- 10 -
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 5, 1995
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
1994 Fiscal Year End and Fourth Quarter Earnings
On January 5, 1995, Lehman Brothers Holdings Inc. (the "Registrant") issued
a press release with respect to its fourth quarter and year end 1994 earnings
(the "Earnings Release").
Copies of the Earnings Release follow.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The following Exhibits are filed as part of this Report.
99.1 Press Release Relating to Fourth
Quarter and 1994 Fiscal Year End Earnings
99.2 Selected Statistical Information
99.3 Consolidated Statement of Operations
(Three Months Ended November 30, 1994)
(Preliminary and Unaudited)
99.4 Consolidated Statement of Operations
(Eleven Months Ended November 30, 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: ________________________
Robert Matza
Chief Financial Officer
(Principal Financial Officer)
Date: January 6, 1995
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
Fourth Quarter 1994 Earnings
Exhibit 99.2 Selected Statistical Information
Exhibit 99.3 Consolidated Statement of
Operations (Three Months Ended November 30, 1994)
(Preliminary and Unaudited)
Exhibit 99.4 Consolidated Statement of
Operations
(Eleven Months Ended November 30, 1994)
(Preliminary and Unaudited)
Exhibit 99.1
For Immediate Release MEDIA CONTACT: Steven H. Faigen
(212) 526-4379
INVESTOR CONTACT: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS 1994 FISCAL YEAR END
AND FOURTH QUARTER EARNINGS
NEW YORK, January 5, 1995 _ Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported net income of $46 million or $0.32 per share of common stock for
the fourth quarter ended November 30, 1994.
By comparison, the Firm reported net income of $22 million for the third
quarter of 1994 and $114 million for the fourth quarter of 1993.
Lehman Brothers also reported net income of $113 million or $0.69 per share
of common stock for the 11 months comprising its 1994 fiscal year. Net
income attributable to the Lehman Businesses for the 12 months ended
December 31, 1993 totaled $355 million.
Richard S. Fuld, Jr., Chairman and Chief Executive Officer, said: "Despite
a difficult business environment that has prevailed since early 1994,
Lehman Brothers maintained its franchise positions in its core origination,
trading and advisory businesses. The Firm also made considerable progress
in executing its global business strategy."
Net revenues for the fourth quarter (total revenues less interest expense)
were $708 million versus $719 million in the third quarter of 1994 and $899
million in the fourth quarter of 1993. Principal transactions revenue
continued to be adversely affected by market volatility and weaker customer
volume in many product lines. Investment banking revenues reflected lower
fixed income and equity origination activity offset, in part, by improved
results from strategic advisory activities.
Mr. Fuld continued: "Our fourth quarter results begin to show the impact
of the year-long Firmwide effort to reduce expenses, which have declined
from both last year's fourth quarter as well as from all quarters in 1994.
Total expenses in the current period, for example, are $43 million lower
than in the third quarter. This improvement has been achieved through a
combination of headcount reduction, tighter controls on purchased goods and
services and a rationalization of the systems and services that support the
Firm's businesses. While we have made progress on costs, reducing them
further remains a top priority in 1995."
Non-interest expenses were $643 million, reflecting a 6% decrease from the
third quarter of this year and a 13% decrease from last year's fourth
quarter. Compensation and benefits were $356 million, an 8% decrease from
the third quarter of 1994 and a 20% decrease from the prior year's fourth
quarter. Non-interest expenses, excluding compensation and benefits,
decreased 4% from the third quarter of 1994 and 2% versus the fourth
quarter of 1993. At the end of the fourth quarter, the Firm's headcount was
8,512 versus a peak of 9,400 employees reached during the first quarter of
1994.
For the 11 months ended November 30, 1994, the Firm reported net revenue of
$2,738 million. Although the reporting periods are not comparable, net
revenue of $3,555 million was attributable to the Lehman Businesses for the
12 months ended December 31, 1993. Non-interest operating expenses for
fiscal 1994 were $2,497 million, versus $2,958 million for the Lehman
Businesses in 1993. Compensation and benefits expenses were $1,413 million
in fiscal 1994 versus $1,825 million for the Lehman Businesses in 1993.
As of December 31, 1994, Lehman Brothers was ranked the number three
underwriter of debt and equity worldwide and the number two underwriter of
debt and equity in the U.S., according to Securities Data Company. Lehman
Brothers also ranked third in the number of mergers and acquisitions
completed globally in 1994.
As of November 30, 1994, Lehman Brothers' stockholders' equity was $3,395
million and total capital (stockholders' equity and long-term debt) was
$14,716 million.
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.
Exhibit 99.2
LEHMAN BROTHERS HOLDINGS INC. Year End
1994
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(dollars in millions, except per share data)
Eleve Twelv
n e Quarters Ended
Month Month
s s
1994 1993 11/30/94 8/31/94 6/30/94 3/31/9 12/31/9
(a) (b) 4 3 (b)
Income
Statement
Net Revenues $2,73 $3,55 $ 708 $ 719 $ 719 $ $ 899
8 5 868
Non-Interest
Expenses:
Compensation
and Benefits 1,413 1,825 356 388 364 450 443
Non-Personnel
Expenses 1,084 1,133 287 298 305 297 293
After-Tax
Income from
Operations
(excluding
special
charges) 156 376 46 22 32 73 114
Special
Charges
(after-tax):
Spin-Off
Expenses (12) (12)
Severance
Charge (18) (18)
Accounting
Change (13) (13)
Non-Core
Reserves (21)
Net Income 113 355 46 22 20 42 114
Financial
Ratios (%)
Return on
Common Equity
(annualized) 4.0 N/A 5.2 1.6 2.8 N/A N/A
Pre-Tax
Operating
Margin
(excluding
special
charges) 8.8 16.8 9.1 4.6 6.8 14.0 18.1
Compensation
&
Benefits/Net 51.6 51.4 50.3 53.9 50.7 51.8 49.2
Revenues (c)
Effective Tax
Rate (d) 33.7 37.1 29.2 35.1 34.6 38.0 29.8
Balance Sheet
Total Assets $111,000 $121,246 $118,511 $112,2 $100,62
(e) 77 4
Total Assets
Excluding
Matched Book 73,000 76,677 74,375 71,147 54,428
(f)
Common
Stockholders'
Equity 2,687 2,652 2,602 1,275 1,294
Total
Stockholders'
Equity 3,395 3,360 3,310 2,033 2,052
Total Capital
(long-term
debt plus
stockholders'
equity) 14,716 14,187 13,877 12,608 11,951
Book Value
per Common 24.35 23.97 24.65 N/A N/A
Share (g)
Other Data
(#s)
Common Stock
Outstanding 104,537,690 105,528,91 105,554,7 N/A N/A
4 48
Employees 8,512 8,926 8,948 9,292 9,300
(a) The results for the month of June 1994 are reflected in both the second and
third quarters of 1994. Thus the four quarters of 1994 are not additive.
(b) The 1993 amounts represent the Lehman Businesses.
(c) For the period ended March 31, 1994, compensation expense excludes the pre-
tax severance charge of $33 million.
(d) For the eleven months 1994 and the period ended June 30, 1994, the actual
tax rates were 34.9% and 41.6%, respectively, reflecting the non-
deductibility of certain spin-off expenses.
(e) Reflects the FIN 39 adjustment to reported assets of $80.5 billion at
December 31, 1993.
(f) Matched book is defined as securities purchased under agreements to resell.
(g) Beginning August 31, 1994 this calculation includes restricted stock units
granted to employees under the 1994 Lehman Stock Award Program. At
November 30, 1994, this calculation also includes restricted stock units
issuable to executive officers under the same plan.
Exhibit 99.3
LEHMAN BROTHERS HOLDINGS INC. Year End 1994
CONSOLIDATED STATEMENT OF
OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share
data)
Three Three Months Ended
Months December 31, 1993 (Note 1) Percenta
Ended ge of
November Dollar
30, Change
1994 Lehman Businesses Inc/(Dec
Businesses Sold ) Lehman
Total Business
es
Revenues:
Principal transactions $ 291 $ 382 $ 382 (24)%
Investment banking 151 246 246 (39)
Commissions 112 127 127 (12)
Interest and dividends 2,214 1,451 1,451 53
Other 27 20 20 35
Total revenues 2,795 2,226 2,226 26
Interest expense 2,087 1,327 1,327 57
Net revenues 708 899 899 (21)
Non-interest expenses:
Compensation and benefits 356 443 443 (20)
Brokerage, commissions and
clearance fees 64 68 68 (6)
Communications 48 47 47 2
Professional services 45 45 45
Occupancy and equipment 46 42 42 10
Business development 31 33 33 (6)
Depreciation and amortization 30 32 32 (6)
Other 23 26 26 (12)
Total non-interest expenses 643 736 736 (13)
Income before taxes 65 163 163 (60)
Provision for income taxes 19 49 49 (61)
Net income $46 $114 $114 (60)
Net income applicable to $35 $102 $102 (66)
common stock
Number of shares used in per 110.6 105.7
share computation(Note 2)
Earnings per common share $0.32 $0.97
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.
Exhibit 99.4
LEHMAN BROTHERS HOLDINGS INC. Year End 1994
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Eleven Twelve Months Ended
Months December 31, 1993 (Note 1)
Ended
November Lehman Businesses
30, Businesse Sold Total
1994 s
Revenues:
Principal transactions $1,345 $1,732 $ 323 $2,055
Investment banking 572 802 170 972
Commissions 445 488 828 1,316
Interest and dividends 6,761 5,679 161 5,840
Other 67 79 412 491
Total revenues 9,190 8,780 1,894 10,674
Interest expense 6,452 5,225 143 5,368
Net revenues 2,738 3,555 1,751 5,306
Non-interest expenses:
Compensation and benefits 1,413 1,825 1,164 2,989
Brokerage, commissions and 243 256 (20) 236
clearance fees
Communications 184 188 130 318
Professional services 166 161 42 203
Occupancy and equipment 160 164 93 257
Business development 116 127 34 161
Depreciation and amortization 116 111 46 157
Other 99 126 145 271
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 2,545 2,990 2,289 5,279
Income (loss) from continuing
operations before taxes and
cumulative effect of change in 193 565 (538) 27
accounting principle
Provision for income taxes 67 210 108 318
Income (loss) from continuing
operations before cumulative
effect of change in accounting 126 355 (646) (291)
principle
Income from discontinued
operations, net of taxes:
Income from operations 24 24
Gain on disposal 165 165
Net income from discontinued 189 189
operations
Income (loss) before cumulative
effect of change in accounting 126 355 (457) (102)
principle
Cumulative effect of change in
accounting principle (13)
Net income (loss) $ 113 $ 355 $ (457) $ (102)
Net income (loss) applicable to
common stock $ 75 $ 307 $ (457) $ (150)
Number of shares used in per share
computation (Note 2) 108.0 105.7
Earnings per common share:
Income (loss) from continuing
operations before cumulative
effect of change in accounting $ 0.81 $ (3.20)
principle
Discontinued operations 1.79
Cumulative effect of change in
accounting principle (0.12)
Net income (loss) $ 0.69 $ (1.41)
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
calculations of earnings per share includes shares issued in the spin-
off.
