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 15, 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.)
<PAGE>
Item 5. Other Events
On April 15, 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 April 15, 1997
<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 15, 1997 By: /s/ Richard J. Carbone
Controller
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 $173 MILLION FOR THE
1997 FIRST QUARTER
New York, April 15, 1997 -- Salomon Inc today announced net income of $173
million for the quarter ended March 31, 1997, compared with income from
continuing operations of $310 million in the first quarter of 1996. Fully
diluted return on equity from continuing operations was 13.4% for the three
months ended March 31, 1997, compared with 29.7% in the year ago period. Fully
diluted earnings per share from continuing operations was $1.37 for the first
quarter of 1997, compared with $2.49 in the first quarter of 1996.
Salomon Inc Chairman and Chief Executive Officer Robert E. Denham said: "Overall
first quarter performance was satisfactory, with market conditions that were
more difficult than generally prevailed in 1996." Commenting on Salomon
Brothers' results, Chairman and Chief Executive Officer Deryck C. Maughan, said:
"Salomon Brothers had another active quarter, with $1 billion of revenues, in
line with our average quarterly performance of last year."
Key items regarding the Company's performance:
o Global investment banking revenues (underwriting plus advisory) for the
three months ended March 31, 1997, were $220 million, up over 20% from $181
million in the first quarter of 1996. Results for debt underwriting were
particularly strong.
o Fixed income sales and trading net revenues were $519 million in the first
quarter of 1997, down from $732 million in the year ago quarter. Results
for the 1997 first quarter reflect continued strengthening in customer
sales and trading as well as positive proprietary trading results. The
year-to-year decrease is indicative of exceptionally strong proprietary
trading results in the first quarter of 1996.
o Equity sales and trading net revenues were $243 million in 1997 first
quarter, up significantly from $64 million in the first quarter of 1996.
This increase reflects improved results in both customer sales and trading
and proprietary trading activities.
<PAGE>
o Net revenues from commodities trading activities, which are conducted by
Phibro Inc., were $25 million in the first quarter of 1997, down
significantly from the exceptionally strong result of $235 million in the
year ago quarter. As a consequence of its cost structure, Phibro was still
modestly profitable for the quarter. Commencing with this quarter's press
release, Phibro is no longer shown as a separate segment. Phibro's revenues
are now shown as the "commodities trading" component of the Company's
revenues.
o Asset management revenues for the 1997 first quarter were $17 million
compared with $12 million in first quarter of 1996.
Consolidated compensation and employee-related expenses for the three months
ended March 31, 1997 were $565 million, compared with $550 million in the year
ago quarter. The year-over-year change was driven primarily by higher levels of
market compensation and increased headcount. Noncompensation expenses were $178
million in the 1997 first quarter, about even with the average quarterly level
of such expenses in 1996.
Total common and perpetual preferred equity was $5.0 billion at March 31, 1997,
up from $4.9 billion at December 31, 1996. In addition, the Company has
outstanding $345 million of TRUPS units and $420 million of redeemable preferred
stock. Book value per common share was $41.13 at March 31, 1997, compared with
$40.03 at December 31, 1996 and $37.98 at March 31, 1996. Average assets for the
quarter were $211 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, Dec. 31, March 31,
1997 1996 1996
------------- ------------- -------------
<S> <C> <C> <C>
SUMMARY OF REVENUES, NET OF
INTEREST EXPENSE:
Fixed income sales and trading $ 519 $ 588 $ 732
Equity sales and trading 243 83 64
Global investment banking 220 234 181
Commodities trading 25 100 235
Asset management 17 15 12
Other (2) 33 14
------------- ------------- -------------
Total revenues, net of interest expense $ 1,022 $ 1,053 $ 1,238
============= ============= =============
RETURN ON AVERAGE COMMON STOCKHOLDERS'
EQUITY FROM CONTINUING OPERATIONS:
Primary 14.0% 21.1% 33.4%
Fully diluted* 13.4 19.6 29.7
============= ============= =============
PER COMMON SHARE:
Cash dividends $ 0.16 $ 0.16 $ 0.16
High market price 61 3/8 49 39 1/4
Low market price 46 44 1/8 34 7/8
Ending market price 49 7/8 47 1/8 37 1/2
Book value at quarter-end* 41.13 40.03 37.98
============= ============= =============
AT QUARTER-END:
Average assets for the quarter $ 211,000 $ 209,000 $ 191,000
Common equity 4,544 4,407 4,061
Redeemable preferred equity 420 420 560
Perpetual preferred equity 450 450 562
TRUPS** 345 345 -
============= ============= =============
Full-time employees:
Salomon Brothers 6,858 6,808 6,337
Salomon Inc (excluding Basis) 7,151 7,146 6,927
============= ============= =============
<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.
** Guaranteed preferred beneficial interests in Company subordinated debt securities.
</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, Dec. 31, March 31,
1997 1996 1996
----------------- ----------------- ------------------
<S> <C> <C> <C>
Revenues:
Interest and dividends $ 1,367 $ 1,374 $ 1,572
Principal transactions 484 448 651
Investment banking 220 234 181
Commissions 99 92 90
Other 14 51 11
----------------- ----------------- ------------------
Total revenues 2,184 2,199 2,505
Interest expense 1,162 1,146 1,267
----------------- ----------------- ------------------
Revenues, net of interest expense 1,022 1,053 1,238
----------------- ----------------- ------------------
Noninterest expenses:
Compensation and employee-related 565 502 550
Technology 56 51 46
Professional services and business development 40 52 43
Occupancy 40 41 43
Clearing and exchange fees 18 20 17
Other 24 22 23
----------------- ----------------- ------------------
Total noninterest expenses 743 688 722
----------------- ----------------- ------------------
Income from continuing operations before income taxes 279 365 516
Income tax expense 106 131 206
----------------- ----------------- ------------------
Income from continuing operations 173 234 310
----------------- ----------------- ------------------
Discontinued Operations:
Loss, net of tax benefit of $3 and $21 - (6) (34)
Loss on disposal of Basis, net of tax benefit of $215 - (290) -
================= ================= ==================
Net income (loss) $ 173 $ (62) $ 276
================= ================= ==================
EARNINGS (LOSS) PER SHARE:
Primary earnings from continuing operations $ 1.44 $ 2.03 $ 2.75
Primary earnings (loss) 1.44 (0.71) 2.44
Fully diluted earnings from continuing operations* 1.37 1.88 2.49
Fully diluted earnings (loss)* 1.37 (0.71) 2.21
================= ================= ==================
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING
(in thousands):
For primary earnings per share 109,500 108,100 106,600
For fully diluted earnings per share 120,900 120,700 121,800
================= ================= ==================
<FN>
* Assumes conversion of redeemable preferred stock unless such assumptions result in higher earnings per share than determined
under the primary method.
</FN>
</TABLE>
