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 24, 1997
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
On March 24, 1997, Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its first quarter 1997 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 1997 Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended February 28, 1997)
(Preliminary and Unaudited)
99.3 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: March 26, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
First Quarter 1997 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended February 28, 1997)
(Preliminary and Unaudited)
Exhibit 99.3 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
FIRST QUARTER EARNINGS OF $144 MILLION,
UP 38 PERCENT FROM A YEAR AGO
NEW YORK, March 24, 1997 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported net income of $144 million, or $1.16 per common share, for the first
quarter ended February 28, 1997.
Net income increased by 38 percent over the $104 million reported for the first
quarter of 1996. Net income per share increased by 47 percent from $0.79 in the
year-ago quarter.
"The first quarter results reflect continued strong progress for the Firm
overall," said Richard S. Fuld, Jr., Chairman and Chief Executive Officer. "Most
of the positive trends we saw in our record fourth quarter continued into this
quarter. The balanced strength we have seen in the Firm's fixed income, equity,
and investment banking activities over the past six months has translated into
significantly improved earnings momentum and profitability for the Firm."
Net revenues (total revenues less interest expense) for first quarter were
$925 million, an
- more -
<PAGE>
First Quarter 1997/page 2
increase of 13 percent from $821 million in the first quarter of 1996. Mr. Fuld
noted that the Firm's revenue performance in the first quarter reflected
continued strength in a range of businesses globally. In particular, the Firm
reported gains in several strategically important, higher-margin businesses that
it is focusing on in 1997 and beyond, including mergers and acquisitions, equity
origination, derivatives, high yield, and emerging markets activities.
Non-interest expenses for the quarter were $706 million, compared with $662
million in the 1996 first quarter. Nonpersonnel expenses in the 1997 quarter
were $237 million, a decrease of 4 percent from the previous year's first
quarter, reflecting the Firm's continued successful focus on expense management.
Compensation and benefits as a percentage of net revenues remained at 50.7
percent for the eighth successive quarter.
For the 1997 first quarter, the Firm's pre-tax margin was 23.7 percent, compared
with 19.2 percent in the year-ago first quarter, and 20.9 percent for all of
1996, before taking into account the effect of a non-recurring charge in the
1996 fourth quarter. Return on common equity increased to 16.1 percent for the
quarter ended February 28, 1997, compared with 12.6 percent a year ago, and 13.9
for all of 1996, before taking into account the non-recurring charge.
As of February 28, 1997, Lehman Brothers stockholders' equity was $4.012 billion
and total capital (stockholders' equity and long-term debt) was $21.308 billion.
Book value per common share was $29.76.
Lehman Brothers is a global investment bank with leadership positions in
corporate finance, advisory services, municipal finance, and fixed income and
equity 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
LEHMAN BROTHERS HOLDINGS INC.
Page 3
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
Three Months Ended Percentage of
February 28, February 29, Dollar Change
1997 1996 Inc/(Dec)
-------------- ------------ -------------
Revenues:
Principal transactions $ 346 $ 413 (16)%
Investment banking 240 211 14
Commissions 97 96 1
Interest and dividends 3,278 2,656 23
Other 38 10 280
-------- -------
Total revenues 3,999 3,386 18
Interest expense 3,074 2,565 20
------ -----
Net revenues 925 821 13
------- ------
Non-interest expenses:
Compensation and benefits 469 416 13
Brokerage, commissions and
clearance fees 57 57
Professional services 41 34 21
Occupancy and equipment 35 40 (13)
Communications 34 40 (15)
Business development 25 27 (7)
Depreciation and amortization 22 24 (8)
Other 23 24 (4)
-------- --------
Total non-interest expenses 706 662 7
------- -------
Income before taxes 219 159 38
Provision for income taxes 75 55 36
-------- --------
Net income $ 144 $ 104 38
======= =======
Net income applicable to common stock $ 138 $ 93 48
======= =======
Average common and common
equivalent shares outstanding 118.5 116.9
===== =====
Earnings per common share $1.16 $0.79
===== =====
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EXHIBIT 99.3
Page 4
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarters Ended Twelve Months
<S> <C> <C> <C> <C> <C> <C>
2/28/97 11/30/96 8/31/96 5/31/96 2/29/96 1996
Income Statement
Net Revenues $ 925 $1,068 $722 $833 $821 $3,444
Non-Interest Expenses:
Compensation and Benefits 469 542 366 422 416 1,747
Nonpersonnel Expenses (a) 237 247 240 242 246 976
Net Income from Operations
Excluding Special Items 144 177 77 108 104 466
Special Charges (after-tax):
Severance charge (50) (50)
Net Income 144 127 77 108 104 416
Net Income Applicable to
Common Stock 138 113 71 102 93 378
Earnings per Common Share $1.16 $0.96 $0.60 $0.89 $0.79 $3.24
Financial Ratios (%) (b)
Return on Common Equity
(annualized) 16.1 20.6 9.0 13.4 12.6 13.9
Pretax Operating Margin 23.7 26.1 16.0 20.2 19.2 20.9
Compensation & Benefits/
Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7
Effective Tax Rate (c) 34.0 36.7 33.6 36.0 34.0 35.4
Balance Sheet
Total Assets $149,000 $128,596 $125,666 $133,725 $128,702
Total Assets Excluding
Matched Book (d) 114,000 96,256 90,216 89,864 84,608
Common Stockholders' Equity (e) 3,504 3,366 3,233 3,058 3,015
Total Stockholders' Equity (f) 4,012 3,874 3,741 3,566 3,523
Total Capital (long-term debt
plus
stockholders' equity) 21,308 19,796 17,955 17,135 16,994
Book Value per Common Share (g) 29.76 28.84 27.74 27.29 26.41
Other Data (#s)
Employees 7,602 7,556 7,762 7,794 7,703
Common Stock Outstanding 101,263,173 100,449,144 100,027,645 100,398,499 102,443,232
Average Common and Common
Equivalent Shares Outstanding 118,460,215 116,947,549 117,205,775 114,788,688 116,932,697 116,373,585
</TABLE>
(a) Excludes special items of $84 million relating to severance in the twelve
months and quarter ended November 30, 1996.
(b) Financial ratios exclude the severance charge and the dividend on the
Company's Redeemable Voting Preferred Stock.
(c) The effective tax rate, including the severance charge was 34.7% and
34.9% for the twelve months and quarter ended November 30, 1996,
respectively.
(d) Matched book is defined as the lower of securities purchased under
agreements to resell or securities sold under agreements to repurchase.
(e) The increase in common stockholders' equity at 8/31/96, reflects an
increase in common stock issuable due to restricted stock units granted
under the Lehman Stock Award Program effective July 1.
(f) 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 forpurposes of calculating earnings
per share.
(g) This calculation includes restricted stock units granted under the
Lehman Stock Award Programs included in stockholders' equity.
