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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 15, 1999
DONALDSON, LUFKIN & JENRETTE, INC.
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(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
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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
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A press release dated April 15, 1999, 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 15, 1999.
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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 21, 1999
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FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Catherine M. Conroy Kevin Zuccala
212-892-3275 212-892-4693
DLJ FIRST QUARTER NET $121.7 MILLION, OR $0.84 PER SHARE
New York, New York - April 15, 1999 - Donaldson, Lufkin & Jenrette,
Inc. (NYSE: DLJ) today reported net income of $121.7 million, or $0.84 per
diluted share, for the first quarter of 1999. These results are 9 and 16
percent lower, respectively, than the $134.2 million, or $1.00 per share
(diluted and adjusted for a two-for-one stock split in May 1998) reported for
the first quarter of 1998. When compared to the quarter ended December 31,
1998, DLJ's net income increased 77 percent.
DLJ's average return on equity for the first quarter of 1999 was 17.8
percent. The weighted average number of common diluted shares rose 7 percent
compared to the first quarter of 1998. At March 31, 1999, book value per
split-adjusted common share was $21.45.
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, "This was a solid quarter for DLJ. Our results reflect the
fundamental strength and balance of DLJ's business mix and our ability to
capitalize on market trends. Commissions, for example, increased by more than
40 percent during the first quarter to a record $281 million, offsetting a
decline in underwriting revenues and the absence of meaningful, realized
merchant banking gains. Driven largely by outstanding results at our Pershing
correspondent services division, DLJ's Financial Services Group enjoyed its
best quarter ever, more than doubling pre-tax income compared to the first
quarter of 1998. Assets in client accounts maintained by Pershing increased 45
percent during the last twelve months and were at $295 billion at the end of
the first quarter of 1999."
Messrs. Roby and Chalsty noted further, "Our online brokerage service,
DLJdirect, also turned in a strong first quarter and reported $11 million of
pre-tax profits for the current quarter, compared to a pre-tax loss of $3.8
million for the first quarter of 1998. Also in the first quarter of 1999,
Barron's magazine cited DLJdirect as its number-one rated online broker, and
Gomez Advisors, Inc., for the fifth time in the last seven quarters, named
DLJdirect the number-one overall Internet broker."
DLJdirect's pre-tax income for the first quarter of 1999 does not
reflect the significant, future increases in marketing and advertising
expenditures that are anticipated for the balance of 1999. First quarter
revenues for DLJdirect almost doubled in 1999, rising to $47 million, and
assets in customer accounts grew 90 percent to stand at $11.2 billion at the
end of the quarter. On average, DLJdirect executed 20,200 trades per day during
the first quarter of 1999 - more than twice the number of trades during the
comparable quarter a year ago.
Messrs. Roby and Chalsty commented, "We continued to invest in the
expansion of our international franchise and are pleased with the progress that
we have made. We launched a trading business in non-U.S. equities in London and
Hong Kong in early January and considerably increased our European investment
banking activities. Aggregate revenues from these and DLJ's other international
businesses increased 47 percent on a quarter-to-quarter comparison."
FIRST QUARTER REVIEW
Total revenues of $1.5 billion for the first quarter of 1999 were
essentially identical to those reported for the comparable quarter a year ago.
Net revenues, or total revenues minus interest expense, were $1.1 billion for
the first quarter of 1999, or 2 percent higher than net revenues reported for
the first quarter of 1998.
Commission revenues rose more than 40 percent during the first quarter
of 1999 to a record $281 million. Compared to the first quarter of 1998,
average daily trading volume on the New York Stock Exchange and Nasdaq
increased 27 and 31 percent respectively during the first quarter of 1999.
DLJ maintained its leadership position as the number-one-ranked
underwriter of high-yield bonds in the first quarter of 1999 and increased its
market share as a lead underwriter from 16.2 percent for all of 1998 to 24.2
percent. During the first quarter of 1999, total new issue volume for the
industry decreased 36 percent.
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DLJ's underwriting revenues declined 16 percent to $257 million during
the first quarter of 1999 as a result of an overall slowdown in new issuance of
high-yield bonds and commercial real estate and mortgage-backed securities.
Fee income for the first quarter of 1999 increased 12 percent to $287
million, reflecting the strength of DLJ's rapidly expanding franchise in both
U.S. and international merger and acquisition transactions. DLJ ranks fourth as
a financial advisor as measured by the dollar volume of the global assignments
it completed during the first quarter of 1999, up from eighth place a year ago.
Net interest income declined 37 percent to $121 million for the first
quarter of 1999 and trading revenues increased 46 percent to $174 million. Were
the impact of the firm's proprietary trading activities in emerging markets
debt during the first quarter of 1998 to be excluded (the business was
discontinued in the third quarter of 1998), net interest income would have
increased 9 percent and trading revenues would have increased 16 percent for
the current quarter.
Investment gains, which arise primarily from DLJ's merchant banking
business, were $3 million for the first quarter of 1999, down from $41.3
million for the comparable 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 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; online,
interactive brokerage services; and asset management. Founded in 1959 and
headquartered in New York City, DLJ employs approximately 8,700 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.
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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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QUARTER ENDED
MARCH 31, 1999 VS. 1998
1999 1998 $ %
--------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 280,992 $ 198,524 $ 82,468 41.5 %
Underwritings 256,914 306,158 (49,244) (16.1)%
Fees 287,075 255,371 31,704 12.4 %
Interest-net 476,661 564,789 (88,128) (15.6)%
Principal transactions-net:
Trading 174,045 118,944 55,101 46.3 %
Investment 3,024 41,298 (38,274) (92.7)%
Other 14,739 8,337 6,402 76.8 %
---------- ---------- ---------- -------
Total revenues 1,493,450 1,493,421 29 0.0 %
---------- ---------- ---------- -------
Costs and expenses:
Compensation and benefits 635,714 644,084 (8,370) (1.3)%
Interest 355,953 373,866 (17,913) (4.8)%
Brokerage, clearing, exchange
fees, and other 71,221 56,321 14,900 26.5 %
Occupancy and equipment 73,323 59,434 13,889 23.4 %
Communications 26,440 19,501 6,939 35.6 %
Other operating expenses 133,799 122,965 10,834 8.8 %
---------- ---------- ---------- -------
Total costs and expenses 1,296,450 1,276,171 20,279 1.6 %
---------- ---------- ---------- -------
Income before provision for
income taxes 197,000 217,250 (20,250) (9.3)%
---------- ---------- ---------- -------
Provision for income taxes 75,350 83,100 (7,750) (9.3)%
---------- ---------- ---------- -------
Net income $ 121,650 $ 134,150 $ (12,500) (9.3)%
========== ========== ========== =======
Dividends on preferred stock $ 5,289 $ 5,443 $ (154) (2.8)%
========== ========== ========== =======
Earnings applicable to
common shares $ 116,361 $ 128,707 $ (12,346) (9.6)%
========== ========== ========== =======
Earnings per share (2):
Basic $ 0.94 $ 1.12 $ (0.18) (16.1)%
Diluted $ 0.84 $ 1.00 $ (0.16) (16.0)%
========== ========== ========== =======
Weighted average common shares (2):
Basic 123,995 115,088 8,907 7.7%
Diluted 137,850 128,794 9,056 7.0%
========== ========== ========== =======
</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)
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QUARTER ENDED
MARCH 31,
1999 1998
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BALANCE SHEET DATA AT END OF PERIOD:
Long-term borrowings (3) $ 4,244,665 $ 2,272,147
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Redeemable preferred stock $ 200,000 $ 200,000
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Total stockholders' equity $ 3,069,121 $ 2,397,428
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Book value per common share
outstanding $ 21.45 $ 17.00
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Common shares and RSUs outstanding
at end of period 125,612 119,010
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OTHER FINANCIAL DATA AT END OF PERIOD:
Ratio of long-term borrowings to total
capitalization (5) 55.8% 46.7%
Return on average common stockholders'
equity (6) 17.8% 26.6%
(1) Interest-net is net of interest expense to finance U.S. Government,
agency and mortgage-backed securities of $705.3 million and $766.1
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 calculated under the
treasury stock method.
(3) In the first quarter of 1999, the Company filed a shelf registration
statement which enables the Company to issue from time to time up to $2.0
billion in aggregate principal amount of debt securities or preferred
stock. In March 1999, the Company issued $650.0 million 5 7/8% Senior
Notes due 2002 from this shelf registration.
(4) On March 17, 1999 the Company filed a registration statement with the
Securities and Exchange Commission relating to a proposed initial public
offering of a new class of common stock that will track the performance
of DLJdirect, its online brokerage business.
(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.
