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 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.)
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Item 5. Other Events
On January 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 January 23, 1996
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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: January 23, 1996 By: /s/ Richard Carbone
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Controller
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Contact: Robert F. Baker
212-783-6299
For immediate release:
SALOMON INC REPORTS QUARTERLY NET INCOME OF $168 MILLION
New York, January 23, 1996 -- Salomon Inc today announced fourth quarter net
income of $168 million. Net income for the second half of 1995 was $436 million,
among the most profitable six month periods in Salomon's history. Primary return
on equity for the six months ended December 31, 1995 was 22%. For the year ended
December 31, 1995, the Company recorded net income of $457 million, compared to
a net loss of $399 million in the same period a year ago. Fully diluted earnings
per share were $1.32 and $3.50 for the three and twelve month periods ended
December 31, 1995, respectively. Chairman and Chief Executive Officer Robert E.
Denham said, "Salomon Inc's very strong performance in the second half of 1995
provides a good base for our efforts to become increasingly profitable in 1996."
Revenues net of interest expense for Salomon Brothers, the Company's global
investment banking and securities business, were just under $3 billion for the
full year, reflecting a broad-based recovery. Salomon Brothers recorded pretax
income of $704 million in 1995, including $207 million in the fourth quarter.
Deryck C. Maughan, Chairman and Chief Executive Officer of Salomon Brothers,
said "Salomon Brothers has good momentum and our goal is to show continued
progress in 1996. Our revenues of nearly $3 billion were almost triple the level
of 1994."
Fixed income sales and trading net revenues for the year increased to $1.6
billion, from $644 million in 1994, reflecting a return to strong performance in
customer sales and trading, favorable market conditions and good results in
trading for the Firm's account. Equity sales and trading net revenues for the
year increased to $828 million from $157 million in 1994, reflecting substantial
progress in building our global equity capability, favorable market conditions
and a strong trading performance.
Investment banking revenues for the year were $472 million, compared to $486
million in 1994. The 1995 results reflect a $68 million loss on Latin American
underwriting positions reported in the first quarter. For the fourth quarter,
Salomon Brothers ranked second in U.S. corporate debt and equity capital
raising.
As planned, Salomon Brothers' headcount at the end of 1995 was 6,400, down over
500 on the year. Despite very competitive market conditions, Salomon Brothers'
full year ratio of compensation to revenues, net of interest expense, was 54%,
which was close to industry-wide levels. Noncompensation expenses for the year
of $645 million were 22% of revenues, net of interest expense, which compares
favorably to our major competitors.
Phibro, the Company's commodities trading business, recorded pretax income of
$56 million in the fourth quarter compared to $68 million in the third quarter.
Phibro recorded pretax income of $85 million in 1995, compared with $81 million
in 1994.
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Phibro USA, the Company's oil refining and marketing business, recorded a pretax
loss of $32 million in the fourth quarter of 1995 compared to a pretax loss of
$9 million in the third quarter. Weak refining margins in the fourth quarter
were compounded by a lengthier than normal turnaround at the Texas City
refinery, which involved modifying certain existing units to connect to the
almost complete Residfiner/ROSE complex. For the full year, Phibro USA had
pretax losses of $91 million, compared with pretax earnings of $18 million for
1994. Phibro USA's 1995 results were adversely affected by depressed refining
margins, which were at an eight year low in 1995, and reduced throughput due to
the completion of major planned turnarounds for each of its Texas refineries
during the year. In order to establish a distinct identity from Phibro,
effective April 1, 1996, Phibro USA will be changing its name to Basis
Petroleum, Inc.
Other expenses in the fourth quarter were reduced by $23 million, which is the
amount to be received by the Company in settlement of the Shareholder Derivative
Action against certain former executives in connection with Salomon Brothers'
1991 Treasury Auction matter. The fourth quarter 1995 effective tax rate of 28%
includes an adjustment necessary to bring the full year effective tax rate to
35%.
Book value per common share was $35.84 at December 31, 1995 up from $32.65 at
the end of 1994. Average assets for the fourth quarter were $184 billion.
Salomon Inc 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)
Quarter ended Year ended
December 31, September 30, December 31, December 31, December 31,
1995 1995 1994 1995 1994
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SUMMARY OF OPERATING RESULTS BY BUSINESS:
Income (loss) before income taxes:
Salomon Brothers $ 207 $ 381 $ (416) $ 704 $ (963)
Phibro 56 68 (24) 85 81
Phibro USA (32) (9) 5 (91) 18
Corporate and other 3 (1) 14 10 33
Income (loss) before income taxes $ 234 $ 439 $ (421) $ 708 $ (831)
Salomon Brothers' revenues, net of interest expense:
Fixed income sales and trading $ 379 $ 733 $ 269 $ 1,603 $ 644
Equity sales and trading 185 196 (64) 828 157
Global investment banking 168 128 109 472 486
Asset management 11 9 9 39 38
Unallocated charges and other - - (267) 6 (247)
Total Salomon Brothers' revenues,
net of interest expense $ 743 $ 1,066 $ 56 $ 2,948 $ 1,078
RETURN ON AVERAGE COMMON STOCKHOLDERS' EQUITY:
Primary 16.4% 28.0% (19.2)% 10.8% (11.7)%
Fully diluted* 15.1 24.6 (19.2) 10.3 (11.7)
PER COMMON SHARE:
Cash dividends $ 0.16 $ 0.16 $ 0.16 $ 0.64 $ 0.64
High market price 40 5/8 41 1/8 42 43 1/4 52 3/4
Low market price 33 7/8 34 3/4 35 32 1/4 35
Ending market price 35 3/8 38 1/2 37 1/2
Book value at quarter-end* 35.84 34.49 32.65
AT QUARTER-END (in billions):
Average assets for the quarter $ 184 $ 163 $ 175
Common equity 3.8 3.7 3.5
Convertible preferred equity 0.6 0.7 0.7
Perpetual preferred equity 0.3 0.3 0.3
<FN>
*Assumes conversion of convertible notes and redeemable preferred stock, unless
such assumptions result in higher returns on equity or book value than
determined under the primary method.
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SALOMON INC AND SUBSIDIARIES
Consolidated Statement of Income(unaudited)
(Dollars in millions, except per share data)
Quarter ended Year ended
December 31, September 30, December 31, December 31, December 31,
1995 1995 1994 1995 1994
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Revenues:
Interest and dividends $ 1,859 $ 1,611 $ 1,635 $ 7,022 $ 5,902
Principal transactions 268 691 (326) 1,077 (560)
Investment banking 168 128 109 472 486
Commissions 80 82 79 332 336
Other - 24 31 30 114
Total revenues 2,375 2,536 1,528 8,933 6,278
Interest expense 1,549 1,355 1,432 5,782 4,892
Revenues, net of interest expense 826 1,181 96 3,151 1,386
Noninterest expenses:
Compensation and employee-related 425 557 332 1,737 1,486
Technology 60 64 65 252 255
Professional services and business
development 53 45 46 178 167
Occupancy 45 45 32 173 165
Clearing and exchange fees 15 15 17 63 70
Other (6) 16 25 40 74
Total noninterest expenses 592 742 517 2,443 2,217
Income (loss) before income taxes 234 439 (421) 708 (831)
Income tax expense (benefit) 66 171 (264) 251 (432)
Net income (loss) $ 168 $ 268 $ (157) $ 457 $ (399)
EARNINGS AVAILABLE FOR FULLY
DILUTED EARNINGS PER SHARE $ 163 $ 263 $ (175) $ 437 $ (461)
EARNINGS (LOSS) PER SHARE:
Primary $ 1.42 $ 2.36 $ (1.65) $ 3.64 $ (4.31)
Fully diluted* 1.32 2.10 (1.65) 3.50 (4.31)
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING (in thousands):
For primary earnings per share 106,600 106,600 105,800 106,500 106,800
For fully diluted earnings per share 123,000 125,400 105,800 124,700 106,800
<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.
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