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:
January 27, 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 January 27, 1994, the Registrant issued a press release, a copy of which
is filed herewith as Exhibit 28 and incorporated herein by reference in its
entirety.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibits:
(28) Press release dated January 27, 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 hereunto duly authorized.
SALOMON INC
(Registrant)
Date: January 27, 1994 By: /s/ David C. Fisher
Controller
Contact: Robert F. Baker
212-783-6299
For immediate release:
SALOMON INC REPORTS QUARTERLY NET INCOME OF $476 MILLION;
FULL YEAR NET INCOME WAS $827 MILLION
New York, January 27, 1994 - Salomon Inc today announced fourth quarter
net income of $476 million. Net income was $827 million for the full year, up
50% from $550 million earned in 1992. Results for 1993 include a $37
million aftertax charge recorded in the first quarter to reflect a cumulative
change in accounting for postretirement benefits. Return on common equity for
the year, on a fully diluted basis, was 19% (before the cumulative accounting
charge) compared with 13% in 1992. Earnings per share for the year, on a
fully diluted basis, were $6.57 (before the cumulative accounting charge), up
62% from $4.05 in 1992.
Salomon Brothers, the Company's global investment banking business, posted
quarterly pretax earnings of $862 million, compared with $503 million in last
year's fourth quarter. For the full year, Salomon Brothers' pretax earnings
were $1.6 billion, compared with $1.4 billion in 1992.
Fourth quarter results for Salomon Brothers' Client-Driven Businesses were
indicative of the favorable conditions for the industry as well as the
continued strengthening of these businesses. Pretax earnings for these
businesses were $354 million, compared with $115 million in the comparable
1992 quarter. Pretax earnings for the year were $1.2 billion, more than four
times the $276 million earned in 1992. Customer trading activities in the
fourth quarter were strong and record investment banking revenues were
generated for the third consecutive quarter.
Salomon Brothers' Proprietary Trading Businesses had an exceptional quarter,
producing pretax earnings of $508 million following a $173 million loss in the
third quarter. However, management believes that Proprietary Trading results
are best evaluated over periods of one or more years. For the full year,
pretax earnings for these businesses were $416 million; Salomon Brothers
earned $1.4 billion from these activities in 1992.
The Phibro Division, the Company's energy and other commodities trading
business, recorded a pretax loss of $21 million in the fourth quarter. As a
result of this loss, the division reported a pretax loss of $15 million for
the year. In 1992, the division reported a pretax loss of $181 million for
the fourth quarter and $194 million for the year. Last year's results
included fourth quarter losses of $147 million in connection with the
downsizing of the division, including losses attributable to businesses that
were exited.
Page 1 of 4
<PAGE>
Results for Phibro USA, the Company's oil refining business, included a
fourth quarter pretax charge of $30 million to write down the carrying amount
of the business's core refining and marketing inventories to the lower market
prices that prevailed at year-end. These inventories are neither hedged nor
marked-to-market as trading inventories, but instead are carried at the
lower of their aggregate cost or market value. Once written down, these
inventories are not adjusted for subsequent recoveries in market value.
Excluding this charge, Phibro USA operated at near break-even for the quarter,
reflecting weakness in refining margins. Phibro USA incurred a pretax loss
of $31 million in the 1992 fourth quarter. For the year, Phibro USA reported
a pretax loss of $16 million before the inventory writedown, compared with a
loss of $47 million in 1992.
During 1993, the Company repurchased approximately 362,000 of its common
shares for treasury, at an aggregate cost of $15.5 million. Substantially
all of these repurchases took place in the fourth quarter. Shares authorized
for additional repurchase by the Company's Board of Directors totaled 9.6
million at year-end. Fourth quarter results increased book value per common
share to $38.57 at December 31, 1993, compared with $32.33 at the end of
1992.
Salomon Inc Chairman Robert E. Denham stated, "I am pleased but not satisfied
by the results for the quarter and year. While quarterly results fluctuate,
the Company can acheive satisfactory returns on equity over meaningful
periods. The extraordinary improvement in the results of Salomon Brothers'
Client-Driven Businesses is due, in part, to favorable securities market
conditions, but is also due, I believe, to important changes made by the
management of Salomon Brothers in some of these businesses. Salomon
Brothers' Proprietary Trading Businesses continue to demonstrate long-term
profitability, notwithstanding significant quarterly fluctuations."
<PAGE>
SALOMON INC AND SUBSIDIARIES
Selected Financial Information (unaudited)
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31, December 31,
1993 1992 1993 1992
<S> <C> <C> <C> <C>
SUMMARY OF CONSOLIDATED INCOME
BEFORE TAXES AND CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES
BY SEGMENT (in millions):
Salomon Brothers' business unit
contributions:
Client-Driven Businesses $ 354 $ 115 $1,159 $ 276
Proprietary Trading 508 482 416 1,416
Other - (94) - (302)
------ ------ ------ ------
Total Salomon Brothers 862 503 1,575 1,390
Phibro Division (21) (181) (15) (194)
Phibro USA (31) (31) (46) (47)
Corporate and Other (3) (43) (49) (93)
------ ------ ------ ------
Income before taxes and cumulative effect
of changes in accounting principles $ 807 $ 248 $1,465 $1,056
====== ====== ====== ======
ANNUALIZED RETURN ON AVERAGE COMMON
STOCKHOLDERS' EQUITY BEFORE CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES:
Primary 47.2% 13.7% 21.7% 13.6%
Fully diluted* 39.5% 12.9% 19.1% 12.8%
====== ====== ====== ======
PER COMMON SHARE:
Cash dividends $0.16 $0.16 $0.64 $0.64
High market price 50 1/2 39 51 7/8 39
Low market price 41 1/2 32 3/8 34 3/8 26 5/8
====== ======
Ending market price 47 5/8 38 1/8
Book value at year-end* 38.57 32.33
====== ======
AT YEAR-END (in billions):
Total assets $ 185 $ 159
Stockholders' equity (common and perpetual
preferred) 4.6 3.7
Redeemable preferred stock 0.7 0.7
====== ======
</TABLE>
* Assumes conversion of convertible notes and redeemable preferred stock,
unless such assumptions result in a higher return on equity.
4
<PAGE>
SALOMON INC AND SUBSIDIARIES
Consolidated Statement of Income (unaudited)
(dollars in millions, except per share data)
<TABLE>
Quarter ended Year ended
December 31, December 31,
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Revenues:
Interest and dividends $1,424 $1,240 $5,989 $4,861
Principal transactions 1,000 754 1,716 2,651
Investment banking 250 104 791 450
Commissions 79 51 285 202
Other 11 (7) 18 19
------ ------ ------ ------
Total revenues 2,764 2,142 8,799 8,183
Interest expense 1,080 1,133 4,600 4,324
------ ------ ------ ------
Revenues, net of interest expense 1,684 1,009 4,199 3,859
------ ------ ------ ------
Noninterest expenses:
Compensation and employee-related 655 439 1,900 1,638
Technology 61 85 265 310
Occupancy 42 152 231 324
Professional services and business
development 35 39 142 145
Clearing and exchange fees 15 15 59 61
Charge relating to U.S. Treasury
auction matters - - - 185
Other 69 31 137 140
------ ------ ------ ------
Total noninterest expenses 877 761 2,734 2,803
------ ------ ------ ------
Income before taxes and cumulative effect
of changes in accounting principles 807 248 1,465 1,056
Income taxes 331 105 601 506
------ ------ ------ ------
Net income before cumulative effect of
changes in accounting principles 476 143 864 550
Cumulative effect of changes in accounting
principles, net of tax benefit of $28 - - (37) -
------ ------ ------ ------
Net income $ 476 $ 143 $ 827 $ 550
====== ====== ====== ======
PER COMMON SHARE:
Primary earnings before cumulative effect of
changes in accounting principles $ 4.33 $ 1.10 $ 7.34 $ 4.18
Cumulative effect of changes in accounting
principles - - (0.33) -
------ ------ ------ ------
Primary earnings $ 4.33 $ 1.10 $ 7.01 $ 4.18
====== ====== ====== ======
Fully diluted earnings before
cumulative effect of changes in
accounting principles* $ 3.64 $ 1.06 $ 6.57 $ 4.05
Cumulative effect of changes in
accounting principles - - (0.29) -
------ ------ ------ ------
Fully diluted earnings* $ 3.64 $ 1.06 $ 6.28 $ 4.05
====== ====== ====== ======
</TABLE>
* Assumes conversion of convertible notes and redeemable preferred stock,
unless such assumptions result in higher earnings per share than determined
under the primary method.
Note: Certain prior period amounts have been reclassified to conform with
the 1993 presentation.
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