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 25, 1996
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
<PAGE>
Item 5. Other Events
Second Quarter Earnings
On September 25, 1996, Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its third quarter 1996 earnings (the
"Earnings Release").
Copy of the Earnings Release follows.
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 1996
Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended August 31, 1996)
(Preliminary and Unaudited)
99.3 Consolidated Statement of Operations
(Nine Months ended August 31, 1996)
(Preliminary and Unaudited)
99.4 Selected Statistical Information
The Exhibit Index to this Report is incorporated herein by reference.
<PAGE>
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/ Charles B. Hintz
Charles B. Hintz
Chief Financial Officer
(Principal Financial Officer)
Date: Sept 26, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
Third Quarter 1996 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended August 31, 1996)
(Preliminary and Unaudited)
Exhibit 99.3 Consolidated Statement of Operations
(Nine Months Ended August 31, 1996)
(Preliminary and Unaudited)
Exhibit 99.4 Selected Statistical Information
<PAGE>
EXHIBIT 99.1
LEHMAN BROTHERS
News Release
---------------------------
For Immediate Release MEDIA CONTACT: William J. Ahearn
(212) 526-4379
INVESTOR CONTACT: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS
THIRD QUARTER EARNINGS OF $77 MILLION,
UP 15 PERCENT PER SHARE
NEW YORK, September 25, 1996 -- Lehman Brothers Holdings Inc. (NYSE:
LEH) today reported net income of $77 million, or $0.60 per common
share, for the third quarter ended August 31, 1996.
Net income increased by 8 percent over the third quarter of 1995, with
net income per share increasing by 15 percent from the year-ago
quarter. Results were lower than in the 1996 second quarter, in which
net income was $108 million and net income per share was $0.89. For the
first nine months of 1996, net income was $289 million, an increase of
66 percent from $174 million in net income for the first nine months of
1995.
"Volatile conditions in the debt and equity markets, as well as
seasonal softness in several businesses, interrupted the five
consecutive quarters of higher revenues we had
- more -
<PAGE>
Second Quarter 1996/page 2
posted," said Richard S. Fuld, Jr., Chairman and Chief Executive
Officer. "However, the success of our efforts to enhance profitable
growth and improve productivity are clearly evident in our results
over the course of the first nine months of the year."
Net revenues (total revenues less interest expense) for the third
quarter were $722 million, down from $750 million in the third quarter
of 1995 and from $833 million in the second quarter of 1996. For the
first nine months of 1996, net revenues were $2.376 billion, an
increase of 9 percent from $2.188 billion in the 1995 first nine
months.
Mr. Fuld noted that revenues in the third quarter were down in
comparison with the 1996 second quarter due in large part to the
effects of movements in interest rates on customer trading volumes, and
to decisions by issuers to delay scheduled underwritings. The Firm's
current forward equity calendar includes $1.9 billion in lead managed
transactions, and its forward fixed income calendar includes $6.8
billion in offerings. For the third quarter, net revenues reflected
continued strength in a number of the Firm's global businesses,
particularly fixed income derivative activities, mortgage and
asset-backed securities, and M&A advisory.
Non-interest expenses for the quarter were $606 million. Nonpersonnel
expenses for the same period were $240 million, a decrease of 8 percent
from $261 million in the previous year's third quarter, and down from
$242 million in the second quarter of 1996. Compensation and benefits
as a percentage of net revenues remained at 50.7 percent for the sixth
successive quarter.
- more -
<PAGE>
Second Quarter 1996/page 3
"Our ability to maintain a consistent ratio of compensation and
benefits to net revenues for well over a year now reflects the ongoing
success of our Firmwide expense management efforts," Mr. Fuld said.
"That effort is a key to consistent and sustainable improvement in the
Firm's earnings and profitability. While quarterly revenue was off for
a number of market-related and seasonal reasons, it is important to
note that our discipline around expenses remained strong."
For the 1996 first nine months, non-interest expense was $1.934
billion. Nonpersonnel expenses were $729 million, a decrease of 10
percent from $808 million in the first nine months of 1995.
For the 1996 third quarter, the Firm's pre-tax margin was 16.0 percent,
compared with 14.5 percent in the third quarter of 1995, and 20.2
percent in the 1996 second quarter. Return on common equity was 9.0
percent for the quarter ended August 31, 1996, compared with 8.5
percent for the third quarter of 1995, and 13.4 percent for the 1996
second quarter. For the first nine months of 1996, return on common
equity was 11.5 percent.
As of August 31, 1996, Lehman Brothers stockholders' equity was $3.741
billion and total capital (stockholders' equity and long-term debt) was
$17.955 billion. Book value per common share was $27.74.
Lehman Brothers is a global investment bank with leadership positions
in corporate finance, advisory services, municipal finance and
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.
# # #
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EXHIBIT 99.2
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Three Months Ended Percentage of
August August Dollar Change
31, 1996 31, 1995 Inc/(Dec)
----------- ---------- ----------
Revenues:
Principal transactions $ 303 $ 245 24%
Investment banking 237 251 (6)
Commissions 77 116 (34)
Interest and dividends 2,964 2,830 5
Other 4 11 (64)
------ ------
Total revenues 3,585 3,453 4
Interest expense 2,863 2,703 6
----- -----
Net revenues 722 750 (4)
------ ------
Non-interest expenses:
Compensation and benefits 366 380 (4)
Brokerage, commissions and clearance fees 62 59 5
Occupancy and equipment 37 44 (16)
Communications 35 43 (19)
Professional services 38 39 (3)
Business development 23 27 (15)
Depreciation and amortization 22 26 (15)
Other 23 23
------ ------
Total non-interest expenses 606 641 (5)
------ ------
Income before taxes 116 109 6
Provision for income taxes 39 38 3
------ -------
Net income $ 77 $ 71 8
====== =======
Net income applicable to common stock $ 71 $ 60 18
====== =======
Average common and common
equivalent shares outstanding 117.2 116.2
===== =====
Earnings per common share $0.60 $0.52
===== =====
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EXHIBIT 99.3
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Nine Months Ended Percentage of
August 31, August 31, Dollar Change
1996 (Note 1) 1995 Inc/(Dec)
-------------- ---------- -------------
Revenues:
Principal transactions ..................$ 1,114 $ 959 16%
Investment banking ...................... 671 540 24
Commissions ............................. 267 342 (22)
Interest and dividends .................. 8,369 7,986 5
Other ................................... 27 36 (25)
------- -------
Total revenues ....................... 10,448 9,863 6
Interest expense ..................... 8,072 7,675 5
------- -------
Net revenues ..................... 2,376 2,188 9
------- -------
Non-interest expenses:
Compensation and benefits ............... 1,205 1,111 8
Brokerage, commissions and clearance fees 176 183 (4)
Occupancy and equipment ................. 114 134 (15)
Communications .......................... 114 137 (17)
Professional services ................... 111 123 (10)
Business development .................... 75 84 (11)
Depreciation and amortization ........... 68 80 (15)
Other ................................... 71 67 6
------- -------
Total non-interest expenses ........... 1,934 1,919 1
------- -------
Income before taxes ...................... 442 269 64
Provision for income taxes ........... 153 95 61
------- -------
Net income .............................. $ 289 $ 174 66
======= =======
Net income applicable to common stock .. $ 265 $ 142 87
======= =======
Average common and common
equivalent shares outstanding ........ 116.3 112.2
======= =======
Earnings per common share ................ $ 2.28 $ 1.27
======= =======
Note 1: Certain amounts have been reclassified to conform to the current
presentation.
<PAGE>
EXHIBIT 99.4
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
Quarters Ended
8/31/96 5/31/96 2/29/96 11/30/95 (a) 8/31/95 5/31/95
Income Statement
<S> <C> <C> <C> <C> <C> <C>
Net Revenues $722 $833 $821 $755 $750 $ 731
Non-Interest Expenses:
Compensation and Benefits 366 422 416 383 380 371
Nonpersonnel Expenses (b) 240 242 246 254 261 270
Net Income from Operations
Excluding Special Items 77 108 104 80 71 58
Net After-Tax Gain from Sale
of Omnitel 47
Special Charges (after-tax):
Restructuring Charge (58)
Net Income 77 108 104 69 71 58
Net Income Applicable to
Common Stock 71 102 93 58 60 48
Earnings per Common Share $0.60 $0.89 $0.79 $0.49 $0.52 $0.43
Financial Ratios (%) (c)
Return on Common Equity
(annualized) 9.0 13.4 12.6 9.3 8.5 7.0
Pretax Operating Margin 16.0 20.2 19.2 15.6 14.5 12.3
Compensation & Benefits/
Net Revenues (d) 50.7 50.7 50.7 50.7 50.7 50.7
Effective Tax Rate (e) 33.6 36.0 34.0 32.5 35.0 35.5
Balance Sheet
Total Assets $126,000 $133,725 $128,702 $115,303 $117,518 $123,421
Total Assets Excluding
Matched Book (f) 90,000 89,864 84,608 79,069 80,345 83,115
Common Stockholders' Equity (g) 3,233 3,058 3,015 2,990 2,923 2,767
Total Stockholders' Equity (h) 3,741 3,566 3,523 3,698 3,631 3,475
Total Capital (long-term debt plus
stockholders' equity) 17,955 17,135 16,994 16,463 16,528 16,257
Book Value per Common Share (i) 27.74 27.29 26.41 25.67 25.23 25.16
f
Other Data (#s)
Employees 7,762 7,794 7,703 7,771 8,069 8,195
Common Stock Outstanding 100,027,645 100,398,499 102,443,232 104,565,875 104,558,121 104,524,685
Average Common and Common
Equivalent Shares Outstanding 117,205,775 114,788,688 116,932,697 117,090,034 116,157,865 110,248,747
</TABLE>
(a) Net revenues and non-interest expenses exclude the effects of the sale of
Omnitel.
(b) Excludes special items of $97 million relating to real estate- and
occupancy-related expenses and severance payments in the quarter ended
November 30, 1995.
(c) Financial ratios exclude special items and Omnitel.
(d) The actual Compensation & Benefits/Net Revenues ratio, including gross
proceeds and the $50 million expense related to the sale of Omnitel, was
49.0% for the quarter ended November 30, 1995.
(e) The actual tax rate, including the effects of the sale of Omnitel and the
restructuring charge, was 31.3% for the quarter ended November 30, 1995.
(f) Matched book is defined as securities purchased under agreements to resell.
(g) The increase in common stockholders' equity at 8/31/96 and 8/31/95,
reflects an increase in common stock issuable due to restricted stock units
granted under the Lehman Stock Award Program effective July 1.
(h) In February 1996, the Company repurchased the $200 million 8.44% Cumulative
Preferred Stock owned by American Express with the proceeds from the
issuance of $200 million of Quarterly Income Capital Securities Series A
Subordinated Debentures with an interest rate of 8.3% maturing in 2035.
The repurchase of the Preferred Stock included a premium of $2 million
over the par value, which represents a one-time decrease in income
available to common shareholders for purposes of calculating earnings
per share.
(i) This calculation includes restricted stock units granted under the Lehman
Stock Award Programs included in stockholders' equity.
