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 23, 1996
SALOMON INC
(Exact name of registrant as specified in its charter)
Delaware I-4346 22-1660266
(State of Incorporation) (Commission File No.) (I.R.S. 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 23, 1996, 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 23, 1996
<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: July 23, 1996 By: /s/ Richard Carbone
Controller
<PAGE>
Contact: Robert F. Baker
212-783-6299
For immediate release:
SALOMON INC REPORTS QUARTERLY NET INCOME OF $291 MILLION
New York, July 23, 1996 -- Salomon Inc today announced second quarter net income
of $291 million. Net income for the six months ended June 30, 1996 was $567
million. The first two quarters of 1996 were the most profitable two consecutive
quarters in Salomon's history. In the first half of 1995, the Company's net
income was $21 million. Primary return on equity for both the three and six
months ended June 30, 1996 was 26%. Primary earnings per share were $2.58 and
$5.02 for the three and six months ended June 30, 1996, respectively.
Chairman and Chief Executive Officer Robert E. Denham, said: "The quarter's very
favorable results were produced by the strong and broadly based performance of
Salomon Brothers. In a highly competitive environment, Salomon Brothers has
been strengthening its competitive position."
Salomon Brothers, the Company's global investment banking and securities
business, recorded pretax earnings of $525 million for the second quarter and
$893 million for the six months ended June 30, 1996. Revenues, net of interest
expense, for the second quarter were $1.2 billion, up from $989 million in the
first quarter and $552 million in last year's second quarter. Commenting on
Salomon Brothers' results, Deryck C. Maughan, Salomon Brothers' Chairman and
Chief Executive Officer, said: "This is a good quarter and it brings Salomon
Brothers' pretax earnings for the past 12 months to $1.5 billion, reflecting a
strong performance across all business activities."
Key items for the second quarter are as follows:
Global investment banking revenues were a record $251 million, up 63% from
the second quarter of 1995, principally reflecting a doubling of equity
underwriting revenues.
Fixed income sales and trading revenues were $706 million, up
significantly from the second quarter of 1995 and comparable with the
strong results in the first quarter of 1996.
Revenues from equity sales and trading were $268 million, reflecting a
solid performance in customer sales and trading despite trailing the $295
million generated in last year's exceptional second quarter.
Phibro, the Company's commodity trading business, recorded a pretax loss of $17
million for the second quarter, reflecting less favorable conditions in the
commodity markets. Phibro's first six months profits of $128 million reflect a
very strong performance.
<PAGE>
Basis Petroleum, the Company's oil refining and marketing business, recorded a
pretax loss of $13 million in the second quarter of 1996 compared with pretax
income of $1 million in the 1995 second quarter. For the 1996 first half, Basis
recorded a pretax loss of $68 million compared with a pretax loss of $50 million
in the first half of 1995. Although industry refining margins for the 1996
second quarter improved by approximately $.50 per barrel over the first quarter,
they continue to be weak by historical standards. Results for the 1996 second
quarter and first half include nonrecurring income of $23 million in connection
with the reduction of the minimum crude oil inventory required to support Basis'
refining activities. The reduction reflects changes in feedstock supply patterns
as a result of the ongoing integration of the Residfiner/ROSE unit complex into
Basis' operations.
The increase in Salomon's compensation and employee-related expenses in 1996
over 1995 levels reflects the significant strengthening in the Company's
earnings. Non-compensation expenses have increased only marginally in 1996
demonstrating the Company's commitment to containing costs.
Total common and perpetual preferred equity has increased 17% thus far in 1996,
from $4.1 billion at December 31, 1995 to $4.8 billion at June 30, 1996. Over
the same period, book value per common share has increased from $35.84 to
$40.08. Average assets for the quarter were $193 billion.
Salomon Inc selected financial information and the Unaudited Consolidated
Statement of Income follow:
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<TABLE>
<CAPTION>
SALOMON INC AND SUBSIDIARIES
Selected Financial Information (unaudited)
(Dollars in millions, except per share data)
Quarter ended Six months ended
--------------------------------------------- ----------------------------
June 30, March 31, June 30, June 30, June 30,
1996 1996 1995 1996 1995
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATING RESULTS BY BUSINESS:
Income (loss) before income taxes:
Salomon Brothers $ 525 $ 368 $ 56 $ 893 $ 116
Phibro (17) 145 (162) 128 (39)
Basis Petroleum (13) (55) 1 (68) (50)
Corporate and other (11) 3 6 (8) 8
------------ ----------- ----------- ----------- ----------
Income (loss) before income taxes $ 484 $ 461 $ (99) $ 945 $ 35
============ =========== =========== =========== ==========
Salomon Brothers' revenues, net of interest expense:
Fixed income sales and trading $ 706 $ 732 $ 93 $ 1,438 $ 491
Equity sales and trading 268 64 295 332 447
Global investment banking 251 181 154 432 176
Asset management 11 12 10 23 19
Other - - - - 6
----------- ---------- ---------- ---------- ----------
Total Salomon Brothers' revenues,
net of interest expense $ 1,236 $ 989 $ 552 $ 2,225 $ 1,139
=========== ========== ========== ========== ==========
RETURN ON AVERAGE COMMON STOCKHOLDERS' EQUITY:
Primary 26.1% 26.4% (8.8)% 26.3% (0.8)%
Fully diluted* 23.8 24.0 (8.8) 23.9 (0.8)
=========== ========== ========== ========== ==========
PER COMMON SHARE:
Cash dividends $ 0.16 $ 0.16 $ 0.16 $ 0.32 $ 0.32
High market price 44 1/4 39 1/4 43 1/4 44 1/4 43 1/4
Low market price 36 1/8 34 7/8 33 1/4 34 7/8 32 1/4
========== ==========
Ending market price 44 37 1/2 40 1/8
Book value at quarter-end* 40.08 37.98 32.38
=========== ========== ==========
AT QUARTER-END:
Average assets for the quarter $ 193,000 $ 191,000 $ 176,000
Common equity 4,266 4,061 3,458
Redeemable preferred equity 560 560 700
Perpetual preferred equity 562 562 312
=========== ========== ==========
<FN>
*Assumes conversion of redeemable preferred stock unless such assumptions result
in higher returns on equity or book value than determined under the primary
method.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SALOMON INC AND SUBSIDIARIES
Consolidated Statement of Income (unaudited)
(Dollars in millions, except per share data)
Quarter ended Six months ended
--------------------------------------------- ----------------------------
June 30, March 31, June 30, June 30, June 30,
1996 1996 1995 1996 1995
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Interest and dividends $ 1,436 $ 1,573 $ 1,944 $ 3,009 $ 3,552
Principal transactions 584 651 (252) 1,235 118
Investment banking 251 181 154 432 176
Commissions 75 90 81 165 170
Other 16 (27) 27 (11) 6
------------ ---------- ---------- ----------- -----------
Total revenues 2,362 2,468 1,954 4,830 4,022
Interest expense 1,143 1,275 1,553 2,418 2,878
------------ ---------- ---------- ----------- -----------
Revenues, net of interest expense 1,219 1,193 401 2,412 1,144
------------ ---------- ---------- ----------- -----------
Noninterest expenses:
Compensation and employee-related 551 556 324 1,107 755
Technology 59 55 64 114 128
Professional services and business
development 51 44 35 95 80
Occupancy 44 43 42 87 83
Clearing and exchange fees 18 17 17 35 33
Other 12 17 18 29 30
----------- ---------- --------- ---------- -----------
Total noninterest expenses 735 732 500 1,467 1,109
----------- ---------- --------- ---------- -----------
Income (loss) before income taxes 484 461 (99) 945 35
Income tax expense (benefit) 193 185 (39) 378 14
------------ ---------- ---------- ----------- -----------
Net income (loss) $ 291 $ 276 $ (60) $ 567 $ 21
=========== ========== ========== =========== ===========
EARNINGS (LOSS) AVAILABLE FOR FULLY
DILUTED EARNINGS PER SHARE $ 282 $ 270 $ (77) $ 552 $ (15)
=========== ========== ========= =========== ============
EARNINGS (LOSS) PER SHARE:
Primary $ 2.58 $ 2.44 $ (0.73) $ 5.02 $ (0.14)
Fully diluted* 2.34 2.21 (0.73) 4.55 (0.14)
=========== ========== ========== =========== ============
WEIGHTED AVERAGE SHARES
OF COMMON STOCK
OUTSTANDING (in thousands):
For primary earnings per share 105,400 106,600 106,500 106,000 106,400
For fully diluted earnings per share 120,600 121,800 106,500 121,200 106,400
=========== ========== =========== =========== ============
<FN>
*Assumes conversion of redeemable preferred stock unless such assumptions result
in higher earnings per share than determined under the primary method.
</FN>
</TABLE>
