<PAGE>
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) October 11, 1999
DONALDSON, LUFKIN & JENRETTE, INC.
----------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
1-6862 13-1898818
- ---------------------------------------- ----------------------------------
(Commission File Number) (I.R.S. Employer
(Identification No.)
277 Park Avenue, New York, New York 10172
- ---------------------------------------- ----------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (212) 892-3000
<PAGE>
Item 5. Other Events
- --------------------
Press releases dated October 11, 1999, issued by Donaldson, Lufkin &
Jenrette, Inc. ("the Company"), concerning second quarter financial results and
information for the Company and DLJdirect, its online brokerage service
contained therein, are filed herewith as exhibits and hereby incorporated in
their entirety by reference.
(c) Exhibit
Exhibit 99.1 Press release dated October 11, 1999 for Donaldson, Lufkin &
Jenrette, Inc.
Exhibit 99.2 Press release dated October 11, 1999 for DLJdirect
<PAGE>
FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Catherine M. Conroy Kevin Zuccala
212-892-3275 212-892-4693
DLJ THIRD QUARTER NET REBOUNDS FOURFOLD TO $122.2 MILLION,
ON FIVEFOLD RISE IN EPS TO $0.85 PER SHARE
NEW YORK, NY - OCTOBER 12, 1999 - Donaldson, Lufkin & Jenrette, Inc. (NYSE:
DLJ) today reported a fourfold rise in net income to $122.2 million for the
third quarter of 1999, up from $25.7 million for the comparable quarter a year
ago. Third quarter earnings per diluted share of $0.85 for the current quarter
represent a fivefold increase from the $0.15 per diluted share reported for the
same quarter a year ago, when financial services firms were affected by the
crises in Russia and Asia. For the nine-month period ended September 30, 1999,
DLJ's net income increased 36 percent to a record $409.5 million, or $2.84 per
diluted share.
DLJ's total revenues for the third quarter of 1999 rose 59 percent to $1.7
billion. Net revenues for the third quarter of 1999, or total revenues minus
interest expense, grew 91 percent to $1.3 billion.
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,
"DLJ's businesses performed well during the third quarter of 1999 and the firm
posted significantly stronger results in all revenue categories compared to the
exceptionally difficult third quarter of 1998. Consequently, DLJ's record net
income for the nine months ended September 30, 1999 exceeds the full-year
results for 1997 - our strongest year ever."
<PAGE>
They continued, "DLJ's Banking Group led the firm in profitability during
the third quarter, contributing to an outstanding 41 percent firmwide increase
in fee income to a record $449 million. Fees from merger and acquisition
assignments nearly doubled, also rising to record levels. At September 30, 1999,
DLJ ranked fifth in completed global M&A assignments and fourth in completed
U.S. assignments, up dramatically from eleventh place in both measures a year
ago. Our Sprout Group of venture capital funds also turned in an excellent
quarter, benefiting from strong increases in both realized and unrealized
portfolio gains."
They continued, "Third quarter results, however, reflect the double impact
of a generally slower underwriting and trading environment compared to the
second quarter of 1999, as well as the costs associated with the ongoing
expansion of our international businesses and the anticipated, seasonal slowdown
of the European marketplace."
INCREASING ITS LEAD IN HIGH-YIELD
Messrs. Roby and Chalsty noted, "In the face of increasingly challenging
market conditions during the third quarter of 1999, DLJ significantly increased
its market share as an underwriter of high-yield bonds. During the quarter, DLJ
underwrote $4.3 billion of new high-yield issues to earn a first-place ranking
and a market share of 25 percent, almost 15 market share points more than the
market share of its nearest competitor."
For the nine months ended September 30, 1999, DLJ also ranked first as an
underwriter of high-yield bonds, with market share of 20 percent, up
significantly from a 15.6 percent share for the comparable period a year ago and
nearly 60 percent larger than the market share of its nearest competitor.
INTERNATIONAL EXPANSION ON TARGET
During the third quarter of 1999, DLJ continued to build out its
international investment banking and equities businesses, and revenues from
2
<PAGE>
these activities increased sharply. The firm opened an investment banking office
in Frankfurt in September and added banking coverage for two important sectors
in Europe: utilities and technology. DLJ also completed the first phase of its
launch of an international equities research, sales and trading business. Forty
analysts now provide DLJ's institutional clients with coverage of more than 300
companies in 15 industry segments representing nearly 90 percent of the market
capitalization for European equities. A similar business in Asia now provides
coverage of approximately 60 percent of the Asian equities markets.
Overall revenues from DLJ's international activities in the third quarter
increased by 181 percent over the third quarter of last year.
DLJDIRECT POSTS 82 PERCENT INCREASE IN REVENUES
DLJdirect (NYSE: DIR), DLJ's online brokerage service, reported total
revenues of $54.9 million for the third quarter of 1999, an 82 percent increase
over the $30.2 million in revenues reported for the comparable period a year
ago. DLJdirect reported a net after-tax loss of $3.3 million, or $0.03 per share
(diluted), for the third quarter of 1999. This compares to net income of $0.8
million, or $0.01 per share (pro forma diluted), for the third quarter of 1998.
Average customer assets per active account now stand at $47,000, up 38
percent from $34,000 twelve months ago. Total customer assets reached a record
$14.2 billion at the end of the third quarter of 1999.
Total trades executed and average trades per day during the third quarter
of 1999 were up significantly versus the third quarter of 1998, although they
declined 12 percent and 14 percent respectively compared to the record levels of
the second quarter of 1999. These declines reflect the general slowdown in the
U.S. equities market during the current quarter, as well as historical, seasonal
variations in online investors' behavior.
3
<PAGE>
NINE-MONTH HIGHLIGHTS: RECORD INCOME AND REVENUES
Net income for the nine-month period ended September 30, 1999 was a record
$409.5 million, up 36 percent from the comparable period a year ago. Diluted
earnings per share were $2.84, up 30 percent from the comparable nine months of
1998. Total revenues for the period were a record $5 billion, 22 percent more
than for the first nine months of 1998.
For the nine months ended September 30, 1999, commissions were $841
million, up 34 percent. Underwriting income was $912 million, or 19 percent more
than a year ago and fee income was $1.1 billion, 20 percent higher than for the
first nine months of 1998. All three revenue categories reached record levels
for the nine months.
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 9,700 people worldwide and maintains
offices in 13 cities in the United States and 14 cities in Europe, Latin America
and Asia. The company has two classes of common stock trading on the New York
Stock Exchange. Shares trading under the ticker symbol "DLJ" represent
Donaldson, Lufkin & Jenrette, Inc. Shares trading under the ticker symbol "DIR"
track the performance of DLJdirect, its online brokerage business. For more
information on Donaldson, Lufkin & Jenrette, refer to the company's World Wide
Web site at www.dlj.com. The firm's world headquarters are located at 277 Park
Avenue, New York, NY 10172; telephone number (212) 892-3000.
Financial Tables Follow
4
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
<TABLE>
<CAPTION>
-------------------------------------------------------------------
QUARTERS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 269,174 $ 225,345 $ 841,278 $ 625,811
Underwritings 245,395 115,536 911,763 764,840
Fees 448,691 317,297 1,068,439 891,104
Interest-net (3) 537,460 577,515 1,514,023 1,732,568
Principal transactions-net:
Trading 127,771 (228,232) 520,234 (69,339)
Investment 57,558 44,724 85,737 133,217
Other 18,323 17,642 66,864 41,792
------------ ------------- ------------- -------------
Total revenues 1,704,372 1,069,827 5,008,338 4,119,993
------------ ------------- ------------- -------------
Costs and expenses:
Compensation and benefits 761,553 387,168 2,197,276 1,704,218
Interest 375,697 374,686 1,112,301 1,126,793
Brokerage, clearing, exchange
fees, and other 66,194 61,356 213,741 190,593
Occupancy and equipment 83,192 65,849 233,858 189,897
Communications 31,083 23,479 84,739 64,638
Other operating expenses 192,653 115,689 516,423 354,504
------------ ------------- ------------- -------------
Total costs and expenses 1,510,372 1,028,227 4,358,338 3,630,643
------------ ------------- ------------- -------------
Income before provision for income taxes 194,000 41,600 650,000 489,350
------------ ------------- ------------- -------------
Provision for income taxes 71,800 15,900 240,500 187,200
------------ ------------- ------------- -------------
Net income 122,200 25,700 409,500 302,150
Dividends on preferred stock 5,289 5,289 15,867 16,021
------------ ------------- ------------- -------------
Earnings applicable to common shares $ 116,911 $ 20,411 $ 393,633 $ 286,129
============ ============= ============= =============
Earnings applicable to common shares (1)
DLJ $ 117,507 $ 20,411 $ 394,180 $ 286,129
============ ============= ============= =============
DLJdirect $ (596) $ (547)
============ =============
Earnings per share (2):
DLJ
Basic $ 0.93 $ 0.17 $ 3.15 $ 2.42
Diluted $ 0.85 $ 0.15 $ 2.84 $ 2.18
============ ============= ============= =============
DLJdirect
Basic $ (0.03) $ (0.03)
Diluted $ (0.03) $ (0.03)
============ =============
Weighted average common shares (2):
DLJ
Basic 125,993 121,569 125,211 118,025
Diluted 138,185 134,478 139,012 131,386
============ ============= ============= =============
DLJdirect
Basic 18,400 18,400
Diluted 18,400 18,400
============ =============
DLJdirect
Net income (loss) (included in
consolidated earnings applicable
to common shares) $ (3,330) $ 776 $ 8,918 $ (325)
============ ============= ============= =============
</TABLE>
5
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
<TABLE>
<CAPTION>
---------------------------------------------------------------
QUARTERS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
---------------------------------------------------------------
<S> <C> <C> <C> <C>
DLJ INC.
BALANCE SHEET DATA AT END OF PERIOD:
Long-term borrowings (4) $ 4,660,831 $ 3,137,104
============== ================
Redeemable preferred stock $ 200,000 $ 200,000
============== ================
Total stockholders' equity (2) $ 3,727,442 $ 2,862,060
============== ================
Book value per common share
outstanding
DLJ common stock $ 26.08 $ 19.93
Common shares and RSUs outstanding
at end of period
DLJ common stock 126,972 124,802
DLJdirect common stock 18,400 N/A
DLJ INC.
OTHER FINANCIAL DATA AT END OF PERIOD:
Ratio of long-term borrowings to total
capitalization (5) 51.8% 50.6%
Return on average common stockholders'
equity (6) 14.3% 3.4% 17.9% 17.9%
</TABLE>
6
<PAGE>
FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Catherine M. Conroy Kevin Zuccala
Donaldson, Lufkin & Jenrette Donaldson, Lufkin & Jenrette
212-892-3275 212-892-4693
DLJDIRECT THIRD QUARTER REVENUES UP 82 PERCENT TO $54.9 MILLION
NEW YORK, NY - OCTOBER 12, 1999 - Donaldson, Lufkin & Jenrette, Inc. (NYSE:
DLJ) announced today that DLJdirect (NYSE: DIR), its online brokerage service,
reported total revenues of $54.9 million for the third quarter of 1999, an 82
percent increase over the $30.2 million in revenues reported for the comparable
period a year ago. DLJdirect also reported a net after-tax loss of $3.3 million,
or $0.03 per share (diluted), for the third quarter of 1999. This compares to
net income of $0.8 million, or $0.01 per share (pro forma diluted), for the
third quarter of 1998.
Blake Darcy, Chief Executive Officer of DLJdirect, said, "We are pleased
that serious investors are realizing the benefits of online trading and
recognizing that DLJdirect can best serve their financial needs. Average
customer assets per active account now stand at $47,000, up from $34,000 twelve
months ago. Total customer assets reached a record $14.2 billion at the end of
the quarter."
Total trades executed during the third quarter of 1999 and average trades
per day were up significantly versus the third quarter of 1998, although they
declined 12 percent and 14 percent respectively compared to the record levels of
the second quarter of 1999. These declines reflect a general slowdown in the
U.S. equities market, as well as historical, seasonal variations in online
investors' behavior.
DLJdirect continued to diversify revenues. Fee income in the third quarter
of 1999 grew by 86 percent over the same period a year earlier. DLJdirect
expanded its underwriting activity and participated in 20 public offerings in
the third quarter of 1999.
<PAGE>
In addition, third-party demand for the Internet-based products developed by
iNautix, DLJdirect's in-house technology company, also contributed to the gains
in fee income. Interest income (net) in the third quarter of 1999 increased more
than 200 percent over the comparable quarter a year ago.
Commissions, which were $30.7 million during the third quarter of 1999,
were 58 percent greater than for the third quarter of 1998, and represented 56
percent of total revenues.
DLJdirect also continued to expand internationally. Mr. Darcy said,
"DLJdirect is experiencing explosive growth overseas, particularly in Japan,
where we were the first U.S. firm to offer online trading. Launched on June 11,
our Japanese joint venture, DLJdirect SFG, opened nearly 10,000 customer
accounts during the third quarter of 1999. DLJdirect began operations in the
United Kingdom on September 1, where we hope to replicate the same success that
we have experienced in Japan."
GROWTH IN U.S. CUSTOMERS, ASSETS AND TRADING ACTIVITY
As of September 30, 1999, DLJdirect had 700,000 U.S. customer accounts, 41
percent more than the third quarter a year ago. Active domestic customer
accounts at DLJdirect at the end of the third quarter of 1999 numbered 302,000,
a 53 percent increase versus the third quarter of 1998. During the third quarter
of 1999, DLJdirect opened 43,000 new customer accounts and 25,000 new active
accounts in the United States. Assets in customer accounts on September 30, 1999
were $14.2 billion, more than double the $6.7 billion reported at the end of the
third quarter of 1998.
DLJdirect executed a total of 1.2 million trades during the third quarter
of 1999, 67 percent more than the 720,000 trades executed during the third
quarter of 1998. On average, DLJdirect executed 19,200 trades per day during the
third quarter of 1999, 71 percent more than the 11,200 trades per day during the
same year earlier period.
INCREASED ADVERTISING
During the third quarter of 1999, DLJdirect launched an aggressive new
multi-media advertising campaign that emphasizes the strengths and benefits of
its Wall Street heritage, using the tagline, "Putting Our Reputation Online." Of
the $18.1 million
2
<PAGE>
allocated to advertising in the third quarter, $16.8 million was concentrated in
U.S. media.
NEW INITIATIVES AND AWARDS
In July, DLJdirect announced it had entered into a partnership to establish
an electronic communications network (ECN). As a result, beginning in late
October, DLJdirect customers will have access to extended-hours trading,
including pre-opening and after-hours sessions during which clients will be able
to enter limit orders for selected listed securities and all Nasdaq National
Market System and Small Cap issues.
In August, DLJdirect expanded its array of investment products and
services, with the launch of a full service mortgage program, allowing investors
to access online mortgage rates, and to prequalify and apply online for a
mortgage. In addition, DLJdirect introduced two innovative mortgage services
that eliminate the cash down payment from residential mortgage financing.
In September, DLJdirect unveiled a new look for its Web site and announced
a number of new features, including real-time account balances, real-time Dow
Jones NewswiresSM, full S&P stock reports, and a portfolio evaluation system
that provides investors with realized and unrealized gains on the positions in
their portfolios. DLJdirect also expanded its fixed income investment product
offerings in response to research conducted among its high-net-worth investor
client base.
As part of its ongoing efforts to provide customers with enhanced products
and the latest technology, DLJdirect launched DLJdirect AnywhereTM Wireless
Services in September, enabling clients to access real-time news, quotes and
trading when on the go, anywhere, anytime.
DLJdirect was named "Forbes Favorite" online broker and "Best of the Web"
in the Fall 1999 special Internet issue of Forbes magazine. DLJdirect's
comprehensive and powerful trading platform, low prices, and information
resources were specifically cited in the magazine's recognition.
3
<PAGE>
NINE MONTH HIGHLIGHTS
Net income reported for the first nine months of 1999 was $8.9 million, as
opposed to a loss of $0.3 million for the first nine months of 1998. Earnings
per share (pro forma diluted) for the first nine months of 1999 were $0.09.
Total revenues for the first nine months of 1999 were $161.8 million, nearly
double the $82.5 million for the same period in 1998.
DLJdirect is one of America's premier online brokerage firms. Established
in 1988, DLJdirect offers a broad range of investment products and services to
sophisticated, self-directed investors, representing approximately $14.2 billion
in assets. For more information on DLJdirect, refer to the company's World Wide
Web site at www.DLJdirect.com.
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 9,700 people worldwide and maintains
offices in 13 cities in the United States and 14 cities in Europe, Latin America
and Asia. The company has two classes of common stock trading on the New York
Stock Exchange. Shares trading under the ticker symbol "DLJ" represent
Donaldson, Lufkin & Jenrette, Inc. Shares trading under the ticker symbol "DIR"
track the performance of DLJdirect, its online brokerage business. For more
information on Donaldson, Lufkin & Jenrette, refer to the company's World Wide
Web site at www.dlj.com. The firm's world headquarters are located at 277 Park
Avenue, New York, NY 10172; telephone number (212) 892-3000.
Financial Tables Follow
4
<PAGE>
DLJDIRECT
Combined Summary of Operations (Unaudited)
(in thousands, except per share data and financial ratios)
<TABLE>
<CAPTION>
------------------------------------------------------------
QUARTERS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 30,660 $ 19,443 $ 98,425 $ 54,314
Fees 13,172 7,070 38,322 18,365
Interest-net 11,049 3,669 25,010 9,838
--------- ----------- ------------ ----------
Total revenues 54,881 30,182 161,757 82,517
--------- ----------- ------------ ----------
Costs and expenses:
Compensation and benefits 17,136 7,552 41,351 20,231
Brokerage, clearing, exchange
fees, and other 8,865 6,984 26,939 19,724
Advertising 18,128 6,585 37,461 19,918
Occupancy and equipment 2,545 1,347 6,017 3,659
Communications 2,641 1,196 8,065 3,931
Technology costs 813 782 2,624 3,089
Other operating expenses 8,481 4,422 20,527 12,513
--------- ----------- ------------ ----------
Total costs and expenses 58,609 28,868 142,984 83,065
--------- ----------- ------------ ----------
Income (loss) before income tax provision
(benefit) and equity in net loss of join venture (3,728) 1,314 18,773 (548)
--------- ----------- ------------ ----------
Income tax provision (benefit) (1,490) 538 7,807 (223)
Equity in net loss of joint venture (2) (1,092) - (2,048) -
--------- ----------- ------------ ----------
Net income (loss) $ (3,330) $ 776 $ 8,918 $ (325)
========= =========== ============ ==========
Earnings (loss) per share (3):
Basic $ (0.03) $ 0.01 $ 0.09 $ (0.00)
Diluted $ (0.03) $ 0.01 $ 0.09 $ (0.00)
========= =========== ============ ==========
Weighted average notional and outstanding shares:
Basic 102,650 102,650 102,650 102,650
Diluted 102,650 104,673 103,269 102,650
========= =========== ============ ==========
Earnings (loss) attributable to:
DLJ Retained Interest $ (2,734) $ 776 $ 9,465 $ (325)
DLJdirect Tracking Stock (1) (596) 0 (547) 0
========= =========== ============ ==========
Tracking Stock earnings per share (3):
Basic $ (0.03) $ (0.03)
Diluted $ (0.03) $ (0.03)
========= ============
Tracking Stock weighted average common shares:
Basic 18,400 18,400
Diluted 18,400 18,400
========= ============
</TABLE>
5
<PAGE>
DLJDIRECT
COMBINED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
------------------------------------
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1999
------------------------------------
BALANCE SHEET DATA AT END OF PERIOD:
Total allocated equity $ 232,662
=========
Common shares at end of period:
DLJ Retained Interest (Notional) 84,250
DLJdirect Tracking Stock Outstanding 18,400
=========
OTHER FINANCIAL DATA AT END OF PERIOD:
Return on average common stockholders' (5.7)% 9.0%
equity (4)
(1) DLJdirect Common Stock tracks the separate performance of DLJ Inc.'s
existing online discount brokerage and related investment services business
for periods subsequent to the date of the offering ("Tracking Stock"). On
May 28, 1999 ("the closing date"), DLJ Inc. issued in an initial public
offering, 18.4 million shares of DLJdirect Common Stock. The shares of
DLJdirect Common Stock have no voting rights, except in certain limited
circumstances.
As a result of the offering, DLJ Inc. has a retained interest of 82.1% in
DLJdirect represented by 84.3 million notional shares. The 18.4 million
shares of DLJdirect Tracking Stock reflects the 17.9% owned by the public.
Prior to the offering DLJ Inc. had a 100% interest in the earnings of
DLJdirect.
(2) DLJdirect has a 50% interest in a joint venture with a Japanese bank which
amount is included in equity from net loss of joint venture in the
statement of operations.
(3) Earnings (loss) per share amounts have been calculated by dividing net
income (loss) by the weighted average notional and outstanding tracking
shares. For periods prior to the quarter ended September 30, 1999, these
amounts are pro forma as if the issuance of the DLJdirect Tracking Stock
occurred at the beginning of 1998. Earnings per share amounts for the
quarter ended September 30, 1999 are calculated based on actual results.
The notional shares represent DLJ's 82.1% retained interest in DLJdirect.
Prior to the offering, DLJ Inc. had a 100% interest in the earnings of
DLJdirect. These pro forma amounts are presented for comparative purposes
only.
Tracking Stock earnings per common share amounts have been calculated by
dividing earnings applicable to common shares by the weighted average
actual common shares outstanding. For the nine months ended September 30,
1999, earnings per share amounts are calculated for the period the tracking
stock was outstanding, May 28, 1999 to September 30, 1999. Earnings per
share for periods prior to the closing date are not presented as such
amounts are not meaningful.
(4) Return on average common stockholders' equity is calculated on an
annualized basis for periods of less than one full year using a monthly
average and is based on earnings applicable to Tracking Stock (pro forma
for the nine months ended September 30, 1999).
6
<PAGE>
Donaldson, Lufkin & Jenrette, Inc. and Subsidiaries
Consolidated Summary of Operations (Unaudited)
(in thousands, except per share data and financial ratios)
(1) DLJdirect Common Stock tracks the separate performance of the Company's
existing online discount brokerage and related investment services business
("Tracking Stock"). Prior to issuing DLJdirect Common Stock, the Company's
existing Common Stock was designated as DLJ Common Stock and reflects the
performance of the Company's primary businesses, i.e., Banking, Fixed
Income, Equities and Financial Services, plus a 100% interest in DLJdirect.
These operations are referred to as DLJ. On May 28, 1999, ("the closing
date"), the Company issued in an initial public offering, 18.4 million
shares of DLJdirect Common Stock. The shares of DLJdirect Common Stock have
no voting rights, except in certain limited circumstances.
Earnings applicable to common shares for DLJ includes a 100% retained
interest in DLJdirect for periods prior to the closing date and 82.1% for
subsequent periods. Quarterly results reported by DLJ prior to the closing
date were not affected by the issuance of the tracking stock.
(2) Earnings per common share amounts for periods after the closing date have
been calculated using the two class method. The two class method is an
earnings allocation formula that determines the earnings per share for each
class of common stock according to participation rights in undistributed
earnings.
For DLJ, basic earnings per common share represents earnings applicable to
common shares (including its retained interest in DLJdirect) divided 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.
For DLJdirect, basic earnings per share is calculated by dividing earnings
applicable to common shares for the period the tracking stock was
outstanding (May 28, 1999 to September 30, 1999) by the weighted average
actual common shares outstanding. Diluted earnings per common share include
the dilutive effect of options calculated under the treasury stock method.
DLJ's retained interest excludes the effect of the 10 million shares of
common stock that have been reserved for issuance under the DLJdirect
Stock Option Plan. Earnings per share for DLJdirect for periods prior to
the closing date are not presented as such amounts are not meaningful.
(3) Interest-net is net of interest expense to finance U.S. Government, agency
and mortgage-backed securities of $790.1 million, $794.2 million, $2,285.0
million and $2,343.0 million, respectively.
(4) During the third quarter of 1999, the Company issued an aggregate of $280.0
million medium-term notes with various maturity dates through 2008.
(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 monthly
average and is based on earnings applicable to common shares.
7
<PAGE>
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
----------------------------------
Marjorie White
Secretary
October 14, 1999
