,797

 

$

268,936

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible equity capital:

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

$

22,494

 

$

21,733

 

$

21,129

 

$

20,005

 

$

19,191

 

Junior subordinated notes(a)

 

4,740

 

4,539

 

4,404

 

3,013

 

2,738

 

Less: Identifiable intangible assets and goodwill

 

(4,127

)

(4,108

)

(3,652

)

(3,531

)

(3,362

)

Tangible equity capital(a)

 

$

23,107

 

$

22,164

 

$

21,881

 

$

19,487

 

$

18,567

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage (total assets / total stockholders’ equity)

 

30.7

x

30.3

x

28.7

x

28.1

x

26.2

x

 

 

 

 

 

 

 

 

 

 

 

 

Net leverage (net assets / tangible equity capital)

 

16.1

x

16.1

x

15.4

x

15.4

x

14.5

x

 


(a)   Our definition for tangible equity capital limits the amount of junior subordinated notes and preferred stock included in the calculation to 25% of tangible equity capital. The amounts excluded were approximately $237 million, $375 million and $117 million in the fourth, third and second quarters of 2007, respectively. No amounts were excluded in the prior periods.

 

13