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 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 April 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 April 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: April 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 $276 MILLION
New York, April 23, 1996 -- Salomon Inc today announced first quarter net income
of $276 million, representing the third most profitable quarter in Salomon's
history. Fully diluted earnings per share was $2.21 in the first quarter of
1996, up from $0.59 in the first quarter of 1995. Primary return on equity
increased from 7% in the first quarter of 1995 to 26% in this year's first
quarter (34% excluding oil refining and production activities). Chairman and
Chief Executive Robert E. Denham, said: "The first quarter's results are based
on the outstanding performance of our securities and commodities businesses. Our
balance of customer businesses and proprietary risk-taking is producing solid
results."
Salomon Brothers, the Company's global investment banking and securities
business, recorded pretax income of $368 million in the first quarter, up from
$60 million in the first quarter of 1995. Net revenues (total revenues less
interest expense) for the first quarter of $1.0 billion were up 68% from the
first quarter of 1995, principally reflecting broad based strength in sales and
trading. Deryck C. Maughan, Chairman and Chief Executive Officer of Salomon
Brothers, said: "Salomon Brothers produced excellent results for the quarter.
Our objective is to build our underwriting and advisory revenues and to maintain
effective control of our trading risk."
Fixed income sales and trading net revenues in the first quarter increased to
$732 million, up significantly from $398 million in the first quarter of 1995.
First quarter results reflect favorable market conditions, excellent results
from trading for the Firm's account and a strong performance in customer sales
and trading. Equity sales and trading net revenues were $64 million for the
quarter, down from $152 million in the first quarter of 1995. This decline was
attributable to losses on long-term equity arbitrage positions, which offset a
solid performance in customer sales and trading. Global investment banking
revenues were $181 million for the quarter, up 53% from the average 1995
quarterly investment banking revenues of $118 million. Salomon Brothers ranked
second in all domestic U.S. public new issues for the second consecutive
quarter.
Phibro, the Company's commodities trading business, recorded pretax income of
$145 million in the first quarter, compared with $123 million in the first
quarter of 1995. Phibro's first quarter results reflect successful trading in
the context of favorable conditions in the commodity markets.
Basis Petroleum, the Company's oil refining and marketing business, recorded a
pretax loss of $55 million in the first quarter of 1996, compared with a pretax
loss of $51 million in the first quarter of 1995. Basis' results continue to be
adversely affected by weak refining margins.
<PAGE>
The increase in Salomon's first quarter 1996 compensation and employee-related
expenses over the first quarter of 1995 reflects the improvements in Salomon
Brothers' and Phibro's earnings.
Strong first quarter results coupled with the February 1996 issuance of $250
million of perpetual preferred stock resulted in a 12% increase in stockholders'
equity from year-end 1995. Book value per common share was $37.98 at March 31,
1996 up from $35.84 at the end of 1995. Average assets for the first quarter
were $191 billion.
Salomon Inc selected financial information and the Unaudited Consolidated
Statement of Income follow:
<PAGE>
<TABLE>
<CAPTION>
SALOMON INC AND SUBSIDIARIES
Selected Financial Information (unaudited)
(Dollars in millions, except per share data)
Quarter ended
----------------------------------------------------
March 31, December 31, March 31,
1996 1995 1995
--------------- -------------- ---------------
<S> <C> <C> <C>
SUMMARY OF OPERATING RESULTS BY BUSINESS:
Income (loss) before income taxes:
Salomon Brothers $ 368 $ 207 $ 60
Phibro 145 56 123
Basis Petroleum (55) (32) (51)
Corporate and other 3 3 2
--------------- -------------- ---------------
Income before income taxes $ 461 $ 234 $ 134
=============== ============== ===============
Salomon Brothers' revenues, net of interest expense:
Fixed income sales and trading $ 732 $ 379 $ 398
Equity sales and trading 64 185 152
Global investment banking 181 168 22
Asset management 12 11 9
Other - - 6
--------------- -------------- ---------------
Total Salomon Brothers' revenues,
net of interest expense $ 989 $ 743 $ 587
=============== ============== ===============
RETURN ON AVERAGE COMMON STOCKHOLDERS' EQUITY:
Primary 26.4% 16.4% 7.1%
Fully diluted* 24.0 15.1 7.1
=============== ============== ===============
PER COMMON SHARE:
Cash dividends $ 0.16 $ 0.16 $ 0.16
High market price 39 1/4 40 5/8 40 1/8
Low market price 34 7/8 33 7/8 32 1/4
Ending market price 37 1/2 35 3/8 33 7/8
Book value at quarter-end* 37.98 35.84 33.22
=============== ============== ===============
AT QUARTER-END:
Average assets for the quarter $ 191,000 $ 184,000 $ 172,000
Common equity 4,061 3,831 3,543
Redeemable preferred equity 560 560 700
Perpetual preferred equity 562 312 312
=============== ============== ===============
<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
------------------------------------------------------
March 31, December 31, March 31,
1996 1995 1995
-------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Interest and dividends $ 1,573 $ 1,859 $ 1,608
Principal transactions 651 268 370
Investment banking 181 168 22
Commissions 90 80 89
Other (27) - (21)
-------------- --------------- ---------------
Total revenues 2,468 2,375 2,068
Interest expense 1,275 1,549 1,325
-------------- --------------- ---------------
Revenues, net of interest expense 1,193 826 743
-------------- --------------- ---------------
Noninterest expenses:
Compensation and employee-related 556 425 431
Technology 55 60 64
Professional services and business
development 44 53 45
Occupancy 43 45 41
Clearing and exchange fees 17 15 16
Other 17 (6) 12
-------------- --------------- ---------------
Total noninterest expenses 732 592 609
-------------- --------------- ---------------
Income before income taxes 461 234 134
Income tax expense 185 66 53
-------------- --------------- ---------------
Net income $ 276 $ 168 $ 81
============== =============== ===============
EARNINGS AVAILABLE FOR FULLY
DILUTED EARNINGS PER SHARE $ 270 $ 163 $ 63
============== =============== ===============
EARNINGS PER SHARE:
Primary $ 2.44 $ 1.42 $ 0.59
Fully diluted* 2.21 1.32 0.59
============== =============== ===============
WEIGHTED AVERAGE SHARES
OF COMMON STOCK
OUTSTANDING (in thousands):
For primary earnings per share 106,600 106,600 106,300
For fully diluted earnings per share 121,800 123,000 106,700
============== =============== ===============
<FN>
*Assumes conversion of redeemable preferred stock unless such assumptions result
in higher earnings per share than determined under the primary method.
</FN>
</TABLE>
