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): June 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
<PAGE>
Item 5. Other Events
Second Quarter Earnings
On June 20, 1996, Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its second 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 Second Quarter 1996
Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended May 31, 1996)
(Preliminary and Unaudited)
99.3 Consolidated Statement of Operations
(Six Months ended May 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: June 20, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
Second Quarter 1996 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended May 31, 1996)
(Preliminary and Unaudited)
Exhibit 99.3 Consolidated Statement of Operations
(Six Months Ended May 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
SECOND QUARTER EARNINGS OF $108 MILLION,
UP 86 PERCENT FROM A YEAR AGO
NEW YORK, June 20, 1996 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported net income of $108 million, or $0.89 per common share, for the second
quarter ended May 31, 1996.
Net income increased by 86 percent over the $58 million reported for the second
quarter of 1995, and by 4 percent over the $104 million reported for the first
quarter of 1996. Net income per share increased by 107 percent from $0.43 in the
year-ago quarter and by 13 percent from $0.79 in the first quarter of 1996.
For the first six months of 1996, net income was $212 million, an increase
of 106 percent from $103 million in net income for the first half of 1995.
"We saw continued positive momentum in all of our major business lines during
the second quarter," said Richard S. Fuld, Jr., Chairman and Chief Executive
Officer. "For the fifth consecutive quarter, we reported higher revenues and
lower expenses, underscoring the success of our ongoing efforts to enhance
profitable growth and improve productivity."
- more -
<PAGE>
Second Quarter 1996/page 2
Net revenues (total revenues less interest expense) for the second quarter were
$833 million, an increase of 14 percent from $731 million in the second quarter
of 1995 and up slightly from $821 million in the first quarter of 1996. The
increase in net revenues reflected continued strength in a number of the Firm's
global fixed income, equity, and corporate finance advisory businesses,
particularly equity trading, underwriting and derivatives; foreign exchange;
high yield; and debt emerging markets. In addition, investment banking revenues
increased in the quarter, reflecting continued strength in corporate finance
advisory, as well as debt and equity syndicate activity.
For the first six months of 1996, net revenues were $1.654 billion,
an increase of 15 percent from $1.438 billion in the 1995 first half.
Non-interest expenses for the quarter were $664 million. Nonpersonnel expenses
for the same period were $242 million, a decrease of 10 percent from $270
million in the previous year's second quarter, and down from $246 million in the
first quarter of 1996. Compensation and benefits as a percentage of net revenues
remained at 50.7 percent for the fifth successive quarter. At the end of the
1996 second quarter, the Firm's headcount totaled 7,794 versus a peak of 9,400
employees reached during the first quarter of 1994. Headcount increased
marginally from the first quarter of 1996, as the Firm continued its program of
strategically investing in growth businesses by selectively hiring key staff.
"The decrease in nonpersonnel expense, and our ability to maintain a consistent
ratio of compensation and benefits to net revenues for more than a year now,
reflects the ongoing success of our Firmwide expense management efforts," Mr.
Fuld said. "That discipline, combined with progressively stronger revenue
momentum, has enabled us to consistently improve the Firm's earnings and
profitability. While our efforts are far from over, the improvement to date has
been significant."
- more -
<PAGE>
Second Quarter 1996/page 3
For the 1996 first half, non-interest expense was $1.327 billion. Nonpersonnel
expenses were $488 million, a decrease of 11 percent from $548 million in the
first six months of 1995.
For the 1996 second quarter, the Firm's pre-tax margin was 20.2 percent,
compared with 12.3 percent in the second quarter of 1995, and 19.2 percent in
the 1996 first quarter. Return on common equity increased to 13.4 percent for
the quarter ended May 31, 1996, compared with 7.0 percent for the second quarter
of 1995, and 12.6 percent for the 1996 first quarter.
As of May 31, 1996, Lehman Brothers stockholders' equity was $3.566 billion and
total capital (stockholders' equity and long-term debt) was $17.135 billion.
Book value per common share was $27.29.
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.
# # #
Financial Statements Attached
<PAGE>
EXHIBIT 99.2
<TABLE>
<CAPTION>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Three Months Ended Percentage of
May 31, May 31, Dollar Change
1996 1995 Inc/(Dec)
<S> <C> <C> <C>
Principal transactions .............................. $ 398 $ 355 12%
Investment banking .......................................223 152 47
Commissions ...............................................94 121 (22)
Interest and dividends .................................2,749 2,655 4
Other .....................................................12 15 (20)
Total revenues ......................................3,476 3,298 5
Interest expense .......................................2,643 2,567 3
Net revenues ..........................................833 731 14
Non-interest expenses:
Compensation and benefits ................................422 371 14
Brokerage, commissions and clearance fees ................ 58 60 (3)
Professional services .....................................39 42 (7)
Communications ............................................38 47 (19)
Occupancy and equipment ...................................37 45 (18)
Business development ......................................25 28 (11)
Depreciation and amortization .............................22 27 (19)
Other .................................................... 23 21 10
Total non-interest expenses ......................... 664 641 4
Income before taxes ......................................... 169 90 88
Provision for income taxes ................................61 32 91
Net income ............................................... $ 108 $ 58 86
Net income applicable to common stock .....................$ 102 $ 48 113
Average common and common
equivalent shares outstanding ........................... 114.8 110.2
Earnings per common share .......................... $0.89 $0.43
</TABLE>
<PAGE>
EXHIBIT 99.3
<TABLE>
<CAPTION>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Six Months Ended Percentage of
May 31, May 31, Dollar Change
1996 (Note 1) 1995 Inc/(Dec)
<S> <C> <C> <C>
Revenues:
Principal transactions .............................................. $ 811 $ 714 14%
Investment banking .................................................. 433 289 50
Commissions ......................................................... 190 226 (16)
Interest and dividends .............................................. 5,405 5,156 5
Other ............................................................... 23 25 (8)
Total revenues ................................................... 6,862 6,410 7
Interest expense .................................................... 5,208 4,972 5
Net revenues ..................................................... 1,654 1,438 15
Non-interest expenses:
Compensation and benefits ........................................... 839 730 15
Brokerage, commissions and clearance fees ........................... 115 124 (7)
Communications ...................................................... 78 94 (17)
Occupancy and equipment ............................................. 77 90 (14)
Professional services ............................................... 73 84 (13)
Business development ................................................ 52 57 (9)
Depreciation and amortization ....................................... 46 54 (15)
Other ............................................................... 47 45 4
Total non-interest expenses ...................................... 1,327 1,278 4
Income before taxes ..................................................... 327 160 104
Provision for income taxes .......................................... 115 57 102
Net income .............................................................. $ 212 $ 103 106
Net income applicable to common stock ................................... $ 195 $ 82 138
Average common and common
equivalent shares outstanding ......................................... 115.9 110.2
Earnings per common share ............................................... $ 1.68 $ 0.74
Note 1: Certain amounts have been reclassified to conform to the current
presentation.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 99.4
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
Quarters Ended
5/31/96 2/29/96 11/30/95 (a) 8/31/95 5/31/95 2/28/95
<S> <C> <C> <C> <C> <C> <C>
Net Revenues ...........................$833 $821 $755 $750 $731 707
Non-Interest Expenses:
Compensation and Benefits ........... 422 416 383 380 371 360
Nonpersonnel Expenses (b) .............242 246 254 261 270 277
Net Income from Operations
Excluding Special Items ............. 108 104 80 71 58 45
Net After-Tax Gain from Sale
of Omnitel ................................................... 47
Special Charges (after-tax):
Restructuring Charge ......................................... (58)
Net Income ............................. 108 104 69 71 58 45
Net Income Applicable to
Common Stock ....................... 102 93 58 60 48 34
Earnings per Common Share ........... $0.89 $0.79 $0.49 $0.52 $0.43 $0.31
Financial Ratios (%) (c)
Return on Common Equity
(annualized) ........................13.4 12.6 9.3 8.5 7.0 5.1
Pretax Operating Margin ................20.2 19.2 15.6 14.5 12.3 9.9
Compensation & Benefits/
Net Revenues (d) ................... 50.7 50.7 50.7 50.7 50.7 50.9
Effective Tax Rate (e) .................36.0 34.0 32.5 35.0 35.5 35.8
Balance Sheet
Total Assets ...................... $134,000 $128,702 $115,303 $117,518 $123,421 127,304
Total Assets Excluding
Matched Book (f) ................. 90,000 84,608 79,069 80,345 83,115 85,257
Common Stockholders' Equity ...........3,058 3,015 2,990 2,923 2,767 2,718
Total Stockholders' Equity (g) ....... 3,566 3,523 3,698 3,631 3,475 3,426
Total Capital (long-term debt plus
stockholders' equity) .......... 17,135 16,994 16,463 16,528 16,257 14,603
Book Value per Common Share (h) ...... 27.29 26.41 25.67 25.23 25.16 24.69
Other Data (#s)
Employees ........................... 7,794 7,703 7,771 8,069 8,195 8,428
Common Stock Outstanding ....... 100,398,499 102,443,232 104,565,875 104,558,121 104,524,685 104,494,667
Average Common and Common
Equivalent Shares Outstanding 114,788,688 116,932,697 117,090,034 116,157,865 110,248,747 110,190,669
</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) 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. (h) This calculation includes
restricted stock units granted under the Lehman Stock Award Programs included in
stockholders' equity.
(h) This calculation includes restricted stock units granted under the Lehman
Stock Award Programs included in stockholders' equity.
