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): March 20, 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
Item 5. Other Events
First Quarter Earnings
On March 20, 1996, Lehman Brothers Holdings Inc. (the
"Registrant") issued a press release with respect to its first
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 First
Quarter 1996
Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended February 29, 1996)
(Preliminary and Unaudited)
99.3 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: March 22, 1996
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
First Quarter 1996 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended February 29, 1996)
(Preliminary and Unaudited)
Exhibit 99.3 Selected Statistical Information
EXHIBIT 99.1
For Immediate Release MEDIA CONTACT: William J. Ahearn
(212) 526-4379
INVESTOR CONTACT: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS
FIRST QUARTER EARNINGS OF $104 MILLION,
UP 131 PERCENT FROM A YEAR AGO
NEW YORK, March 20, 1996 Lehman Brothers Holdings Inc. (NYSE:
LEH) today reported net income of $104 million, or $0.79 per
common share, for the first quarter ended February 29, 1996.
Net income increased by 131 percent over the $45 million reported
for the first quarter of 1995, and by 30 percent over the $80
million of net income from operations reported for the fourth
quarter of 1995. (Operating earnings in the 1995 fourth quarter
do not reflect the impact of two special items.) Net income per
share increased by 155 percent from $0.31 in the year-ago
quarter, and by 61 percent from $0.49 in the 1995 fourth quarter.
"The first quarter results reflect continued positive momentum
across the board for Lehman Brothers," said Richard S. Fuld, Jr.,
Chairman and Chief Executive Officer. "Stronger earnings and
enhanced margins were driven by the fourth consecutive quarter of
higher revenues and lower expenses, amid a period of generally
improved market conditions. We are encouraged with our continued
financial progress, as it underscores the success of our client-
and customer-driven strategy and our focus on effectively
enhancing revenues and improving productivity. Additionally, our
ongoing expense management efforts resulted in another quarter-
over-quarter reduction in nonpersonnel expenses, even as revenues
rose significantly."
Net revenues (total revenues less interest expense) for the first
quarter were $821 million, an increase of 16 percent from $707
million in the first quarter of 1995 and nine percent from $755
million in the fourth quarter of 1995, excluding a special item.
The increase in net revenues reflects continued strengthening in
a number of fixed income and equity areas throughout the Firm,
particularly mortgages, equity derivatives, and both high yield
and high grade corporate bonds.
Mr. Fuld noted that the Firm's revenue performance in the first
quarter was strong even though investment banking revenues --
while well above the first quarter of 1995 -- were somewhat below
the pace of the 1995 fourth quarter, due in large part to the
timing of certain corporate finance advisory fees. The Firm
entered the 1996 first quarter with a backlog of $37 billion in
M&A transactions; at the end of the first quarter, the aggregate
dollar value of transactions in the pipeline had increased to $58
billion.
Non-interest expenses for the quarter were $662 million.
Nonpersonnel expenses for the same period were $246 million, a
decrease of 11 percent from the previous year's first quarter,
and of three percent from the fourth quarter of 1995, excluding
special items. At the end of the 1996 first quarter, the Firm's
headcount totaled 7,703 versus a peak of 9,400 employees reached
during the first quarter of 1994. Compensation and benefits as a
percentage of net revenues remained at 50.7 percent for the
fourth successive quarter.
"The decline in nonpersonnel costs underscores that our Firmwide
effort to reduce expenses is no longer a special program, but a
way of doing business," Mr. Fuld said. "As a reflection of our
progressively stronger revenue momentum, in combination with our
success at expense management, the Firm's pre-tax margin has
grown approximately 15 percentage points above its low in the
third quarter of 1994."
For the 1996 first quarter, the Firm's pre-tax margin was 19.2
percent, compared with 9.9 percent in the first quarter of 1995,
and 15.6 percent in the 1995 fourth quarter. Return on common
equity increased to 12.6 percent for the quarter ended February
29, 1996, compared with 5.1 percent for the first quarter of
1995, and 9.3 percent for the 1995 fourth quarter.
As of February 29, 1996, Lehman Brothers stockholders' equity was
$3.5 billion and total capital (stockholders' equity and long-
term debt) was $17 billion. Book value per common share was
$26.41.
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
<TABLE>
<CAPTION>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
</CAPTION>
Three Months Ended Percentage of
February 29, February 28, Dollar Change
1996 1995 Inc/(Dec)
<S> <C> <C> <C>
Revenues:
Principal transactions $ 413 $ 359 15%
Investment banking 211 137 54
Commissions 96 105 (9)
Interest and dividends 3,187 2,501 27
Other 10 10
Total revenues 3,917 3,112 26
Interest expense 3,096 2,405 29
Net revenues 821 707 16
Non-interest expenses:
Compensation and benefits 416 360 16
Brokerage, commissions 57 64 (11)
and clearance fees
Communications 40 47 (15)
Occupancy and equipment 40 45 (11)
Professional services 34 42 (19)
Business development 27 29 (7)
Depreciation and amortization 24 27 (11)
Other 24 23 4
Total non-interest expenses 662 637 4
Income before taxes 159 70 127
Provision for income taxes 55 25 120
Net income $ 104 $ 45 131
Net income applicable $ 93 $ 34 174
to common stock
Average common and common
equivalent shares outstanding 116.9 110.2
Earnings per common share $0.79 $0.31
</TABLE>
EXHIBIT 99.3
<TABLE>
<CAPTION>
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
</CAPTION>
Twelve
Quarters Ended Months
2/29/96 11/30/95(a) 8/31/95 5/31/95 2/28/95 1995(a)
<S> <C> <C> <C> <C> <C> <C>
Income Statement
Net Revenues $821 $755 $750 $731 $707 $2,942
Non-Interest
Expenses:
Compensation and 416 383 380 371 360 1,494
Benefits
Nonpersonnel 246 254 261 270 277 1,061
Expenses(b)
Net Income from
Operations Excluding
Special Items 104 69 71 58 45 253
Net After-Tax Gain
from Sale of Omnitel 47 47
Special Charges
(after-tax):
Restructuring Charge (58) (58)
Net Income 104 69 71 58 45 242
Net Income Applicable
to Common Stock 93 58 60 48 34 200
Earnings per Common $0.79 $0.49 $0.52 $0.43 $0.31 $1.76
Share
Financial Ratios(%)(c)
Return on Common
Equity (annualized) 12.6 9.3 8.5 7.0 5.1 7.5
Pretax Operating 19.2 15.6 14.5 12.3 9.9 13.2
Margin
Compensation &
Benefits/
Net Revenues(d) 50.7 50.7 50.7 50.7 50.9 50.8
Effective Tax Rate(e) 34.0 32.5 35.0 35.5 35.8 34.5
Balance Sheet
Total Assets $129,000 $115,303 $117,518 $123,421 $127,304
Total Assets
Excluding
Matched Book(f) 85,000 79,069 80,345 83,115 85,257
Common Stockholders' 3,015 2,990 2,923 2,767 2,718
Equity
Total Stockholders' 3,523 3,698 3,631 3,475 3,426
Equity(g)
Total Capital (long-
term debt plus
stockholders'
equity) 16,994 16,463 16,528 16,257 14,603
Book Value per 26.41 25.67 25.23 25.16 24.69
Common Share(h)
Other Data (#s)
Employees 7,703 7,771 8,069 8,195 8,428
Common Stock 102,443,232 104,565,875 104,558,121 104,524,685 104,494,667
Outstanding
Average Common
and Common
Equivalent Shares
Outstand-
ing 116,932,697 117,090,034 116,157,865 110,248,747 110,190,669 113,414,684
</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 twelve months
of 1995 and the quarter ended November 30, 1995.
(c) Financial ratios exclude special items 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) In February 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.
(h) This calculation includes restricted stock units granted under the
Lehman Stock Award Programs included in stockholders' equity.
