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:
July 21, 1994
Salomon Inc
(Exact name of registrant as specified in its charter)
Delaware 1-4346 22-1660266
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
Seven World Trade Center, New York, New York 10048
(Address of Principal Executive Offices) (Zip Code)
(212) 783-7000
(Registrant's Telephone No.)
<PAGE>
Item 5. Other Events
On July 21, 1994, the Registrant issued a press release, a copy of which
is filed herewith as Exhibit 99 and incorporated herein by reference in its
entirety.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
Exhibits:
(99) Press release dated July 21, 1994
<PAGE>
SIGNATURES
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 thereunto duly authorized.
SALOMON INC
(Registrant)
Date: July 21, 1994 By: /s/ David C.Fisher
Controller
Contact: Robert F. Baker
212-783-6299
For immediate release:
SALOMON INC REPORTS A QUARTERLY NET LOSS OF $204
MILLION
New York, July 21, 1994 - As previously indicated, Salomon Inc today
announced a net loss of $204 million, or $2.08 per share, for the 1994
second quarter. Salomon Inc reported net income of $433 million in the
comparable 1993 quarter, or $3.32 per share on a fully diluted basis.
The Company's net loss for the six months ended June 30, 1994 was
$138 million, or $1.54 per share, compared with net income of
$331 million, or $2.52 per share (fully diluted), in the 1993 six-month
period.
Salomon Brothers, the Company's global investment banking and securities
business, reported a $410 million pretax loss for the quarter, largely
attributable to a pretax loss of $291 million for Client-Driven Businesses.
Proprietary Trading Businesses reported a pretax loss of $119 million. In
the 1993 second quarter, Salomon Brothers earned $783 million before taxes,
including pretax earnings of $383 million for Client-Driven Businesses and
$400 million for Proprietary Trading Businesses.
The poor second quarter results for Salomon Brothers' Client-Driven
Businesses reflect the impact of inventory losses and declines in customer
trading volume and underwriting activity. As a market intermediary,
Salomon Brothers' Client-Driven Businesses maintain securities inventories
both to facilitate client-related market making activities and, in some
cases, to express short-term views about changes in price and volatility.
During the second quarter, liquidity and prices of certain products,
particularly fixed income products, declined significantly, contributing to
inventory losses.
The second quarter pretax loss of $119 million for Salomon Brothers'
Proprietary Trading Businesses followed strong first quarter earnings of
$212 million before taxes. Earnings volatility is not unusual for these
businesses and, therefore, results are better evaluated over longer term
periods of at least one year. For the four quarters ended June 30, 1994,
Proprietary Trading Businesses' pretax profits were $428 million.
The Phibro Division, which is the Company's commodities trading business,
had pretax earnings of $82 million in the 1994 second quarter compared
with earnings of $3 million in the 1993 second quarter. Trading results
were again very strong as the Division continued to take advantage of
opportunities created by the volatility in oil prices. For the six months
ended June 30, 1994, the Division earned $132 million before taxes compared
with $9 million in the comparable 1993 period.
Phibro USA, the Company's oil refining business, incurred a second
quarter pretax loss of $10 million compared with a $2 million loss in the
1993 second quarter. In the most recent quarter, prices
for refined products did not rise in line with higher crude oil prices.
Consequently, spreads tightened significantly, particularly as compared
with the first quarter when margins benefited from strong weather-related
demand for refined products. Despite the second quarter loss, Phibro
USA generated pretax earnings of $17 million for the six months ended
June 30, 1994, compared with a $15 million pretax loss in the comparable
1993 period.
Total assets, excluding collateralized short-term financing agreements,
were $117 billion at June 30, 1994 compared with $123 billion at the end
of the first quarter and $136 billion at year end 1993. As a result of the
second quarter loss, book value per common share declined from $38.23 at
March 31 to $35.51 at June 30, 1994. The Company's common share repurchases
were modest in the second quarter. Approximately 300,000 shares were
repurchased at an aggregate cost of approximately $15 million, or $48.94
per share. Shares authorized for additional repurchase by the Company's
Board of Directors totaled 9.8 million at June 30, 1994.
Selected financial information and the unaudited consolidated statement of
income follow.
<PAGE>
SALOMON INC AND SUBSIDIARIES
Selected Financial Information (unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter ended Six months ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
SUMMARY OF OPERATING RESULTS BY
SEGMENT:
Income (loss) before taxes and
change in accounting principles:
Salomon Brothers' business unit
contributions:
Client-Driven Businesses $ (291) $ 383 $ (464) $ 613
Proprietary Trading Businesses (119) 400 93 81
------ ------ ------ ------
Total Salomon Brothers (410) 783 (371) 694
Phibro Division 82 3 132 9
Phibro USA (10) (2) 17 (15)
Corporate and Other (8) (31) (12) (48)
------ ------ ------ ------
Income (loss) before taxes and
cumulative effect of change in
accounting principles $ (346) $ 753 $ (234) $ 640
====== ====== ====== ======
Salomon Brothers' revenues, net of
interest expense:
Client-Driven Businesses:
Global investment banking $ 86 $ 178 $ 256 $ 327
U.S. secondary markets (36) 394 214 665
International secondary markets (27) 262 (95) 457
Foreign exchange 55 57 (56) 84
Private Investment Department and
asset management 17 22 31 39
------ ------ ------ ------
Total Client-Driven Businesses 95 913 350 1,572
Proprietary Trading Businesses (60) 584 281 330
------ ------ ------ ------
Total Salomon Brothers' revenues,
net of interest expense $ 35 $1,497 $ 631 $1,902
====== ====== ====== ======
RETURN ON AVERAGE COMMON STOCKHOLDERS'
EQUITY BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLES:
Primary (21.9)% 46.1% (7.9)% 18.8%
Fully diluted* (21.9)% 40.0% (7.9)% 17.1%
====== ====== ====== ======
PER COMMON SHARE:
Cash dividends $ 0.16 $ 0.16 $ 0.32 $ 0.32
High market price 52 5/8 39 3/8 52 3/4 41 7/8
Low market price 47 1/4 34 3/8 44 3/4 34 3/8
Ending market price 47 3/4 38 1/4 ====== ======
Book value at quarter-end 35.51 35.00
====== ======
AT QUARTER-END (in billions):
Total assets $ 176 $ 169
Total assets, excluding financing
agreements 117 116
Common and convertible preferred
equity 4.5 4.6
Perpetual preferred equity 0.3 0.3
====== ======
<FN>
* Assumes conversion of convertible notes and redeemable preferred stock,
unless such assumptions result in a higher return on equity than determined
under the primary method.
</TABLE>
<PAGE>
SALOMON INC AND SUBSIDIARIES
Consolidated Statement of Income (unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter ended Six months ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Interest and dividends $1,345 $1,392 $2,647 $2,812
Principal transactions (238) 949 (41) 899
Investment banking 86 178 256 327
Commissions 84 79 174 145
Other 6 (13) 16 (7)
------ ------ ------ ------
Total revenues 1,283 2,585 3,052 4,176
Interest expense 1,112 1,080 2,170 2,248
------ ------ ------ ------
Revenues, net of interest expense 171 1,505 882 1,928
------ ------ ------ ------
Noninterest expenses:
Compensation and employee-related 338 524 755 862
Technology 61 67 122 130
Occupancy 51 94 89 143
Professional services and business
development 39 38 73 66
Clearing and exchange fees 15 15 34 29
Other 13 14 43 58
------ ------ ------ ------
Total noninterest expenses 517 752 1,116 1,288
------ ------ ------ ------
Income (loss) before taxes and
cumulative effect of change in
accounting principles (346) 753 (234) 640
Income taxes (142) 320 (96) 272
------ ------ ------ ------
Income (loss) before cumulative
effect of change in accounting
principles (204) 433 (138) 368
Cumulative effect of change in
accounting principles, net of
tax benefit of $28 - - - (37)
------ ------ ------ ------
Net income (loss) $ (204) $ 433 $ (138) $ 331
====== ====== ====== ======
EARNINGS PER SHARE:
Primary earnings (loss) before
cumulative effect of change in
accounting principles $(2.08) $3.75 $(1.54) $ 3.00
Cumulative effect of change in
accounting principles - - - (0.34)
------ ------ ------ ------
Primary earnings (loss) $(2.08) $3.75 $(1.54) $ 2.66
====== ====== ====== ======
Fully diluted earnings (loss)
before cumulative effect of
change in accounting principles* $(2.08) $3.32 $(1.54) $ 2.81
Cumulative effect of change in
accounting principles - - - (0.29)
------ ------ ------ ------
Fully diluted earnings (loss)* $(2.08) $3.32 $(1.54) $ 2.52
====== ====== ====== ======
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING
(in thousands):
For primary earnings per share 105,800 110,900 107,900 110,800
For fully diluted earnings per share 105,800 129,900 107,900 129,800
======= ======= ======= =======
<FN>
* Assumes conversion of convertible notes and redeemable preferred stock,
unless such assumptions result in higher earnings per share than determined
under the primary method.
</TABLE>
