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 4, 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 Number)
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
1995 Fiscal Year End and Fourth Quarter Earnings
On January 4, 1996, Lehman Brothers Holdings Inc. (the "Registrant") issued a
press release with respect to its fourth quarter and year end 1995 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 Fourth Quarter and 1995
Fiscal Year End Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended November 30, 1995)
(Preliminary and Unaudited)
99.3 Consolidated Statement of Operations
(Eleven Months Ended November 30, 1995)
(Preliminary and Unaudited)
99.4 Selected Statistical Information
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: January 9, 1996
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to Fourth
Quarter 1995 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended November 30, 1995)
(Preliminary and Unaudited)
Exhibit 99.3 Consolidated Statement of Operations
(Eleven Months Ended November 30, 1995)
(Preliminary and Unaudited)
Exhibit 99.4 Selected Statistical Information
EXHIBIT 99.1
For Immediate Release MEDIA CONTACT:Steven H. Faigen
(212) 526-4379
INVESTOR CONTACT: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS 1995 FISCAL YEAR END
AND FOURTH QUARTER EARNINGS
NEW YORK, January 4, 1996 _ Lehman Brothers Holdings Inc.
(NYSE: LEH) today reported net income of $80 million for the
fourth quarter ended November 30, 1995, before taking into
account the effect of two special items.
These items are a $47 million after-tax gain related to the
Firm's sale of its interest in Omnitel Sistemi Radiocellullari
Italiani S.p.A. ("Omnitel") and a $58 million after-tax charge
for occupancy-related real estate expenses and severance
payments. The occupancy-related real estate charge will produce
annual pre-tax savings of $24 million. After taking into
account these two items, the Firm reported net income of $69
million which, net of preferred dividends, resulted in earnings
per share of $0.49 for the quarter.
Net income before the special items increased by 13 percent
over the $71 million reported for the third quarter of 1995 and
74 percent over the $46 million of net income reported for the
fourth quarter of 1994.
Lehman also reported net income of $242 million (or $1.76 per
share) for fiscal 1995, compared to net income of $113 million
(or $0.69 per share) for the 11 months comprising fiscal 1994.
Richard S. Fuld, Jr., Chairman and Chief Executive Officer,
said: "With the fourth quarter results we are reporting today,
revenues have increased every quarter this year. Our revenue
growth reflects the strengths of our franchise and the
continued investments we have made this year to build our
business. Coupled with our success in driving costs down, this
has allowed us to raise our profitability in each quarter of
1995, with fourth quarter earnings up almost 75 percent from
the fourth quarter earnings last year. In addition, we have
increased equity by over $400 million and long-term capital by
$2.8 billion since the spin-off. We enter 1996 with momentum in
the marketplace, a more competitive cost structure and
significantly greater financial strength."
The following discussion of the Firm's fourth quarter and
fiscal year results excludes the effect of the sale of Omnitel
($79 million pre-tax gain) and the restructuring charge
totaling $97 million pre-tax (of which $80 million was for
occupancy-related real estate expenses and $17 million was for
severance payments).
Net revenues (total revenues less interest expense) for the
fourth quarter were $755 million, compared to $750 million in
the third quarter of 1995 and $708 million in the fourth
quarter of 1994.
Mr. Fuld said: "Our revenues from the quarter showed continued
growth and greater diversity. In particular, investment banking
activities made strong contributions to our results. Revenues
from debt and stock issuances increased 153 percent over the
fourth quarter of 1994, with the greatest gains in equities.
Merger and acquisition fees increased 50 percent. These results
reflect our ongoing investment in banking, research, and
distribution."
Non-interest expenses for the quarter were $637 million. Non-
personnel expenses for the same period were $254 million, a
decrease of 3 percent from the third quarter of 1995 and 11
percent versus the fourth quarter of 1994. At the end of the
fourth quarter, the Firm's headcount totaled 7,771 versus a
peak of 9,400 employees reached during the first quarter of
1994.
Mr. Fuld continued: "I am pleased to announce that we have
completed our Firmwide program to reduce expenses by $300
million on an annualized basis. Compensation as a percentage of
revenues for the quarter was 50.7 percent, down from 53.9
percent reported when the cost reduction program began in the
third quarter of 1994. Non-personnel expenses have declined for
the sixth quarter in a row and, on an annualized basis, are
running $177 million below the third quarter 1994 run rate.
Taxes and interest expenses have been reduced by $51 million.
Combined with successive quarterly revenue growth and the
ongoing cost reduction effort, the Firm achieved a pre-tax
margin of 15.6 percent for the fourth quarter of 1995, an
eleven percentage point increase over the third quarter of
1994."
For the 12 months ended November 30, 1995, the Firm reported
net revenue of $2,942 million. Compensation and benefits
expenses were $1,494 million, while non-personnel expenses were
$1,061 million.
As of December 31, 1995, Lehman Brothers was ranked the number
two underwriter of debt and equity in the U.S. and the number
four underwriter of debt and equity worldwide, according to
Securities Data Company. Lehman Brothers also ranked fifth in
the number of mergers and acquisitions completed globally in
1995, according to Securities Data Company.
As of November 30, 1995, Lehman Brothers stockholders' equity
was $3,698 million and total capital (stockholders' equity and
long-term debt) was $16,463 million. Book value per common
share was $25.67.
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.
EXHIBIT 99.2
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
Three Months Ended Percentage of
November 30, November 30, Dollar Change
1995 1994 Inc/(Dec)
<CAPTION>
<S> <C> <C> <C>
Revenues:
Principal transactions $ 434 $ 291 49%
Investment banking 261 151 73
Commissions 108 112 (4)
Interest and dividends 2,802 2,214 27
Other 8 27 (70)
Total revenues 3,613 2,795 29
Interest expense 2,729 2,087 31
Net revenues 884 708 25
Non-interest expenses:
Compensation and benefits 433 356 22
Brokerage, commissions
and clearance fees 58 64 (9)
Communications 43 48 (10)
Occupancy and equipment 41 46 (11)
Professional services 36 45 (20)
Business development 26 31 (16)
Depreciation and amortization 25 30 (17)
Other 25 23 9
Restructuring charge 97 -----
Total non-interest expenses 784 643 22
Income before taxes 100 65 54
Provision for income taxes 31 19 63
Net income $ 69 $ 46 50
Net income applicable to
common stock $ 58 $ 35 66
Number of shares used
in earnings per common
share computation 117.1 110.6
Earnings per common share $0.49 $0.32
</TABLE>
EXHIBIT 99.3
<TABLE>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Twelve Months Eleven Months
Ended Ended
November 30, November 30,
1995 1994
<CAPTION>
<S> <C> <C>
Revenues:
Principal transactions $1,393 $1,345
Investment banking 801 572
Commissions 450 445
Interest and dividends 10,788 6,761
Other 44 67
Total revenues 13,476 9,190
Interest expense 10,405 6,452
Net revenues 3,071 2,738
Non-interest expenses:
Compensation and benefits 1,544 1,413
Brokerage, commissions
and clearance fees 241 243
Communications 180 184
Occupancy and equipment 174 160
Professional services 159 166
Business development 110 116
Depreciation and amortization 105 116
Other 92 99
Restructuring charge 97
Severance charge 33
Spin-off expenses _____ 15
Total non-interest
expenses 2,702 2,545
Income before taxes and
cumulative effect of
change in accounting
principle 369 193
Provision for income taxes 127 67
Income before cumulative
effect of change in
accounting principle 242 126
Cumulative effect of
change in accounting
principle, net of taxes _____ (13)
Net income $ 242 $ 113
Net income applicable to
common stock $ 200 $ 75
Number of shares used in
earnings per 113.4 108.0
common share computation (Note 1)
Earnings per common share:
Income before cumulative
effect of change in
accounting principle $1.76 $0.81
Cumulative effect of
change in accounting
principle _____ (0.12)
Net income $1.76 $ 0.69
Note 1: Pursuant to SEC requirements, the number of common shares used in the
1994 calculation of earnings per share includes shares issued in the
spin-off.
</TABLE>
EXHIBIT 99.4
<TABLE>
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
Twelve Eleven
Months Months Quarters Ended
1995(a) 1994 11/30/95(a) 8/31/95 5/31/95 2/28/95 11/30/94
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement
Net Revenues $2,942 $2,738 $755 $750 $731 $707 $708
Non-Interest
Expenses:
Compensation
and Benefits 1,494 1,413 383 380 371 360 356
Nonpersonnel
Expenses(b) 1,061 1,084 254 261 270 277 287
Net Income from
Operations
Excluding Special
Charges and Gain
on Sale of Omnitel 253 156 80 71 58 45 46
Net After-Tax Gain
from Sale of
Omnitel 47 47
Special Charges
(after-tax):
Restructuring
Charge (58) (58)
Spin-Off
Expenses (12)
Severance Charge (18)
Accounting Change (13)
Net Income 242 113 69 71 58 45 46
Financial Ratios
(%) (c)
Return on Common
Equity
(annualized) 7.5 6.2 9.3 8.5 7.0 5.1 5.2
Pretax Operating 13.2 8.8 15.6 14.5 12.3 9.9 9.1
Margin
Compensation &
Benefits/
Net Revenues(d) 50.8 51.6 50.7 50.7 50.7 50.9 50.3
Effective Tax Rate 34.5 33.7 32.5 35.0 35.5 35.8 29.2
(e)
Balance Sheet
Total Assets $115,000 $117,518 $127,421 $127,304 $109,947
Total Assets
Excluding
Matched Book (f) 79,000 80,345 83,115 85,257 72,457
Common
Stockholders'
Equity 2,990 2,923 2,767 2,718 2,687
Total Stockholders'
Equity 3,698 3,631 3,475 3,426 3,395
Total Capital (long-
term debt plus
stockholders'
equity) 16,463 16,528 16,257 14,603 14,716
Book Value per
Common Share(g) 25.67 25.23 25.16 24.69 24.35
Other Data (#s)
Common Stock
Outstanding 104,565,875 104,558,121 104,524,685 104,494,667 104,537,690
Employees 7,771 8,069 8,195 8,428 8,512
(a) Net revenues and non-interest expenses exclude the effects of
the sale of Omnitel.
(b) Excludes special charges of $97 million relating to real estate-
and occupancy-related expenses and severance payments in the twelve
months of 1995 and the quarter ended November 30, 1995 and special
charges of $33 million and $15 million relating to severance and the
spin-off, respectively, in the eleven months of 1994.
(c) Financial ratios exclude special charges and Omnitel.
(d) The actual Compensation & Benefits/Net Revenues ratios,
including gross proceeds and the $50 million expense related to the
sale of Omnitel, were 50.3% and 49.0% for the twelve months of 1995
and the quarter ended November 30, 1995, respectively.
(e) The actual tax rates, including the effects of the sale of
Omnitel and the restructuring charge, were 34.3% and 31.3% for the
twelve months of 1995 and the quarter ended November 30, 1995,
respectively.
(f) Matched book is defined as securities purchased under agreements
to resell.
(g) This calculation includes restricted stock units granted under the Lehman
Stock Award Programs included in stockholders' equity.
</TABLE>
