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 17, 1997
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 July 17, 1997, 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 17, 1997
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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: July 17, 1997 By: /s/ Jerome H. Bailey
Chief Financial Officer
SALOMON INC
Seven World Trade Center, New York, New York 10048 212 783-7000
Contact: Robert F. Baker
212-783-6299
For immediate release:
SALOMON INC REPORTS NET INCOME OF $220 MILLION FOR THE
1997 SECOND QUARTER
New York, July 17, 1997 -- Salomon Inc today announced second quarter net income
of $220 million compared with income from continuing operations of $298 million
(net income of $291 million including discontinued operations) in the 1996
second quarter. For the six months ended June 30, 1997, net income was $393
million, compared with income from continuing operations of $608 million (net
income of $567 million including discontinued operations) in the comparable 1996
period. Fully diluted return on equity for the three and six month periods ended
June 30, 1997 was 17.0% and 15.2%, respectively. Fully diluted earnings per
share for the 1997 three and six month periods were $1.77 and $3.14,
respectively.
Salomon Inc Chairman and Chief Executive Officer Robert E. Denham said: "The
Company experienced a very solid second quarter performance as a result of the
contributions of many different business units."
Key items regarding the Company's performance are as follows:
o Global investment banking revenues (underwriting plus advisory) were $221
million for the second quarter of 1997, essentially unchanged from the 1997
first quarter though down from the record revenues of $251 million in the
second quarter of 1996. Advisory and debt underwriting revenues improved
year over year while equity underwriting revenues were below the record
level of last year's second quarter.
o Fixed income sales and trading net revenues for the second quarter of 1997
were $532 million, down from $706 million in the year ago quarter. This
decrease reflects lower revenues in both proprietary trading and customer
sales and trading compared with the very strong results of the second
quarter of 1996.
o Equity sales and trading net revenues were $229 million for the second
quarter of 1997 compared with $268 million for the second quarter of 1996.
Equity sales and trading results continued at a level well above the
quarterly average for 1996.
o Net revenues from commodities trading activities, which are conducted by
Phibro Inc., were $91 million for the second quarter of 1997, compared with
negative revenues of $18 million in the year ago quarter.
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o Asset management revenues were $20 million for the second quarter of 1997,
nearly double the $11 million recorded in the second quarter of 1996.
Consolidated compensation and employee-related expenses for the three and six
month periods ended June 30, 1997 were $546 million and $1,111 million,
respectively, compared with $546 million and $1,096 million for the three and
six month periods ended June 30, 1996, respectively. Although operating results
for the first six months of 1997 were lower than the comparable 1996 period,
compensation and employee related expenses were about the same, due to increased
headcount and higher levels of market compensation in 1997. Non-compensation
expenses for the three and six month periods ended June 30, 1997 were $194
million and $372 million, respectively, compared with $180 million and $352
million for the three and six month periods ended June 30, 1996, respectively.
The increases in 1997 are primarily the result of higher technology expenses.
During the second quarter, the Company repurchased 1.9 million common shares for
treasury at an average price of $51.59 per share.
Total common and convertible preferred equity was $5.1 billion at June 30, 1997.
Total equity capital, including perpetual preferred and TRUPS was $5.9 billion
at such date. Book value per common share was $42.52 at June 30, 1997, as
compared with $40.03 at December 31, 1996. Average assets for the 1997 second
quarter were $225 billion.
The sale of Basis Petroleum to Valero Energy Corporation was completed on May 1
in accordance with the terms that were previously announced. Basis is reflected
as a discontinued operation in the 1996 periods.
Salomon Inc's Selected Financial Information and Unaudited Consolidated
Statement of Income follow:
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<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,
1997 1997 1996 1997 1996
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SUMMARY OF REVENUES, NET OF
INTEREST EXPENSE:
Fixed income sales and trading $ 532 $ 519 $ 706 $ 1,051 $ 1,438
Equity sales and trading 229 243 268 472 332
Global investment banking 221 220 251 441 432
Commodities trading 91 25 (18) 116 217
Asset management 20 17 11 37 23
Other (3) (2) 5 (5) 19
------------ ------------ ----------- ----------- -----------
Total revenues, net of interest expense $ 1,090 $ 1,022 $ 1,223 $ 2,112 $ 2,461
============ ============ =========== =========== ===========
RETURN ON AVERAGE COMMON STOCKHOLDERS'
EQUITY FROM CONTINUING OPERATIONS:
Primary 17.9% 14.0% 29.7% 16.0% 31.5%
Fully diluted* 17.0 13.4 26.7 15.2 28.2
============ ============ =========== =========== ===========
PER COMMON SHARE:
Cash dividends $ 0.16 $ 0.16 $ 0.16 $ 0.32 $ 0.32
High market price 58 5/8 61 3/8 44 1/4 61 3/8 44 1/4
Low market price 49 46 36 1/8 46 34 7/8
=========== ===========
Ending market price 55 5/8 49 7/8 44
Book value at quarter-end* 42.52 41.13 40.08
============ ============ ===========
AT QUARTER-END:
Average assets for the quarter $ 225,000 $ 211,000 $ 193,000
Common equity 4,638 4,544 4,266
Redeemable convertible preferred equity 420 420 560
Perpetual preferred equity 450 450 562
TRUPS** 345 345 -
============ ============ ===========
Full-time employees:
Salomon Brothers 7,027 6,858 6,370
Salomon Inc (excluding Basis) 7,294 7,151 6,966
============ ============ ===========
<FN>
* Assumes conversion of redeemable convertible preferred stock unless such
assumptions result in higher returns on equity or book value than determined
under the primary method.
** Guaranteed preferred beneficial interests in Company subordinated debt
securities.
</FN>
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<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,
1997 1997 1996 1997 1996
------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Interest and dividends $ 1,678 $ 1,367 $ 1,436 $ 3,045 $ 3,008
Principal transactions 443 484 584 927 1,235
Investment banking 221 220 251 441 432
Commissions 100 99 75 199 165
Other 13 14 11 27 22
------------- ------------- ------------- ------------ -------------
Total revenues 2,455 2,184 2,357 4,639 4,862
Interest expense 1,365 1,162 1,134 2,527 2,401
------------- ------------- ------------- ------------ -------------
Revenues, net of interest expense 1,090 1,022 1,223 2,112 2,461
------------- ------------- ------------- ------------ -------------
Noninterest expenses:
Compensation and employee-related 546 565 546 1,111 1,096
Technology 59 56 50 115 96
Professional services and business development 50 40 49 90 92
Occupancy 42 40 42 82 85
Clearing and exchange fees 22 18 17 40 34
Other 21 24 22 45 45
------------- ------------- ------------- ------------ -------------
Total noninterest expenses 740 743 726 1,483 1,448
------------- ------------- ------------- ------------ -------------
Income from continuing operations before income taxes 350 279 497 629 1,013
Income tax expense 130 106 199 236 405
------------- ------------- ------------- ------------ -------------
Income from continuing operations 220 173 298 393 608
------------- ------------- ------------- ------------ -------------
Loss from discontinued operations, net of tax benefit - - (7) - (41)
============= ============= ============= ============ =============
Net income $ 220 $ 173 $ 291 $ 393 $ 567
============= ============= ============= ============ =============
EARNINGS PER SHARE:*
Primary earnings from continuing operations $ 1.89 $ 1.44 $ 2.65 $ 3.34 $ 5.41
Primary earnings 1.89 1.44 2.58 3.34 5.02
Fully diluted earnings from continuing operations** 1.77 1.37 2.40 3.14 4.89
Fully diluted earnings** 1.77 1.37 2.34 3.14 4.55
============= ============= ============= ============ =============
WEIGHTED AVERAGE SHARES
OF COMMON STOCK
OUTSTANDING (in thousands):
For primary earnings per share 108,200 109,500 105,400 108,800 106,000
For fully diluted earnings per share 119,700 120,900 120,600 120,300 121,200
============= ============= ============= ============ =============
<FN>
* Quarterly earnings per share are based on average common shares outstanding
in the individual quarters; thus, the sum of quarterly earnings per share
may not equal the amounts reported for the year-to-date periods.
** Assumes conversion of redeemable convertible preferred stock unless such
assumptions result in higher earnings per share than determined under the
primary method.
</FN>
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