<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) April 18, 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 April 18 and 19, 2000 issued by Donaldson, Lufkin
& Jenrette, Inc. ("the Company"), concerning first 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 April 19, 2000 for Donaldson, Lufkin &
Jenrette, Inc.
Exhibit 99.2 Press release dated April 18, 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
April 20, 2000
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
MEDIA CONTACT: INVESTOR CONTACT:
Catherine M. Conroy Kevin Zuccala
212-892-3275 212-892-4693
DLJ POSTS STRONGEST QUARTER EVER
FIRST QUARTER NET DOUBLES TO $245 MILLION, OR $1.72 PER SHARE
NEW YORK, NY - APRIL 19, 2000 - Donaldson, Lufkin & Jenrette, Inc.
(NYSE: DLJ) today reported the strongest quarterly earnings ever in the history
of the 40-year-old investment bank.
DLJ said today that its net income for the first quarter of 2000 was a
record $245.2 million, or $1.72 per diluted share. These results were more than
double the $121.7 million, or $0.84 per diluted share, reported for the first
quarter of 1999, and were 28 percent greater than the previous quarterly record
of $191.2 million reported for the fourth quarter of 1999. DLJ's return on
average equity for the first quarter of 2000 was 26.4 percent and book value per
common share at March 31, 2000 was $29.35.
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 blockbuster quarter for DLJ! Revenue growth was
impressive across the board and margins and returns improved substantially. All
of our major business units had operating results well ahead of last year's
first quarter, and significant progress was made in the development of our
international businesses. While DLJ's international businesses were not
profitable in the aggregate, important strides toward profitability were made in
the first quarter. Our new international equity business achieved profitability
after only five quarters of operations."
DLJ was once again the world's number-one-ranked underwriter of
high-yield bonds with a market share of 19.2 percent.
<PAGE>
FIRST QUARTER REVENUE SUMMARY
DLJ's total revenues for the first quarter of 2000 increased 67 percent
to $2.5 billion. Net revenues, or total revenues minus interest expense, rose 66
percent to $1.9 billion. Commission revenues increased 68 percent to $472.0
million, while underwriting income declined 2 percent to $250.6 million. Fee
income increased 47 percent to $422.0 million, and trading gains more than
doubled, rising 121 percent to $384.8 million. Investment gains from DLJ's
merchant banking and venture capital businesses increased dramatically to $129.9
million for the first quarter of this year.
FIRST QUARTER HIGHLIGHTS
STRONG WORLDWIDE EQUITY VOLUME BOOSTS DLJ'S CLEARING, ONLINE, RETAIL
AND INSTITUTIONAL EQUITY BUSINESSES: DLJ's Financial Services Group, which
encompasses its Pershing correspondent clearing business, as well as its online
and traditional brokerage and asset management businesses, led the firm in
profitability for the first quarter of 2000. The Financial Services Group
generated net revenues of $675.5 million, an increase of 66 percent versus the
comparable quarter a year ago, and earned record pretax profits of $170.5
million - 88 percent greater than in the first quarter of 1999. Included in this
record performance are results for DLJdirect, which turned in the strongest
quarter ever in its 12-year history and earned pretax profits of $25.5 million
on net revenues of $114.2 million. DLJ's Pershing correspondent clearing
business generated net revenues of $367.2 million in the first quarter. As of
March 31, 2000, Pershing maintained 3.4 million individual investment accounts
holding $466 billion of assets for its 650 correspondent customers. Net revenues
earned by DLJ's Investment Services Group, a worldwide network of 440 investment
professionals, who serve the needs of high-net-worth individual investors,
increased 67 percent to $158.5 million.
Benefiting from similar trends in worldwide equity volume, DLJ's Global
Institutional Equities Group doubled its net revenues to $450.0 million and saw
its first-quarter pretax profits increase nearly threefold to $94.1 million. Net
revenues generated by the group's U.S. institutional equities business rose 65
percent to $280.3 million. Revenues generated by its new International Equities
business grew more than threefold to $112.1 million; after operating for only
five quarters, this new business attained profitability for the first time in
the first quarter of 2000. DLJ's International Equities department employs more
2
<PAGE>
than 300 individuals around the world, who provide institutional investors with
research, sales and trading services in non-U.S. equities.
STRONG M&A FEES AND SURGING INVESTMENT GAINS DRIVE DLJ'S BANKING GROUP:
DLJ's Banking Group generated net revenues of $548.0 million during the first
quarter of 2000, approximately 70 percent more than for the comparable quarter a
year ago. The group's pretax profits nearly doubled, rising to $154.4 million.
The firm's global mergers and acquisitions practice was a major contributor to
the group's fee income, which rose 45 percent over the first quarter a year ago.
In initial public offerings, DLJ lead managed its largest initial
public offering ever during the first quarter of 2000: a EURO1.7 billion (euro)
IPO for e.Biscom S.p.A, a provider of broadband telecommunications and internet
services in Italy. The offering was the first IPO of the year in Italy and the
largest non-privatization ever of an Italian company.
DLJ reported net investment gains of approximately $130 million during
the first quarter of 2000. Both of the Banking Group's investment businesses -
its $10 billion family of Merchant Banking partnerships and its $2 billion
Sprout Group of venture capital funds - realized significant investment gains in
the quarter. DLJ's Merchant Banking funds accounted for approximately two-thirds
of the quarter's investment gains. The technology-weighted portfolios of the
Sprout Group continued to benefit from initial public offerings by technology
companies in which Sprout has invested.
STRONG TRADING GAINS OFFSET INDUSTRYWIDE DECLINE IN HIGH-YIELD
UNDERWRITING: Revenues from dealer and trading gains increased by more than 120
percent to a record $384.8 million for the first quarter, as DLJ's global
trading desks benefited from the ongoing strong volume in the world's equity
markets and traded adroitly in the fixed-income markets. DLJ's High Yield
Department, enjoying the benefits of a three-year program to diversify its
revenues and broaden its business mix, almost doubled its revenues during the
first quarter and tripled its pretax profits. It was the most significant
contributor to the results of DLJ's Fixed Income Group, which generated net
revenues of $245.2 million and earned pretax profits of $81.0 million, 29
percent more than during the comparable quarter a year ago.
For the first quarter of 2000, DLJ reported underwriting revenues of
$250.6 million, approximately $6 million less than the first quarter of 1999.
Solid results in equity and equity-related underwriting were offset by the low
level of activity in the new issue market
3
<PAGE>
for high-yield bonds. DLJ was once again the world's number-one-ranked
underwriter of high-yield bonds with a market share of 19.2 percent.
INTERNATIONAL REVENUES UP 173 PERCENT AS INVESTMENT SPENDING DECLINES:
Net Revenues from DLJ's various non-U.S. businesses almost tripled rising from
$141.0 million for the first quarter of 1999 to $385.3 million during the first
quarter of 2000. The largest gains were achieved by DLJ's new International
Equities unit - a business that began operating only five quarters ago - and
that attained profitability for the first time during the first quarter.
Revenues generated by DLJ's international banking business more than doubled.
International revenues generated within the Financial Services Group increased
by 96 percent, as a result of strong performances by the London office of the
firm's Investment Services Group and by Pershing Ltd., which is the leading
provider of clearing services to European financial services organizations
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 10,600 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 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.
Tables Follow
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except % and per share amounts)
<TABLE>
<CAPTION>
--------------------------------------------------
QUARTER ENDED
MARCH 31, 2000 VS. 1999
2000 1999 $ %
--------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 472,019 $ 280,992 $ 191,027 68.0%
Underwritings 250,625 256,914 (6,289) (2.4)%
Fees 421,987 287,075 134,912 47.0%
Interest-net 813,662 476,661 337,001 70.7%
Principal transactions-net:
Trading 384,756 174,045 210,711 121.1%
Investment 129,889 3,024 126,865 N/M
Other 20,054 14,739 5,315 36.1 %
---------- ---------- ---------- ----------
Total revenues 2,492,992 1,493,450 999,542 66.9%
---------- ---------- ---------- ----------
Costs and expenses:
Compensation and benefits 1,066,062 635,714 430,348 67.7%
Interest 604,090 355,953 248,137 69.7%
Brokerage, clearing, exchange
fees, and other 103,797 71,221 32,576 45.7%
Occupancy and related costs 48,894 41,088 7,806 19.0%
Communications and technology 123,486 90,983 32,503 35.7%
Other operating expenses 157,463 101,491 55,972 55.1%
---------- ---------- ---------- ----------
Total costs and expenses 2,103,792 1,296,450 807,342 62.3%
---------- ---------- ---------- ----------
Income before provision for
income taxes 389,200 197,000 192,200 97.6%
---------- ---------- ---------- ----------
Provision for income taxes 144,000 75,350 68,650 91.1%
---------- ---------- ---------- ----------
Net income 245,200 121,650 123,550 101.6%
Dividends on preferred stock 5,289 5,289 0 0.0%
---------- ---------- ---------- ----------
Earnings applicable to common shares $ 239,911 $ 116,361 $ 123,550 106.2%
========== ========== ========== ==========
EARNINGS APPLICABLE TO COMMON SHARES (1)
DLJ $ 237,474 $ 116,361 $ 121,113 104.1%
========== ========== ========== ==========
DLJdirect $ 2,437
==========
EARNINGS PER SHARE (2):
DLJ
Basic $ 1.87 $ 0.94 $ 0.93 98.9%
Diluted $ 1.72 $ 0.84 $ 0.88 104.8%
========== ========== ========== ==========
DLJdirect
Basic $ 0.13
Diluted $ 0.13
==========
WEIGHTED AVERAGE COMMON SHARES (2):
DLJ
Basic 127,008 123,995 3,013 2.4%
Diluted 138,466 137,850 616 0.4%
========== ========== ========== ==========
DLJdirect
Basic 18,400
Diluted 18,482
==========
DLJdirect
Net income (included in consolidated
earnings applicable to common shares) $ 13,614
==========
</TABLE>
5
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except % and per share amounts)
<TABLE>
<CAPTION>
-------------------------------------------------------
QUARTER ENDED
MARCH 31, 2000 VS. 1999
2000 1999 $ %
-------------------------------------------------------
<S> <C> <C> <C> <C>
DLJ INC.
NET REVENUES BY OPERATING GROUP:
Banking $ 548,035 $ 322,481 $ 225,554 69.9%
Fixed Income 245,180 209,432 35,748 17.1%
Equities 449,992 213,408 236,584 110.9%
Financial Services 675,466 406,240 269,226 66.3%
Elimination and other (29,771) (14,064) (15,707) (111.7)%
----------- ----------- ----------- ----------
Total Net Revenues $ 1,888,902 $ 1,137,497 $ 751,405 66.1%
=========== =========== =========== ==========
DLJ INC.
INCOME BEFORE INCOME TAXES BY
OPERATING GROUP:
Banking $ 154,407 $ 78,305 $ 76,102 97.2%
Fixed Income 80,979 62,806 18,173 28.9%
Equities 94,053 24,720 69,333 280.5%
Financial Services 170,511 90,660 79,851 88.1%
Elimination and other (110,750) (59,491) (51,259) (86.2)%
----------- ----------- ----------- ----------
Total Income before Income Taxes $ 389,200 $ 197,000 $ 192,200 97.6%
=========== =========== =========== ==========
NET REVENUES BY GEOGRAPHIC LOCATION:
Domestic $ 1,503,600 $ 996,537 $ 507,063 50.9%
International 385,302 140,960 244,342 173.3%
----------- ----------- ----------- ----------
Total Net Revenues $ 1,888,902 $ 1,137,497 $ 751,405 66.1%
=========== =========== =========== ==========
DLJ INC.
BALANCE SHEET DATA AT END OF PERIOD:
Long-term borrowings (4) $ 6,130,676 $ 4,244,665 $ 1,886,011 44.4%
Redeemable trust securities $ 200,000 $ 200,000 $ 0 0.0%
Total stockholders' equity (2) $ 4,160,904 $ 3,069,124 $ 1,091,780 35.6%
Book value per common share
outstanding
DLJ common stock $ 29.35 $ 21.45 $ 7.90 36.8%
Common shares and RSUs outstanding
at end of period
DLJ common stock 127,496 125,612 1,884 1.5%
DLJdirect common stock 18,400 18,400 N/A
DLJ INC.
OTHER FINANCIAL DATA AT END OF PERIOD:
Ratio of long-term borrowings to total
capitalization (5) 54.4% 55.8%
Return on average common stockholders'
equity (6) 26.4% 17.8%
</TABLE>
6
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except % and per share amounts)
(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 tracking stock 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 $970.3 million and $705.3 million,
respectively.
(4) During the first quarter of 2000, the Company issued $500.0 million of
8.0% Senior Notes that mature in 2005 and an aggregate of $485.0 million
medium-term notes with various maturity dates through 2007.
(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>
Exhibit 99.2
FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Linda Finnerty Kevin Zuccala
DLJdirect Inc. Donaldson, Lufkin & Jenrette
201.308.3187 212.892.4693
[email protected]
DLJdirect REPORTS RECORD FIRST QUARTER
EARNINGS OF $0.13 PER SHARE
- FIRST QUARTER REVENUES UP 142 PERCENT OVER PRIOR YEAR -
JERSEY CITY, N.J. - APRIL 18, 2000 - DLJdirect (NYSE: DIR), the online brokerage
service of Donaldson, Lufkin & Jenrette, Inc. (NYSE: DLJ), today reported record
revenues of $114.7 million for the first quarter of 2000, a 142 percent increase
over the $47.4 million in revenues reported for the comparable period a year
ago, and 50 percent over the $76.7 million for the fourth quarter of 1999.
DLJdirect also reported net income of $13.6 million, or $0.13 per share
(diluted), for the first quarter of 2000. This represented a $6.4 million or 90
percent increase over the $7.2 million or $0.07 per share (pro forma diluted)
for the first quarter of 1999, and a $15.6 million increase over the net loss of
$2.0 million or $0.02 per share (diluted), for the fourth quarter of 1999.
"First quarter 2000 results set records of significant new proportions
for DLJdirect," said Blake Darcy, Chief Executive Officer. "Quarterly revenues
came in just shy of full year 1998 revenues and our first quarter pre-tax profit
of $25.5 million was 42 percent higher than pre-tax profits in any full year of
our twelve-year history. Global customer assets reached a record $29.4 billion,
with average assets per active account increasing to $69,000, up from $63,000 at
year-end 1999. We added over 82,000 new active accounts worldwide this quarter,
twice as many as last quarter, at
<PAGE>
an average global acquisition cost of $245 per account." As of March 31, 2000,
DLJdirect had 429,000 total active accounts.
Commissions reached $74.5 million in the first quarter, up 133 percent
over the comparable period one year ago and 68 percent over the fourth quarter
of 1999. Fee income more than doubled over the first quarter of 1999 to $18.7
million. iNautix Technologies Inc., DLJdirect's technology subsidiary, continued
to increase its contribution to fee income by posting record quarterly fees of
$8.4 million, up 100 percent from one year ago and 13 percent over the fourth
quarter of 1999. iNautix designs, develops, and hosts global e-commerce
solutions, and its products are now being used by more than 80 financial
services firms.
Net interest increased three-fold year-over-year and 33 percent
sequentially as DLJdirect's strategy to focus on high-net-worth individuals
resulted in increased margin activity. Underwriting revenues declined slightly
from the record set in the fourth quarter of 1999 to $3.1 million. DLJdirect
served as co-manager for $1.5 billion of IPO offerings during the quarter, and
was the number two on-line distributor of IPOs for the first quarter, according
to Securities Data Corporation. THE STREET.COM ranked DLJdirect number one for
IPO availability.
RECORD TRADING VOLUMES
DLJdirect executed a record 2.8 million trades domestically during the
first quarter, one million more than in the prior quarter. On a worldwide basis,
average daily trades were 50,300, a 65 percent increase over the previous record
volume set in the fourth quarter of 1999. "With record setting volume and market
volatility this quarter, our systems were certainly pressure tested," said Glenn
Tongue, President of DLJdirect. "Even with these extraordinary activity levels,
I am proud to report that we continue to receive the highest rankings awarded by
independent third parties for the quality of our systems and services in each of
our local markets."
Blake Darcy added, "We realize that our continued success is based on
the reliability of our systems and our ability to provide superior service to
our clients. To that end, we recently completed the installation of a new, fully
redundant data center and are opening a new Investor Service Center in Sandy
City, Utah - our fourth in the
2
<PAGE>
U.S. Hiring and training have already begun for this facility, which will open
later this year and ultimately accommodate 1,000 additional Investor Service
Representatives."
RECORD INTERNATIONAL RESULTS
The international component of DLJdirect's business experienced
significant growth milestones during the first quarter as well, with
international activities representing 12 percent of total trades, 9 percent of
active accounts, and 8 percent of client assets. DLJdirect SFG Securities Inc.,
which began operations in Japan in June 1999, added 13,000 active accounts
during the first quarter of 2000, a 44 percent increase over the 9,000 accounts
added last quarter, nearly doubling the total number of active accounts in Japan
to 27,000. DLJdirect SFG continued to add to its product and service offerings
with PC voice-recognition capabilities, allowing investors to trade securities
by speaking into their computers. In addition, DLJdirect Village, the first
Internet brokerage branch office in Japan, opened on February 29th. Japanese
investors have access to local as well as U.S. stock markets through DLJdirect
SFG.
DLJdirect UK more than tripled its account base during the first
quarter of 2000, adding 9,000 active new accounts, for a total active account
base of 13,000 after only six months of operation. DLJdirect UK, which offers
access to local and U.S. stock markets, continues to add new products to its
offerings and recently introduced ISA accounts to UK investors. ISAs, which are
similar to U.S. Individual Retirement Accounts, offer investors an opportunity
to shelter their investment profits from capital gains taxes.
During the first quarter, DLJdirect announced an agreement with Hong
Kong-based Hutchison Whampoa Limited of Hong Kong to form a new company to
distribute DLJdirect's online brokerage services to countries throughout Asia.
The new company, DLJ Hutchison direct Limited, will service investors in Hong
Kong, mainland China, Thailand, Singapore, Malaysia, the Philippines, Taiwan,
and Indonesia. A second joint venture was announced during the first quarter
with Capital Union E.C. and Webtrade EVentures Ltd. The company formed as a
result of that initiative, DLJdirect-EUnion, commenced operations on April 15th,
providing online
3
<PAGE>
discount brokerage services to investors in 14 countries in the Middle East and
North Africa.
AWARDS AND ACCOLADES
DLJdirect received four stars, the highest rating awarded, in BARRON'S
fifth annual review of online brokers. Measurements included execution, ease of
use, reliability, commissions, and range of offerings. DLJdirect was again named
"Best of the Web" in the Spring 2000 special Internet issue of FORBES magazine,
and in THESTREET.COM Readers' Online Brokers Survey 2000, DLJdirect received
number one rankings for reliability, real-time market and company news, IPO
availability, bond and options trading, and e-mail alerts.
DLJdirect's proprietary investment management and online trading
software, DLJdirect MarketSpeedTM 3.0, was awarded "E-Commerce Software - Best
Product" and "Online Brokerage Service - Best Product" by the Software &
Information Industry Association at the 2000 Codie Awards ceremony honoring
excellence for software and information products and services. The DLJdirect Web
site continued to earn top rankings in the Keynote Web Broker Trading Index for
average response time and success rate for standard stock-order transactions.
In addition to its U.S. awards, DLJdirect has also achieved accolades
for its international platforms. KABUKO, a Japanese Web site that ranks online
brokerages and other service providers, rated DLJdirect SFG the best online
broker in Japan. DLJdirect UK received top-rated online broker and Web site
awards from FIND.CO.UK, the leading directory for UK financial services,
INVESTORS CHRONICLE, and the MONEYWISE 2000 GUIDE TO ONLINE BROKING.
ABOUT DLJdirect
DLJdirect is one of the world's premier online brokerage firms.
Established in 1988, DLJdirect offers a diversified range of investment products
and services to sophisticated, self-directed investors. As of March 31, 2000,
DLJdirect had more than 930,000 worldwide customer accounts representing $29.4
billion in assets. Headquartered in Jersey City, N.J., with offices in
Parsippany, N.J., Charlotte, N.C., London, Tokyo, Hong Kong, and Dubai,
DLJdirect employs more than 1,000 people.
4
<PAGE>
DLJdirect common stock trades on the New York Stock Exchange under the ticker
symbol "DIR." For more information on DLJdirect, visit the company's Web site at
www.DLJdirect.com.
Donaldson, Lufkin & Jenrette (DLJ) 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 10,600 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.
Tables Follow
<PAGE>
DLJdirect
COMBINED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
<TABLE>
<CAPTION>
------------------------------------------------
QUARTER ENDED
MARCH 31, 2000 VS. 1999
2000 1999 $ %
------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 74,539 $ 32,054 $ 42,485 132.5%
Underwritings 3,088 427 2,661 623.2%
Fees 18,707 9,169 9,538 104.0%
Interest 18,394 5,705 12,689 222.4%
--------- --------- --------- -----
Total revenues 114,728 47,355 67,373 142.3%
--------- --------- --------- -----
Costs and expenses:
Compensation and benefits 27,171 10,683 16,488 154.3%
Interest 515 153 362 236.6%
Brokerage, clearing, exchange
fees, and other 18,600 8,854 9,746 110.1%
Advertising 18,070 6,101 11,969 196.2%
Occupancy and related costs 2,390 542 1,848 341.0%
Communications and technology 10,101 5,394 4,707 87.3%
Other operating expenses 12,412 4,367 8,045 184.2%
--------- --------- --------- -----
Total costs and expenses 89,259 36,094 53,165 147.3%
--------- --------- --------- -----
Income before income tax provision and equity
in net loss of joint venture 25,469 11,261 14,208 126.2%
--------- --------- --------- -----
Income tax provision 10,650 4,088 6,562 160.5%
Equity in net loss of joint venture (2) (1,205) -- (1,205) N/M
--------- --------- --------- -----
Net income $ 13,614 $ 7,173 $ 6,441 89.8%
========= ========= ========= ====
Earnings per share (3):
Basic $ 0.13 $ 0.07 $ 0.06 85.7%
Diluted $ 0.13 $ 0.07 $ 0.06 85.7%
========= ========= ========= ====
Weighted average notional and outstanding
shares:
Basic 102,650 102,650 0 N/M
Diluted 102,732 102,650 82 N/M
========= ========= ========= ====
Earnings attributable to:
DLJ Retained Interest $ 11,177 $ 7,173 $ 4,004 55.8%
DLJdirect Tracking Stock (1) 2,437 -- 2,437 N/M
========= ========= ========= ====
Tracking Stock earnings per share (3):
Basic $ 0.13
Diluted $ 0.13
=========
Tracking Stock weighted average common
shares:
Basic 18,400
Diluted 18,482
=========
</TABLE>
6
<PAGE>
DLJdirect
COMBINED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
<TABLE>
<CAPTION>
-------------
QUARTER ENDED
MARCH 31,
2000
-------------
<S> <C>
BALANCE SHEET DATA AT END OF PERIOD:
Total allocated equity $ 245,370
============
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'
equity (4) 23.0%
============
</TABLE>
(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 Tracking Stock reflect 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 per share amounts have been calculated by dividing net income 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 Tracking Stock occurred at the
beginning of 1998. Earnings per share amounts for the quarter ended March
31, 2000 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. 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.
7
