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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 ACT OF 1934
Date of Report (Date of earliest event reported) July 14, 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 July 14, 1998, issued by Donaldson, Lufkin &
Jenrette, Inc., is filed herewith as an exhibit concerning second 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 July 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 SECOND QUARTER NET INCOME RISES 42 PERCENT
TO A RECORD $142.3 MILLION
New York - July 14, 1998 - Donaldson, Lufkin & Jenrette, Inc. (NYSE:
DLJ) today reported that its second quarter net income rose 42 percent to a
record $142.3 million. Earnings per share (diluted) increased 33 percent to
$1.05 per share versus the $0.79 per share (adjusted for a two-for-one stock
split in May 1998) that the firm reported for the comparable quarter a year
ago. Total revenues for the second quarter of 1998 rose 47 percent to a record
$1.6 billion as the firm achieved all-time highs in commissions, underwritings
and fees.
Net revenues for the quarter, or total revenues minus interest
expense, rose 45 percent to a record $1.2 billion. Average return on equity for
the second quarter was 26.1 percent. Book value at June 30, 1998, adjusted for
the two-for-one stock split, was $18.12 per common share.
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, "These outstanding results arise from the tremendous momentum
we have generated in our investment banking and capital markets businesses. DLJ
has built well-rounded, highly competitive franchises, giving us leadership
positions in each of our major markets. The numbers, which speak for
themselves, document these achievements.
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"Underwriting revenues nearly doubled, climbing to $352.7 million and
commission revenues rose 28 percent to $201.9 million - both are at record
levels. During the quarter, DLJ lead managed the decade's largest high-yield
offering, a $3.45 billion bond issue for Niagara Mohawk Power Corporation. DLJ
continues to be the leading underwriter in the high-yield market.
"We also made considerable progress in building our M&A practice. Fee
income for the quarter grew by more than 80 percent to a record $318.4 million
as revenues generated by our M&A activities more than doubled. According to
Securities Data Company, during the first half of the year DLJ was the number
six ranked financial advisor on both a domestic and global basis as measured by
the dollar volume of our announced assignments. Among the quarter's highlights
was our role as financial advisor to Tele-Communications, Inc. in its $69
billion pending merger with AT&T Corp.
Messrs. Roby and Chalsty continued, "During the second quarter, net
interest increased 72 percent to $212.0 million, largely as a result of a
highly successful trading strategy employed by our Emerging Markets Group. The
group's profits, which were at record levels for the quarter, are realized as
net interest revenues rather than as trading gains. The increase in net
interest revenues more than offsets the decreases in trading revenues.
Consequently, DLJ recorded only $30.4 million in trading revenues for the
second quarter, a decline of 67 percent. In the aggregate, however, net
interest and trading gains increased 12 percent during the quarter."
A RECORD SIX MONTHS
For the first six months of 1998, DLJ's net income rose 48 percent to
a record $276.5 million. Earnings per share (diluted) were $2.05, 39 percent
greater than the $1.47 (adjusted for the two-for-one stock split)
2
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reported for the comparable period a year ago. Total revenues for the first
half of the year rose 49 percent to a record $3.1 billion. Average return on
equity for the period was 26.4 percent.
Donaldson, Lufkin & Jenrette is a leading integrated investment and
merchant bank serving institutional, corporate, government and individual
clients. DLJ's businesses include securities underwriting; sales and trading;
investment and merchant banking; financial advisory services; investment
research; venture capital; correspondent brokerage services; on-line,
interactive brokerage services; and asset management. Founded in 1959 and
headquartered in New York City, DLJ employs approximately 7,700 people
worldwide and maintains offices in 14 cities in the United States and 11 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 on
Donaldson, Lufkin & Jenrette, refer to the company's world wide web site at
http://www.dlj.com.
Financial Tables Follow
3
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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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Revenues:
Commissions $ 201,942 $ 158,346 $ 400,466 $ 326,696
Underwritings 352,675 181,538 673,474 357,360
Fees 318,436 176,695 573,807 322,827
Interest-net (1) 590,264 369,992 1,155,053 689,720
Principal transactions-net:
Trading 30,420 92,892 134,723 247,308
Investment 47,195 63,533 88,493 64,380
Other 15,813 18,184 24,150 34,292
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Total revenues 1,556,745 1,061,180 3,050,166 2,042,583
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Costs and expenses:
Compensation and benefits 672,966 442,330 1,317,050 865,779
Interest 378,241 247,006 752,107 465,177
Brokerage, clearing, exchange
fees, and other 72,916 51,305 129,237 109,785
Occupancy and equipment 64,614 45,335 124,048 85,305
Communications 21,658 15,927 41,159 29,771
Other operating expenses 115,850 92,277 238,815 175,766
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Total costs and expenses 1,326,245 894,180 2,602,416 1,731,583
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Income before provision for
income taxes 230,500 167,000 447,750 311,000
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Provision for income taxes 88,200 66,800 171,300 124,400
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Net income $ 142,300 $ 100,200 $ 276,450 $ 186,600
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Dividends on preferred stock $ 5,289 $ 2,970 $ 10,732 $ 6,204
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Earnings applicable to
common shares $ 137,011 $ 97,230 $ 265,718 $ 180,396
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Earnings per share (2):
Basic $ 1.17 $ 0.88 $ 2.29 $ 1.65
Diluted $ 1.05 $ 0.79 $ 2.05 $ 1.47
========== ========== ========== ==========
Weighted average common shares (2):
Basic 117,394 110,234 116,244 109,180
Diluted 130,661 124,106 129,795 122,634
========== ========== ========== ==========
</TABLE>
4
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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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Balance Sheet Data at end of period:
Long-term borrowings (3) $2,563,206 $1,551,417
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Redeemable preferred stock $ 200,000 $ 200,000
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Total stockholders' equity (2,4) $2,538,768 $1,824,395
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Book value per common share
outstanding $ 18.12 $ 13.91
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Common shares and RSUs outstanding
at end of period 119,438 116,764
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Other Financial Data at end of period:
Ratio of long-term borrowings to total
capitalization (5) 48.3% 41.8%
Return on average common stockholders'
equity (6) 26.1% 24.7% 26.4% 23.5%
</TABLE>
(1) Interest-net is net of interest expense to finance U.S. Government, agency
and mortgage-backed securities of $782.7 million, $751.9 million, $1,548.8
million and $1,365.8 million, respectively.
(2) The Board of Directors declared a two-for-one stock split of the Company's
common stock and the stockholders approved an increase in the number of
authorized common shares from 150 million to 300 million. The stock split
was effected in the form of a 100% stock dividend to stockholders of
record on April 27, 1998, and was paid on May 11, 1998. The par value of
the common stock remained at $.10 per share. All share and per share
amounts have been restated for the effect of the stock split.
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 May 1998, the Company filed a shelf registration statement which
enables the Company to issue from time to time up to $1.625 billion in
aggregate principal amount of senior or subordinated debt securities,
preferred stock, common stock and warrants. In June 1998, the Company
issued $500 million 6 1/2% Senior Notes due 2008 from this shelf
registration.
(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) 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.
(6) 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.
5
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SIGNATURE
Pursuant to the requirements of the Securities Exchange At 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
July 15, 1998
