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:
October 20, 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 October 20, 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 October 20, 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: October 20, 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
$104 MILLION
New York, October 20, 1994 - As previously
indicated, Salomon Inc today announced a
net loss of $104 million, or $1.13 per share,
for the 1994 third quarter. In the
comparable 1993 quarter, Salomon Inc earned
$20 million or $0.01 per share. For the
nine months ended September 30, 1994, the
Company recorded a net loss of $242
million, or $2.67 per share, compared with
net income of $351 million, or $2.64 per
share (fully diluted) in the comparable 1993
period.
Salomon Brothers, the Company's global
investment banking and securities business,
reported a pretax loss of $176 million for
the quarter compared with pretax earnings of
$19 million in the 1993 third quarter. For
the 1994 nine month period, Salomon Brothers
recorded a pretax loss of $547 million
compared with pretax earnings of $713 million
in
the comparable 1993 period.
Salomon Brothers' Proprietary Trading
Businesses recorded a pretax loss of $114
million
in the third quarter. Results for these
businesses tend to be volatile and are better
evaluated over longer term periods of at
least a year. For the four quarters ended
September 30, 1994, Proprietary Trading
Businesses generated pretax earnings of $487
million.
Weakness in underwriting volume and customer
trading activity continued to have an
adverse effect on Salomon Brothers' Client-
Driven Businesses in the third quarter.
Although results improved significantly from
the 1994 second quarter, these businesses
recorded a third quarter pretax loss of $62
million. Client-Driven Businesses recorded
pretax earnings of $192 million in the 1993
third quarter.
For the 1994 nine month period, Client-Driven
Businesses had a pretax loss of $526
million compared with pretax earnings of $805
million in the comparable 1993 nine
month period. Results for the 1994 nine
month period were adversely affected by
reduced customer trading volume and
underwriting activity, inventory losses, and
trading
losses incurred by certain Client-Driven
Businesses. The businesses most severely
affected were U.S. fixed income, European
secondary markets and foreign exchange.
Salomon Brothers has reduced Client-Driven
Businesses' inventories with a focus on
aged positions, particularly with respect to
mortgage securities. Further, given the
<PAGE>
results for the nine month period and the
difficult market environment, Salomon
Brothers
is closely reviewing the pace of new
initiatives in its Client-Driven Businesses.
The Phibro Division, the Company's
commodities trading business, had a pretax
loss of
$27 million in the 1994 third quarter,
compared with a pretax loss of $3 million in
the
third quarter of 1993. Despite the third
quarter loss, the Phibro Division's pretax
earnings of $105 million for the 1994 nine
month period were quite strong. In the
comparable 1993 period, the Division recorded
pretax earnings of $6 million.
Phibro USA, the Company's oil refining
business, recorded a pretax loss of $4
million for
the 1994 third quarter compared with
breakeven results in the comparable 1993
quarter.
For the nine month period, Phibro USA
recorded pretax earnings of $13 million in
1994
compared with a pretax loss of $15 million in
1993.
The Company's Corporate and Other segment
recorded pretax earnings of $31 million in
the third quarter reflecting positive results
for The Mortgage Corporation, an indirect
wholly-owned mortgage servicing subsidiary in
the United Kingdom, and favorable
developments in certain environmental matters
resulting in a reduction in the Company's
environmental reserves.
Total assets were $158 billion at September
30, 1994 and average assets for the quarter
were $175 billion. Book value per common
share was $34.50 at quarter end compared
with $37.93 at December 31, 1993. Shares
authorized for repurchase by the
Company's Board of Directors remained at 9.8
million at September 30, 1994.
Selected financial information and the
unaudited consolidated statement of income
follow:
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SALOMON INC AND SUBSIDIARIES
Selected Financial Information
(unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, September 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 $ (62) $ 192 $ (526) $ 805
Proprietary Trading Businesses (114) (173) (21) (92)
------ ------ ------ ------
Total Salomon Brothers (176) 19 (547) 713
Phibro Division (27) (3) 105 6
Phibro USA (4) 0 13 (15)
Corporate and Other 31 2 19 (46)
------ ------ ------ ------
Income (loss) before taxes and
cumulative effect of change in
accounting principles $ (176) $ 18 $ (410) $ 658
====== ====== ====== ======
Salomon Brothers' revenues, net of
interest expense:
Client-Driven Businesses:
Global investment banking $ 121 $ 214 $ 377 $ 541
U.S. secondary markets 107 174 321 839
International secondary markets 164 212 69 669
Foreign exchange (12) 66 (68) 150
Private Investment Department and
asset management 18 25 49 64
------ ------ ------ ------
Total Client-Driven Businesses 398 691 748 2,263
Proprietary Trading Businesses (7) (123) 274 207
------ ------ ------ ------
Total Salomon Brothers' revenues,
net of interest expense $ 391 $ 568 $1,022 $ 2,470
====== ====== ====== ======
RETURN ON AVERAGE COMMON STOCKHOLDERS'
EQUITY BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLES:
Primary (12.8)% 0.1% (9.5)% 12.4%
Fully diluted* (12.8)% 0.1% (9.5)% 11.8%
====== ====== ====== ======
PER COMMON SHARE:
Cash dividends $ 0.16 $ 0.16 $ 0.48 $ 0.48
High market price 48 1/4 51 7/8 52 3/4 51 7/8
Low market price 38 1/2 37 5/8 38 1/2 34 3/8
Ending market price 39 1/2 47 3/4 ====== ======
Book value at quarter-end 34.50 34.20
====== ======
AT QUARTER-END (in billions):
Total assets $ 158 $ 173
Average assets for the quarter 175 183
Common and convertible preferred
equity 4.4 4.5
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.
Note: Certain prior period amounts have been restated to conform with the
current presentation.
</TABLE>
<PAGE>
SALOMON INC AND SUBSIDIARIES
Consolidated Statement of Income (unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Interest and dividends $1,517 $1,753 $4,164 $4,565
Principal transactions (39) (202) (131) 677
Investment banking 121 214 377 541
Commissions 83 61 257 206
Other 16 33 83 46
------ ------ ------ ------
Total revenues 1,698 1,859 4,750 6,035
Interest expense 1,290 1,272 3,460 3,520
------ ------ ------ ------
Revenues, net of interest expense 408 587 1,290 2,515
------ ------ ------ ------
Noninterest expenses:
Compensation and employee-related 399 383 1,154 1,245
Technology 69 74 191 204
Occupancy 44 46 133 189
Professional services and business
development 48 41 121 107
Clearing and exchange fees 18 15 52 44
Other 6 10 49 68
------ ------ ------ ------
Total noninterest expenses 584 569 1,700 1,857
------ ------ ------ ------
Income (loss) before taxes and
cumulative effect of change in
accounting principles (176) 18 (410) 658
Income taxes (72) (2) (168) 270
------ ------ ------ ------
Income (loss) before cumulative
effect of change in accounting
principles (104) 20 (242) 388
Cumulative effect of change in
accounting principles, net of
tax benefit of $28 - - - (37)
------ ------ ------ ------
Net income (loss) $ (104) $ 20 $(242) $ 351
====== ====== ====== =======
EARNINGS PER SHARE:
Primary earnings (loss) before
cumulative effect of change in
accounting principles $(1.13) $ 0.01 $(2.67) $ 3.01
Cumulative effect of change in
accounting principles - - - (0.34)
------ ------ ------- ------
Primary earnings (loss) $(1.13) $ 0.01 $(2.67) $ 2.67
====== ====== ======= ======
Fully diluted earnings (loss)
before cumulative effect of
change in accounting principles* $(1.13) $ 0.01 $(2.67) $ 2.93
Cumulative effect of change in
accounting principles - - - (0.29)
------ ------ ------- ------
Fully diluted earnings (loss)* $(1.13) $ 0.01 $(2.67) $ 2.64
====== ====== ======= ======
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING
(in thousands):
For primary earnings per share 105,700 111,200 107,200 110,900
For fully diluted earnings per share 105,700 111,200 107,200 130,000
======= ======= ======= =======
<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.
Note: Certain prior period amounts have been restated to conform with the
current presentation.
</TABLE>
