<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) January 19, 2000
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 January 19, 2000, issued by Donaldson, Lufkin &
Jenrette, Inc. ("the Company"), concerning fourth 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 January 19, 2000 for Donaldson, Lufkin &
Jenrette, Inc.
Exhibit 99.2 Press release dated January 19, 2000 for DLJdirect
<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
January 21, 2000
<PAGE>
FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Catherine M. Conroy Kevin Zuccala
212-892-3275 212-892-4693
DLJ POSTS STRONGEST-EVER QUARTER AND YEAR
4TH QUARTER NET NEARLY TRIPLES TO $191.2 MILLION, OR $1.35 PER SHARE
FULL YEAR NET RISES 62 PERCENT TO $600.7 MILLION, OR $4.18 PER SHARE
NEW YORK, NY- JANUARY 19, 2000 -- Donaldson, Lukfin & Jenrette, Inc. (NYSE:
DLJ) said today that its net income for the fourth quarter of 1999 and for the
full year were the strongest-ever in the firm's forty-year history. Fourth
quarter net income was a record $191.2 million, or $1.35 per diluted share,
nearly tripling the $68.7 million, or $0.47 per diluted share, reported for the
comparable quarter of 1998. For the full year, DLJ earned a record $600.7
million, or $4.18 per diluted share, 62 percent more than the $370.8 million, or
$2.65 per diluted share, reported for 1998.
Return on average equity for the fourth quarter of 1999 increased to 21.9
percent. For the full year, return on average equity was 19.1 percent. At
December 31, 1999, book value per common share was $27.46, or 34 percent greater
than at the end of 1998.
FOURTH QUARTER HIGHLIGHTS
DLJ's total revenues for the fourth quarter of 1999 increased 66 percent to
a record $2.1 billion, as the firm posted record levels of commissions and fee
income that complimented strong gains in dealer and trading revenues and
underwriting income. Fee income increased 81 percent, commissions rose 57
percent and underwriting income was 20 percent higher than during the fourth
quarter a year ago. Net revenues, or total revenues minus interest expense, rose
73 percent to a record $1.7 billion.
<PAGE>
FULL YEAR HIGHLIGHTS: STRONG GAINS IN M&A, HIGH-YIELD AND IPOS
DLJ's total revenues for 1999 rose 32 percent to a record $7.1 billion, and
net revenues rose 41 percent to $5.6 billion, as the firm significantly expanded
its market share in major components of its investment banking businesses. DLJ's
market share in mergers and acquisitions increased dramatically. The firm's
share of completed merger and acquisition assignments rose from 4.9 percent to
13.9 percent to rank the firm sixth on a global basis. As measured by completed
U.S. assignments, the firm's market share increased from 7.2 percent to 19.5
percent to rank DLJ in fourth place. Consequently, fee income earned by DLJ's
global Mergers & Acquisitions Group increased 79 percent from 1998's then-record
levels to a record $883 million in 1999.
For the seventh year in a row, DLJ was the number-one-ranked underwriter of
high-yield bonds. Most importantly, despite an industrywide slowdown in
high-yield new issuance, DLJ increased its market share as a lead underwriter.
In 1999, DLJ was the lead manager of $17.5 billion of high-yield bonds and
accounted for 18.3 percent of the dollar volume of all new issues, up from 15.4
percent in 1998.
As a lead manager of initial public offerings, DLJ rose from eighth place
in 1998 to fifth in 1999, increasing its market share by 70 percent from 3.3
percent in 1998 to 5.6 percent in 1999.
Commissions increased 41 percent to a record $1.2 billion in 1999,
reflecting the strength of the firm's global institutional equities businesses
as well as the cumulative impact of its Pershing correspondent clearing
business, along with its 425-broker high-net-worth group and its online broker,
DLJdirect.
DLJ's 30-year-old-venture capital unit, the Sprout Group, accounted for the
majority of the year's investment gains. Sprout's investment record,
particularly in the technology and internet-related sectors, generated record
portfolio gains and distributions in 1999.
In a joint statement, Joe L. Roby, Chief Executive Officer of Donaldson,
Lufkin & Jenrette, Inc., and John S. Chalsty, DLJ's Chairman, said, "DLJ
developed tremendous momentum in 1999. While favorable market conditions helped
the securities industry overall, DLJ achieved significant market share gains and
record profits that underscore
2
<PAGE>
the inherent balance of our business mix. We finished the year with outstanding
fourth quarter results that propelled DLJ to its strongest year ever. Virtually
all of our businesses enjoyed record results in 1999."
They noted, "Our international businesses also continued to grow in 1999.
Net revenues from DLJ's international activities doubled to a record $782.2
million this year. We opened new offices in Germany, Taiwan, Singapore and South
Korea during the year, and the number of DLJers employed outside of the United
States increased from 1,400 to 1,700."
DLJDIRECT 1999 EARNINGS INCREASE FIVEFOLD TO $6.9 MILLION; REVENUES DOUBLE
DLJdirect (NYSE: DIR), Donaldson, Lufkin & Jenrette's online brokerage
service, reported a 102 percent increase in net revenues to a record $238.1
million for the year ended December 31, 1999, versus $117.9 million for the year
ended December 31, 1998. Net income for the year ended December 31, 1999 grew
fivefold to $6.9 million or $0.07 per share (pro forma diluted), from $1.5
million or $0.01 per share (pro forma diluted), for the same period in 1998.
DLJdirect set new records for the fourth quarter of 1999. Quarterly net
revenues more than doubled to a record $76.3 million, compared to $35.4 million
reported for the comparable period one year ago, and $54.9 million reported for
the third quarter of 1999.
DLJdirect reported a net loss of $2.0 million, or $0.02 per share
(diluted), for the quarter ended December 31, 1999. This compared with net
income of $1.8 million, or $0.02 per share (pro forma diluted), for the fourth
quarter of 1998, and a net loss of $3.3 million, or $0.03 per share (diluted),
for the third quarter of 1999. Highlighting the growth of the business and the
magnitude of increased marketing initiatives, pre-marketing income, before taxes
and equity in the net loss of a joint venture, reached a quarterly record of
$24.7 million, versus $8.2 million for the fourth quarter of 1998 and $14.4
million for the third quarter of 1999.
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
3
<PAGE>
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 10,200 people worldwide and maintains offices in 13 cities
in the United States and 16 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 worldwide 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>
---------------------------------------------------------------------------
QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 359,417 $ 228,868 $ 1,200,695 $ 854,679
Underwritings 334,679 278,686 1,246,442 1,043,526
Fees 543,496 300,551 1,611,935 1,191,655
Interest-net (3) 661,285 456,540 2,175,308 2,189,108
Principal transactions-net:
Trading 198,355 10,743 718,589 (58,596)
Investment 21,584 (7,186) 107,321 126,031
Other 19,115 18,847 85,979 60,639
------------ ------------ -------------- -------------
Total revenues 2,137,931 1,287,049 7,146,269 5,407,042
------------ ------------ -------------- -------------
Costs and expenses:
Compensation and benefits 908,113 527,437 3,105,389 2,231,655
Interest 477,944 329,058 1,590,245 1,455,851
Brokerage, clearing, exchange
fees, and other 100,044 68,032 313,785 258,625
Occupancy and related costs 47,779 42,913 178,933 143,832
Communications and technology 131,711 88,300 445,218 314,624
Other operating expenses 168,840 120,159 559,199 401,955
------------ ------------ -------------- -------------
Total costs and expenses 1,834,431 1,175,899 6,192,769 4,806,542
------------ ------------ -------------- -------------
Income before provision for income taxes 303,500 111,150 953,500 600,500
------------ ------------ -------------- -------------
Provision for income taxes 112,300 42,500 352,800 229,700
------------ ------------ -------------- -------------
Net income 191,200 68,650 600,700 370,800
Dividends on preferred stock 5,289 5,289 21,156 21,310
------------ ------------ -------------- -------------
Earnings applicable to common shares $ 185,911 $ 63,361 $ 579,544 $ 349,490
============ ============ ============== =============
Earnings applicable to common shares (1)
DLJ $ 186,267 $ 63,361 $ 580,447 $ 349,490
DLJdirect $ (356) $ (903)
============ ==============
Earnings per share (2):
DLJ
Basic $ 1.48 $ 0.52 $ 4.63 $ 2.93
Diluted $ 1.35 $ 0.47 $ 4.18 $ 2.65
============ ============ ============== =============
DLJdirect
Basic $ (0.02) $ (0.05)
Diluted $ (0.02) $ (0.05)
============ ==============
Weighted average common shares (2):
DLJ
Basic 126,093 122,916 125,433 119,260
Diluted 137,979 133,493 138,868 131,980
============ ============ ============== =============
DLJdirect
Basic 18,400 18,400
Diluted 18,400 18,400
============ ==============
DLJdirect
Net income (loss) (included in
consolidated earnings applicable
to common shares) $ (1,987) $ 1,785 $ 6,932 $ 1,460
============ ============ ============== =============
</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>
--------------------------------------------------------------------
QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
DLJ INC.
BALANCE SHEET DATA AT END OF PERIOD:
Long-term borrowings (4) $ 5,160,446 $ 3,482,003
============= ===============
Redeemable preferred stock $ 200,000 $ 200,000
============= ===============
Total stockholders' equity (2) $ 3,907,638 $ 2,927,699
============= ===============
Book value per common share
outstanding
DLJ common stock $ 27.46 $ 20.44
Common shares and RSUs outstanding
at end of period
DLJ common stock 127,114 124,895
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) 53.4% 51.9%
Return on average common stockholders'
equity (6) 21.9% 10.1% 19.1% 16.5%
</TABLE>
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 December 31, 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 $964.6 million, $702.3 million, $3,249.6
million and $3,045.3 million, respectively.
(4) During the fourth quarter of 1999, the Company issued an aggregate of
$600.0 million medium-term notes with various maturity dates through 2001.
(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>
FOR IMMEDIATE RELEASE
MEDIA CONTACT: INVESTOR CONTACT:
Linda Finnerty Kevin Zuccala
DLJdirect Donaldson, Lufkin & Jenrette
201-308-3187 212-892-4693
DLJDIRECT 1999 FULL YEAR REVENUES DOUBLE TO $238.1 MILLION,
FULL YEAR EARNINGS INCREASE FIVEFOLD TO $6.9 MILLION
-- GLOBAL CLIENT ASSETS GROW BY $12.8 BILLION TO $21.7 BILLION --
NEW YORK, NY - JANUARY 19, 2000 - Donaldson, Lufkin & Jenrette, Inc. (NYSE:
DLJ) today announced that DLJdirect (NYSE: DIR), its online brokerage service,
reported a 102% increase in net revenues to a record $238.1 million for the year
ended December 31, 1999, versus $117.9 million for the year ended December 31,
1998. Net income for the year ended December 31, 1999 grew fivefold to $6.9
million or $0.07 per share (pro forma diluted), from $1.5 million or $0.01 per
share (pro forma diluted), for the same period in 1998.
Blake Darcy, Chief Executive Officer of DLJdirect, noted that 1999
established new records in every aspect of its business. "DLJdirect more than
doubled its revenues, client assets, total trades, and average trades per day,"
he said. He emphasized that DLJdirect significantly enhanced its product
offerings, launched its international business, dramatically increased brand
awareness and, from a net earnings perspective, produced its second-best year
ever. "We accomplished so much while still maintaining our Number One ratings
for service and reliability," he said. "The momentum continues into the new
millennium. We will be adding another 17,000 accounts with $2.0 billion of
assets in February 2000 when DLJdirect assumes broker-dealer responsibility for
Scudder Investments' brokerage clients as a result of the strategic alliance
that we announced in December."
<PAGE>
DLJdirect set new records for the fourth quarter of 1999. Quarterly net
revenues more than doubled to a record $76.3 million, compared to $35.4 million
reported for the comparable period one year ago, and $54.9 million reported for
the third quarter of 1999. DLJdirect reported a net loss of $2.0 million, or
$0.02 per share (diluted), for the quarter ended December 31, 1999. This
compared with net income of $1.8 million, or $0.02 per share (pro forma
diluted), for the fourth quarter of 1998, and a net loss of $3.3 million, or
$0.03 per share (diluted), for the third quarter of 1999. Pre-marketing income
before taxes and equity in net loss of joint venture reached a quarterly record
of $24.7 million versus $8.2 million for the fourth quarter of 1998 and $14.4
million for the third quarter of 1999, highlighting the growth of the business
and magnitude of increased marketing initiatives.
INTERNATIONAL EXPANSION
"There is also great news on the international scene, where we commenced
operations in Japan in June and in the UK in September," said Mr. Darcy,
indicating that DLJdirect added 29,000 new accounts in Japan and 14,000 in the
UK during 1999. DLJdirect already ranks among the top online brokers in both
markets and was rated the best online broker in Japan by Kabuko, a Japanese Web
site that ranks online brokerages and other service providers. "We've only just
begun. Plans for 2000 include operations in Hong Kong, Germany, and the Middle
East," added Mr. Darcy.
RECORD GROWTH IN GLOBAL CUSTOMERS, ASSETS, AND TRADING ACTIVITY
As of December 31, 1999, DLJdirect had 795,000 global customer accounts, 50
percent more than at the end of 1998. Active customer accounts at the end of
1999 numbered 347,000, a 65 percent increase versus the end of 1998. Assets in
customer accounts on December 31, 1999 totaled $21.7 billion, up 144 percent
over the $8.9 billion as of December 31, 1998.
The fourth quarter set new global records for average daily trading volume,
new active customer accounts, and growth in customer assets. Average daily
trades totaled 30,500 for the quarter, 115 percent higher than the fourth
quarter of 1998 and 57 percent over the third quarter of 1999. In addition,
40,000 net new active accounts were added compared to 13,000 for the fourth
quarter of 1998, and 30,000 for the third quarter of 1999. Customer assets grew
by a record $7.4 billion in the fourth quarter to $21.7 billion
2
<PAGE>
or 52 percent higher than the third quarter of 1999. This compares to an average
quarterly increase of $1.8 billion for the first three quarters of 1999.
DLJdirect experienced record global trading volumes in 1999, executing a
total of 1.9 million trades during the fourth quarter and 5.8 million trades for
the year. On average, DLJdirect executed 23,800 trades per day during 1999, more
than double the number of daily trades executed in 1998. December was a
particularly strong month with average daily trades reaching 38,000. "Investors
continue to embrace online investing," Mr. Darcy said, "and DLJdirect continues
to attract the sophisticated, high-net-worth self-directed investor. Evidence of
this can be seen in the continued rise in average customer assets per active
account, which increased to $63,000, up from $42,000 at the end of 1998."
ENHANCED PRODUCT OFFERINGS
DLJdirect served as i-distributor or co-managing underwriter for 57 online
underwritings valued at $7.2 billion for the year ended December 31, 1999. An
expanded Fixed-Income Center was launched providing customers access to a
broader array of fixed-income securities - including Treasurys, agency bonds,
corporate bonds, and municipal bonds - as well as relevant market information.
DLJdirect also introduced a family of actively managed, no-load mutual funds
with the DLJDIRECT STRATEGIC GROWTH FUND and the DLJDIRECT CHOICE TECHNOLOGY
FUND. All of these products leverage the research strength, asset management
expertise, and investment banking prowess of parent DLJ for the benefit of
DLJdirect customers.
RECOGNITION AND AWARDS
DLJdirect continued to receive performance accolades during the fourth
quarter including a Five-Star rating from the Lafferty Group, which provides
quarterly ratings of approximately 500 Web sites in all sectors of the global
financial services industry. DLJdirect regularly earned the top ranking in the
Keynote Web Broker Trading Index throughout the quarter. The Keynote Index shows
the average Web site response time in seconds and the success rate for creating
a standard stock-order transaction on selected brokerage sites. As a result of
this strong performance, DLJdirect was ranked the #1 online brokerage for
customer confidence by Gomez.com. Gomez.com is a recognized online leader in
providing consumer and business-based e-commerce research, tools, and analysis
to empower consumers to make informed online purchasing decisions.
3
<PAGE>
The New Jersey Technology Council (NJTC) honored DLJdirect as the
"Internet/E-Commerce Company of the Year." The NJTC awards recognize New
Jersey's top technical companies that have achieved business success, and the
Internet/E-Commerce Company of the Year is the organization's highest accolade.
DLJdirect is one of America's premier online brokerage firms. Established
in 1988, DLJdirect offers a diversified range of investment products and
services to sophisticated, self-directed investors. DLJdirect has more than
795,000 customer accounts representing over $21.7 billion in assets.
Headquartered in Jersey City, New Jersey, with offices in Parsippany, Charlotte,
London, and Tokyo, DLJdirect employs approximately 900 people. DLJdirect common
stock trades on the New York Stock Exchange under the ticker symbol "DIR." For
more information on DLJdirect, refer to the company's 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 10,200 people worldwide and maintains
offices in 13 cities in the United States and 16 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 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>
--------------------------------------------------------------
QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 44,380 $ 24,403 $ 142,805 $ 78,717
Fees 18,476 7,119 56,798 25,484
Interest-net 13,458 3,885 38,468 13,723
--------- --------- ---------- ----------
Total revenues 76,314 35,407 238,071 117,924
--------- --------- ---------- ----------
Costs and expenses:
Compensation and benefits 19,640 8,029 60,991 28,260
Brokerage, clearing, exchange
fees, and other 12,267 8,699 39,206 28,423
Advertising 25,452 5,228 62,913 25,146
Occupancy and equipment 3,752 1,386 9,768 5,045
Communications 3,831 1,633 11,896 5,564
Technology costs 664 995 3,288 4,084
Other operating expenses 11,442 6,421 31,969 18,934
--------- --------- ---------- ----------
Total costs and expenses 77,048 32,391 220,031 115,456
--------- --------- ---------- ----------
Income (loss) before income tax provision
(benefit) and equity in net loss of joint venture (734) 3,016 18,040 2,468
--------- --------- ---------- ----------
Income tax provision (benefit) 86 1,231 7,893 1,008
Equity in net loss of joint venture (2) (1,167) 0 (3,215) 0
--------- --------- ---------- ----------
Net income (loss) $ (1,987) $ 1,785 $ 6,932 $ 1,460
========= ========= ========== ==========
Earnings (loss) per share (3):
Basic $ (0.02) $ 0.02 $ 0.07 $ 0.01
Diluted $ (0.02) $ 0.02 $ 0.07 $ 0.01
========= ========= ========== ==========
Weighted average notional and outstanding shares:
Basic 102,650 102,650 102,650 102,650
Diluted 102,650 104,673 102,660 104,673
========= ========= ========== ==========
Earnings (loss) attributable to:
DLJ Retained Interest $ (1,631) $ 1,785 $ 7,835 $ 1,460
DLJdirect Tracking Stock (1) (356) 0 (903) 0
========= ========= ========== ==========
Tracking Stock earnings per share (3):
Basic $ (0.02) $ (0.05)
Diluted $ (0.02) $ (0.05)
========= ==========
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 YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1999
--------------------------------
BALANCE SHEET DATA AT END OF PERIOD:
Total allocated equity $ 231,792
==========
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' (5.1)% 3.0%
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 December 31, 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 year ended December 31, 1999,
earnings per share amounts are calculated for the period the tracking
stock was outstanding, May 28, 1999 to December 31, 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 year ended December 31, 1999).
6
