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:
April 25, 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.)
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Item 5. Other Events
On April 25, 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 April 25, 1994
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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 hereunto duly authorized.
SALOMON INC
(Registrant)
Date: April 25, 1994 By: /s/ David C.Fisher
Controller
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EXHIBIT INDEX
Page number
in sequential
numbering
Exhibit Description system
99 Copy of April 25, 1994 press release
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Contact: Robert F. Baker
212-783-6299
For immediate release:
SALOMON INC REPORTS QUARTERLY NET INCOME OF $66 MILLION
New York, April 25, 1994 - Salomon Inc today announced net income of
$66 million for the 1994 first quarter. Fully diluted earnings per
share were $0.48 and return on common equity was 4.9%. In the 1993
first quarter, Salomon Inc recorded a net loss of $102 million, which
included a $37 million aftertax charge to reflect the cumulative
impact of a change in accounting principles.
Salomon Brothers, the Company's global investment banking and
securities business, earned $39 million before taxes in the 1994 first
quarter. Pretax losses of $173 million for Client-Driven Businesses
were offset by earnings of $212 million for Proprietary Trading
Businesses. In the 1993 first quarter, Salomon Brothers had a loss
before taxes of $89 million.
The disappointing results for Salomon Brothers' Client-Driven
Businesses in the 1994 first quarter were attributable to losses in
foreign exchange and international secondary markets and a decline in
U.S. secondary market revenues. The Company's foreign exchange and
secondary markets businesses combine both client-related market making
activities and positioning activities in which views are expressed
about short-term changes in price and volatility. Revenues were
adversely affected by declines in the value of positions in these
businesses as well as an overall decline in customer trading volume in
the latter part of the quarter.
Proprietary Trading results for the 1994 quarter were strong, but are
better evaluated over longer term periods of at least one year. For
the four quarters ended March 31, 1994, Proprietary Trading
Businesses' pretax profits were $947 million.
The Phibro Division, which is the Company's commodities trading
business, had strong pretax earnings of $50 million in the first
quarter of 1994. The Division was able to take advantage of trading
opportunities in oil markets as prices rose and volatility increased.
In the comparable 1993 quarter, the Phibro Division had pretax
earnings of $6 million.
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Phibro USA, the Company's oil refining business, had pretax earnings
of $27 million in the 1994 first quarter, compared with a $13 million
pretax loss in last year's first quarter. Much of the improvement in
earnings was due to increased refining margins resulting primarily
from weather-related demand in the Northeast for refined products.
Phibro USA's recent expansion of storage and terminal capacity in the
Northeast enabled it to capitalize on these market opportunities. In
addition, Phibro USA had improved results in its petrochemicals, crude
oil gathering and marine fuels businesses.
During the 1994 first quarter, the Company repurchased 4.9 million of
its common shares for treasury at an aggregate cost of $237 million,
or $48.55 per share. Partly because common share repurchases were at
an average price above book value, book value per share declined
modestly from $38.57 at the end of 1993 to $38.23 at March 31, 1994.
Over the last year, book value per share has increased by 24%, from
$30.88 at March 31, 1993. Shares authorized for additional repurchase
by the Company's Board of Directors totaled 4.8 million at quarter
end.
The Company's Chairman and Chief Executive Officer, Robert E. Denham,
stated "First quarter results were disappointing as the sharp
downdraft in securities prices that occurred in the latter part of the
quarter brought losses in several of the trading businesses conducted
as part of Salomon Brothers' Client-Driven Businesses. Elsewhere, in
Salomon Brothers' Proprietary Trading Businesses, in Phibro Division's
commodities trading, and in Phibro USA's oil refining business,
results were more than satisfactory."
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<CAPTION>
SALOMON INC AND SUBSIDIARIES
Selected Financial Information (unaudited)
(dollars in millions, except per share data)
Quarter ended March 31,
1994 1993
<S> <C> <C>
SUMMARY OF OPERATING RESULTS BY SEGMENT:
Income before taxes and change in accounting
principles:
Salomon Brothers' business unit contributions:
Client-Driven Businesses $ (173) $ 230
Proprietary Trading Businesses 212 (319)
------- -------
Total Salomon Brothers 39 (89)
Phibro Division 50 6
Phibro USA 27 (13)
Corporate and Other (4) (17)
------- -------
Income (loss) before taxes and cumulative
effect of change in accounting principles $ 112 $ (113)
======= =======
Salomon Brothers' revenues, net of
interest expense:
Client-Driven Businesses:
Global investment banking $ 170 $ 149
U.S. secondary markets 250 271
International secondary markets (68) 195
Foreign exchange (111) 27
Private Investment Department and asset
management 14 17
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Total Client-Driven Businesses 255 659
Proprietary Trading Businesses 341 (254)
------- -------
Total Salomon Brothers revenues, net of
interest expense $ 596 $ 405
======= =======
RETURN ON AVERAGE COMMON STOCKHOLDERS' EQUITY
BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLES:
Primary 4.9% (9.7)%
Fully diluted* 4.9% (9.7)%
======= =======
PER COMMON SHARE:
Cash dividends $0.16 $0.16
High market price 52 3/4 41 7/8
Low market price 44 3/4 35 3/4
Ending market price 48 1/2 38 3/4
Book value at quarter-end 38.23 30.88
======= =======
AT QUARTER-END (in billions):
Total assets $ 173 $ 177
Common and convertible preferred equity 4.8 4.1
Perpetual preferred equity 0.3 0.3
======= =======
* 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>
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<TABLE>
<CAPTION>
SALOMON INC AND SUBSIDIARIES
Consolidated Statement of Income (unaudited)
(dollars in millions, except per share data)
Quarter ended March 31,
1994 1993
<S> <C> <C>
Revenues:
Interest and dividends $1,302 $1,420
Principal transactions 197 (50)
Investment banking 170 149
Commissions 90 66
Other 10 6
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Total revenues 1,769 1,591
Interest expense 1,058 1,168
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Revenues, net of interest expense 711 423
------- -------
Noninterest expenses:
Compensation and employee-related 417 338
Technology 61 63
Occupancy 38 49
Professional services and business development 34 28
Clearing and exchange fees 19 14
Other 30 44
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Total noninterest expenses 599 536
------- -------
Income (loss) before taxes and cumulative effect
of change in accounting principles 112 (113)
Income taxes 46 (48)
------- -------
Income (loss) before cumulative effect of change
in accounting principles 66 (65)
Cumulative effect of change in accounting principles,
net of tax benefit of $28 - (37)
------- -------
Net income (loss) $ 66 $ (102)
======= =======
EARNINGS PER SHARE:
Primary earnings (loss) before cumulative effect
of change in accounting principles $ 0.48 $(0.76)
Cumulative effect of change in accounting principles - (0.34)
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Primary earnings (loss) $ 0.48 $(1.10)
======= =======
Fully diluted earnings (loss) before cumulative
effect of change in accounting principles* $ 0.48 $(0.76)
Cumulative effect of change in accounting principles - (0.34)
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Fully diluted earnings (loss)* $ 0.48 $(1.10)
======= =======
* 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>
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