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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 (Date of earliest event reported) April 13, 1998
Donaldson, Lufkin & Jenrette, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
1-6862 13-1898818
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(Commission File Number) (I.R.S. Employer
(Identification No.)
277 Park Avenue, New York, New York 10172
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (212) 892-3000
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Item 5. Other Events
A press release dated April 13, 1998, issued by Donaldson, Lufkin &
Jenrette, Inc., is filed herewith as an exhibit concerning first quarter
financial results and the information concerning the Company contained therein
is hereby incorporated in its entirety by reference.
(c) Exhibit
Exhibit 99.1 Press release dated April 13, 1998.
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SIGNATURE
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.
Donaldson, Lufkin & Jenrette, Inc.
/s/ Marjorie White
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Marjorie White
Secretary
April 14, 1998
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FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Catherine M. Conroy Kevin Zuccala
212-892-3275 212-892-4693
DLJ's FIRST QUARTER EARNINGS INCREASE 55 PERCENT TO A RECORD
$134.2 MILLION OR $2.00 PER SHARE
New York, NY, April 13, 1998 --- Donaldson, Lufkin & Jenrette, Inc.
(NYSE: DLJ) today reported record net income of $134.2 million, or $2.00 per
share (diluted), for the first quarter of 1998. These earnings are 55 percent
higher than the $86.4 million, or $1.37 per share (diluted), reported for the
first quarter of 1997, and 12 percent greater than the previous quarterly
record of $120.3 million, or $1.85 per share (diluted), which was set in the
third quarter of 1997. DLJ also set new records for total revenues, net
revenues, commissions, underwriting revenues and fee income during 1998's first
quarter.
Average return on equity for the quarter was 26.6 percent and book
value per common share was $33.99 at March 31, 1998.
In a joint statement, Joe L. Roby, President and Chief Executive
Officer of Donaldson, Lufkin & Jenrette, Inc., and John S. Chalsty, DLJ's
Chairman, said, "All of the firm's businesses contributed to these record
results, with particularly outstanding performances by our investment banking
groups in the United States and abroad. As an underwriter of common stocks and
corporate bonds and as an advisor on U.S. and international merger assignments,
DLJ's competitive position has never been stronger. Underwriting revenues, with
particular strength in high yield, soared 84 percent, and fee income, generated
largely by our investment and merchant banking businesses, increased by 75
percent. Both are at record levels."
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They continued, "These results reflect both the tremendous momentum
DLJ has achieved in the United States and the correctness of our decision to
build our Pan-European investment banking and capital markets franchises
aggressively. DLJ has become a magnet for talented people around the world, and
we take great pride in the more than 160 experienced professionals who have
joined DLJ in Europe, Latin America, Asia and the United States during the last
three months."
Mr. Roby and Mr. Chalsty commented, "Historically, DLJ has prospered
by seizing opportunities as they arise and hiring talented professionals in
times of industry change and upheaval. The first quarter of 1998 was no
exception, and DLJ once again moved nimbly to take advantage of consolidation
and disruption in our industry in the United States and abroad. We expanded our
capabilities in such sectors as financial services and technology, launched an
international equities group, opened an office in Moscow and established a new
European high-yield business in London."
RECORD LEVELS IN ALL MAJOR REVENUE CATEGORIES
Total revenues for the first quarter of 1998 rose 52 percent to a
record $1.5 billion from $981.4 million in the comparable quarter of 1997. Net
revenues, or total revenues minus interest expense, increased 47 percent to a
record $1.1 billion. The first quarter of 1998 is the first time that quarterly
net revenues have exceeded $1 billion.
For the first quarter of 1998, compensation and benefits includes a
$29 million one-time provision for costs associated primarily with the firm's
plans for significant expansion in Europe during the year. This one-time
provision adds 2.6 percentage points to the ratio of compensation and benefits
to net revenues, bringing it to 57.5 percent for the current quarter.
In the first quarter of 1998, commission revenues increased 18 percent
to a record $198.5 million reflecting the strength and increasing volume of the
stock market. DLJ's Pershing Division and institutional equities businesses
benefited from these favorable market conditions.
Underwriting revenues soared by 84 percent to $320.8 million in the
first quarter of 1998 also rising to a new record as DLJ continued to build
market share in the United States. According to Securities Data Co., DLJ ranked
as the third most active underwriter of
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common stocks and convertible bonds for the first quarter of 1998. DLJ
also maintained its strong leadership position in the high-yield market place,
underwriting the first high-yield offering denominated in the new Euro monetary
unit, as well as the largest ever offerings denominated in British Sterling and
German Deutsche Marks.
Fee income, derived in large part from the firm's role as an advisor
in merger and acquisition assignments, grew by 75 percent to a record $255.4
million. According to Securities Data Co.'s analysis of U.S. and international
merger assignments announced during the first quarter, DLJ's market share
nearly doubled to rank the firm seventh in both categories.
First quarter trading gains of $104.3 million were 33 percent lower
than the record level reported in the comparable quarter a year ago. This
decline is primarily a result of an emerging markets trading strategy whereby
"profits" are realized as net interest revenues rather than as trading gains.
Investment gains, arising primarily from DLJ's merchant banking
business increased to $41.3 million in the first quarter of 1998 from a nominal
$847 thousand in the first quarter a year ago. DLJ typically realizes
investment gains only upon the strategic sale or public offering of a portfolio
company.
Donaldson, Lufkin & Jenrette is a leading integrated investment and
merchant bank that serves institutional, corporate, government and individual
clients. DLJ's businesses include securities underwriting, sales and trading,
investment and merchant banking; financial advisory services; investment
research; correspondent brokerage services; online interactive brokerage
services and asset management. Founded in 1959 and headquartered in New York
City, DLJ employs approximately 7,400 people worldwide and maintains offices in
14 cities in the United States and 10 cities in Europe, Latin America and Asia.
The company's common stock trades on the New York Stock Exchange under the
ticker symbol DLJ. For more information about DLJ visit the company's website
at www.dlj.com.
Financial statements follow
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DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
<TABLE>
<CAPTION>
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QUARTERS ENDED
MARCH 31, 1998 VS. 1997
1998 1997 $ %
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Revenues:
<S> <C> <C> <C> <C>
Commissions $ 198,524 $ 168,350 $ 30,174 17.9%
Underwritings 320,799 173,920 146,879 84.5%
Fees 255,371 146,132 109,239 74.8%
Interest-net (1) 564,789 319,728 245,061 76.6%
Principal transactions-net:
Trading 104,303 156,318 (52,015) (33.3)%
Investment 41,298 847 40,451 n/m
Other 8,337 16,108 (7,771) (48.2)%
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Total revenues 1,493,421 981,403 512,018 52.2%
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Costs and expenses:
Compensation and benefits 644,084 423,449 220,635 52.1%
Interest 373,866 218,171 155,695 71.4%
Brokerage, clearing, exchange
fees, and other 56,321 58,480 (2,159) (3.7)%
Occupancy and equipment 59,434 39,970 19,464 48.7%
Communications 19,501 13,844 5,657 40.9%
Other operating expenses 122,965 83,489 39,476 47.3%
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Total costs and expenses 1,276,171 837,403 438,768 52.4%
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Income before provision for
income taxes 217,250 144,000 73,250 50.9%
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Provision for income taxes 83,100 57,600 25,500 44.3%
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Net income $ 134,150 $ 86,400 $ 47,750 55.3%
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Dividends on preferred stock $ 5,443 $ 3,234 $ 2,209 68.3%
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Earnings applicable to
common shares $ 128,707 $ 83,166 $ 45,541 54.8%
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Earnings per share (2):
Basic $ 2.24 $ 1.53 $ 0.71 46.4%
Diluted $ 2.00 $ 1.37 $ 0.63 46.0%
=========== ========== ========== ==========
Weighted average common shares (2):
Basic 57,544 54,430 3,114 5.7%
Diluted 64,397 60,488 3,909 6.5%
=========== ========== ========== ==========
</TABLE>
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DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
<TABLE>
<CAPTION>
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Quarters Ended
March 31,
1998 1997
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Balance Sheet Data at end of period:
<S> <C> <C>
Total assets (estimated) $ 75,000,000 $ 66,000,000
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Long-term borrowings (3) $ 2,419,740 $ 1,635,065
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Redeemable preferred stock $ 200,000 $ 200,000
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Total stockholders' equity (4) $ 2,397,428 $ 1,732,846
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Book value per common share
outstanding $ 33.99 $ 26.26
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Common shares and RSUs outstanding
at end of period 59,505 58,377
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Other Financial Data at end of period:
Ratio of net assets to total stockholders'
equity (estimated) (5) 13.5x 14.9x
Ratio of long-term borrowings to total
capitalization (6) 48.2% 44.3%
Return on average common stockholders'
equity (7) 26.6% 22.3%
</TABLE>
(1) Interest-net is net of interest expense to finance U.S. Government,
agency and mortgage-backed securities of $766.1 million and $ 613.9
million, respectively.
(2) Basic earnings per common share amounts have been calculated by dividing
earnings applicable to common shares (net income less preferred
dividends) by the weighted average actual common shares outstanding,
i.e., excluding the effect of potentially dilutive securities. Diluted
earnings per common share include the dilutive effects of the Restricted
Stock Unit Plan and the dilutive effect of options and convertible debt
calculated under the treasury stock method and "if-converted" method,
respectively.
(3) In March 1998, the Company issued $150.0 million of 6 1/2% Senior Notes
due April 1, 2008.
(4) In January 1998, the Company issued 3.5 million shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, Series B, with a
liquidation preference of $50 per share ($175.0 million aggregate
liquidation value).
(5) Net assets (total assets excluding securities purchased under agreements
to resell and securities borrowed) divided by stockholders' equity.
(6) Long-term borrowings and total capitalization (the sum of long-term
borrowings, preferred stock, and stockholders' equity) exclude current
maturities (one year or less) of long-term borrowings.
(7) Return on average common stockholders' equity is calculated on an
annualized basis for periods of less than one full year using a
four-point average and is based on earnings applicable to common shares.
(8) In February 1998, the Board of Directors declared a two-for-one stock
split of the Company's common stock which will be effected in the form of
a 100% stock dividend. The split is subject to shareholder approval of an
increase in the number of authorized common shares from 150 million to
300 million at the Company's annual meeting on April 22, 1998. All share
and per share amounts will be restated upon approval of the shareholders.
5
