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): September 21, 1994
LEHMAN BROTHERS HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-9466 13-3216325
(Commission File Number) (IRS Employer Identification No.)
3 World Financial Center
New York, New York 10285
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including
area code: (212) 526-7000
________________________________________
Item 5. Other Events
Third Quarter and Year-to-Date 1994 Earnings
On September 21, 1994, Lehman Brothers Holdings Inc.
(the "Registrant") issued a press release with respect to
its third quarter and year-to-date 1994 earnings (the
"Earnings Release").
Copies of the Earnings Release follow.
Following the Registrant's release of its third quarter
earnings, Standard & Poor's ("S&P") revised its long-term
debt outlook for the Registrant to negative from stable,
while affirming its current ratings of single "A" on the
Registrant's long-term senior debt and "A-1" on its short-
term debt. S&P stated that the downturn in the fixed income
markets, along with low trading volumes in long-term debt,
has affected the Registrant's profitability. S&P stated
further, however, that Lehman remains a well-managed firm
with a customer-oriented franchise and adequate diversification
among securities industry segments. It also stated that it expects
that the firm will maintain its position in underwriting and trading
markets.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The following Exhibits are filed as part of this
Report.
99.1 Press Release Relating to
Third Quarter 1994 Earnings
99.2 Selected Statistical
Information
99.3 Consolidated Statement of
Operations
(Three Months Ended August 31, 1994)
(Preliminary and Unaudited)
99.4 Consolidated Statement of Operations
(Eight Months Ended August 31, 1994)
(Preliminary and Unaudited)
The Exhibit Index to this Report is incorporated herein
by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly
authorized.
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Robert Matza
-----------------------------
Robert Matza
Chief Financial Officer
(Principal Financial Officer)
Date: September , 1994
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release
Relating to Third Quarter 1994 Earnings
Exhibit 99.2 Selected Statistical Information
Exhibit 99.3 Consolidated Statement of Operations
(Three Months Ended August 31, 1994)
(Preliminary and Unaudited)
Exhibit 99.4 Consolidated Statement of Operations
(Eight Months Ended August 31, 1994)
(Preliminary and Unaudited)
Exhibit 99.1
Exhibit 99.2
Exhibit 99.3
Exhibit 99.4
8-klbh-1.doc
LEHMAN BROTHERS
News Release
For Immediate Release MEDIA CONTACT: Steven H. Faigen
(212) 526-4379
INVESTOR CONTACT: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS THIRD QUARTER
AND EIGHT MONTH RESULTS
NEW YORK, September 21, 1994 -- Lehman Brothers Holdings
Inc. (NYSE: LEH) today reported net income of $22 million
for the third quarter which ended August 31, 1994. By
comparison, net income of $112 million was attributable to
the Lehman Brothers businesses in the third quarter 1993,
which ended on September 30 of that year.
After accounting for preferred dividends, third quarter net
income applicable to common stock was $11 million for the
three months ended August 31, 1994. Quarterly earnings per
share of common stock were $0.10.
Richard S. Fuld, Jr., Chairman and Chief Executive Officer
said, "Difficult market conditions persisted throughout the
quarter, as interest rate uncertainties and inflationary
concerns continued to dampen the activities of both issuers
and investors, contributing to an overall softness in net
revenues."
Mr. Fuld added: "During this down cycle in the business, we
are continuing to review all components of our expense base
for further cost reductions."
-- more --
Third Quarter 1994/page 2
Revenues
Net revenues (gross revenues less interest expense) of $719
million for the third quarter declined by 19% from the third
quarter of 1993. Market making and principal transaction
revenues were $335 million, down 24% from the prior-year
quarter. Ongoing market volatility lowered the levels of
customer flow activity, resulting in lower revenues across
all major product lines.
Investment banking revenues of $172 million represented an 8%
decrease from 1993's third quarter. Lower origination
volumes were offset by improved results from strategic
advisory activities and gains from certain merchant banking
activities. As of August 31, 1994, Lehman Brothers was
ranked the number two underwriter of U.S. debt and equity
and the number four underwriter of debt and equity worldwide
for the year to date, according to Securities Data Company.
Lehman Brothers also ranked number four in global mergers and
acquisitions year to date.
Net interest and dividend revenues of $83 million decreased
by 29% from the third quarter of 1993, as spreads on fixed
income products continued to tighten and funding costs
increased from the third quarter of 1993.
Commission revenues of $113 million for the quarter were
down 10% from last year's period, reflecting lower market
volumes of customer activity in listed securities.
Expenses
Non-interest expenses were $686 million, reflecting a 5%
decrease from last year's third quarter. To reflect the
overall decline in revenues, compensation and benefits also
declined to $388 million, a 13% decrease from the prior-year
period. As a result of the Firm's strategic plan to improve
its global infrastructure, non-interest expenses excluding
compensation and benefits increased 7% versus the third
quarter of 1993.
-- more --
Third Quarter 1994/page 3
Capital
As of August 31, 1994, Lehman's stockholders' equity was
$3,360 million and total capital (stockholders' equity and
long-term debt) was $14,187 million.
Year-to-Date Earnings
For the eight months ended August 31, 1994, Lehman Brothers
reported net income of $92 million before after-tax charges
of $12 million relating to the May 31 spin-off from the
American Express Company and $13 million relating to the
implementation of SFAS No. 112. Including these charges,
net income for the first eight months of 1994 was $67
million, and net income applicable to common stock was $40
million. Earnings per common share for the first eight
months of 1994 were $0.37.
In March 1994, the Board of Directors of Lehman Brothers
Holdings Inc. approved a change in the Firm's fiscal year
end from December 31 to November 30. Consequently, the three
months that comprise the Firm's 1994 fourth quarter will end
on November 30, 1994.
Lehman Brothers is a global investment bank with leadership
positions in corporate and municipal finance and advisory
services and in securities sales, trading and research.
Lehman Brothers serves the financial needs of corporate,
government and institutional clients, and high-net-worth
individuals through offices in major financial centers
worldwide.
# # #
<TABLE>
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
Lehman
Businesses
8/31/94 6/30/94 3/31/94 9/30/94
<S> <C> <C> <C> <C>
Balance Sheet (dollars in
millions, except per share data)
Total Assets (a) $121,000 $118,511 $112,277 $111,881
Total Assets Excluding Matched 77,000 74,375 71,147 57,546
Book (b)
Common Stockholders' Equity 2,652 2,602 1,275 1,280
Total Stockholders' Equity 3,360 3,310 2,033 2,038
Total Capital (long-term debt plus 14,187 13,877 12,608 11,431
stockholders' equity)
Book Value per Common Share (c) 23.97 24.65 N/A N/A
Financial Ratios (for the 3 months
ended)
Return on Common Equity (%) 1.6 2.8 N/A N/A
Pretax Operating Margin (%) 4.6 6.8 10.2 19.0
Compensation & Benefits/Nets 53.9 50.7 51.8 49.9
Revenues (%) (d)
Effective Tax Rate (%) (e) 35.1 34.6 38.0 33.9
Other Data (#s)
Common Stock Outstanding 105,528,914 105,554,748 N/A N/A
Employees 8,926 8,948 9,292 N/A
(a) Reflects the FIN 39 adjustment to reported assets of $85.1 billion at
September 30, 1993.
(b) Matched book defined as securities purchased under agreements to
resell.
(c) At August 31, 1994, this calculation includes restricted stock units
granted under the 1994 Lehman Stock Award program.
(d) For the period ended March 31, 1994, compensation expense excludes the
severance charge of $33 million.
(e) For the period ended June 30, 1994, the actual tax rate was 41.6%,
reflecting the non-deductibility of certain spin-off expenses.
</TABLE>
<TABLE>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Three Three Months Ended Percentage
Months September 30, 1993 of Dollar
Ended (Note 1) Change
Inc/(Dec)
August Lehman Businesses Lehman
31, 1994 Businesses Sold Total Businesses
<S> <C> <C> <C> <C> <C>
Revenues:
Market making and $ 335 $ 443 $ 41 $ 484 (24)%
principle transactions
Investment banking 172 186 47 233 (8)
Commissions 113 126 118 244 (10)
Interest and dividends 1,901 1,510 25 1,535 26
Other 16 21 67 88 (24)
Total revenues 2,537 2,286 298 2,584 11
Interest expense 1,818 1,393 18 1,411 31
Net revenues 719 893 280 1,173 (19)
Non-interest expenses:
Compensation and benefits 388 445 180 625 (13)
Communications 51 45 21 66 13
Brokerage, commissions and 58 63 (2) 61 (8)
clearance fees
Occupancy and equipment 45 39 10 49 15
Professional services 49 42 10 52 17
Advertising and market 33 32 8 40 3
development
Depreciation and 33 29 6 35 14
amortization
Other 29 29 42 71
Total non-interest 686 724 275 999 (5)
expenses
Income before taxes 33 169 5 174 (80)
Provision for income 11 57 3 60 (81)
taxes
Net Income 22 112 2 114 (80)
Preferred stock dividends 11 12 12 (8)
Net income applicable to $ 11 $ 100 $ 2 $ 102 (89)
common stock
Number of shares used in 109.1 105.7
per share computation
(Note 2)
Earnings per common share $ .10 $ .96
Note 1: Certain prior period amounts have been reclassified to conform to
the current year's presentation.
Note 2: Pursuant to SEC requirements, the number of common shares used in
the 1993 calculation of earnings per share includes shares issued
in the spin-off.
</TABLE>
<TABLE>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Eight Nine Months Ended
Months September 30, 1993 (Note 1)
Ended
August Lehman Businesses
31, Business Sold Total
1994
<S> <C> <C> <C> <C>
Revenues:
Market making and principal $1,054 $1,350 $ 323 $1,673
Investing banking 421 556 171 727
Commissions 332 361 828 1,189
Interest and dividends 4,547 4,227 161 4,388
Other 41 60 412 472
Total revenues 6,395 6,554 1,895 8,449
Interest expense 4,365 3,899 143 4,042
Net revenues 2030 2,655 1,752 4,407
Non-interest expenses:
Compensation and benefits 1,057 1,382 1,164 2,546
Communications 135 141 130 271
Brokerage, commissions and 178 188 (20) 168
clearance fees
Occupancy and equipment 115 122 93 215
Professional services 122 116 42 158
Advertising and market 85 94 34 128
development
Depreciation and amortization 86 78 46 124
Other 76 100 146 246
Severance charge 33
Spin-off expenses 15
Loss on sale of Shearson 535 535
Reserves for non-core businesses 32 120 152
Total non-interest expenses 1,902 2,253 2,290 4,543
Income (loss) from continuing
operations before
taxes and cumulative effect of 128 402 (538) (136)
change in accounting principle
Provision for income taxes 48 161 108 269
Income (loss) from continuing
operations before 80 241 (646) (405)
cumulative effect of change in
accounting principle
Income from discontinued
operations, net of taxes: 24 24
Income from operations
Gain on disposal 165 165
Net Income from discontinued 189 189
operations
Income (loss) before cumulative
effect of change in 80 241 (457) (216)
accounting principle
Cumulative effect of change in (13)
accounting principle
Net Income (loss) 67 241 (457) (216)
Preferred stock dividends 27 36 36
Net income (loss) applicable to $ 40 $ 205 $ (457) $ (252)
common stock
Number of shares used in per share
computation (Note 2) 107.0 105.7
Earnings per common share:
Income (loss) from continuing
operations before $ .49 $ (4.17)
cumulative effect of change
in accounting principle
Discontinued operations
1.79
Cumulative effect of change in
accounting principle (.12)
Net income (loss) $ .37 $ (2.38)
Note 1: Certain prior period amounts have been reclassified to conform
to the current year's presentation.
Note 2: Pursuant to SEC requirements, the number of common shares used
in the calculation of earnings per share includes shares
issued in the spin-off.
</TABLE>
