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 30, 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
Third Quarter Earnings
On September 30, 1997, Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its third 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 Third Quarter 1997
Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended August 31, 1997)
(Preliminary and Unaudited)
99.3 Consolidated Statement of Operations
(Nine Months ended August 31, 1997)
(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: September 30, 1997
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
Third Quarter 1997 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended August 31, 1997)
(Preliminary and Unaudited)
Exhibit 99.3 Consolidated Statement of Operations
(Nine Months Ended August 31, 1997)
(Preliminary and Unaudited)
Exhibit 99.4 Selected Statistical Information
<PAGE>
EXHIBIT 99.1
[GRAPHIC OMITTED]
News Release
-----------------------------------------------------------
For Immediate Release MEDIA CONTACT: William J. Ahearn
(212) 526-4379
INVESTOR CONTACT: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS
RECORD EARNINGS OF $197 MILLION IN THIRD QUARTER,
UP 156 PERCENT FROM A YEAR AGO
NEW YORK, September 30, 1997--Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported record net income of $197 million, or $1.30 per common share, for the
third quarter ended August 31, 1997. Net income increased by 156 percent over
the $77 million reported for the third quarter of fiscal 1996. Earnings per
share increased by 117 percent from $0.60 in the year-ago quarter.
For the first nine months of fiscal 1997, net income was a record $462 million,
an increase of 60 percent from $289 million in net income for the first nine
months of fiscal 1996.
"This was a terrific quarter for Lehman Brothers," said Richard S. Fuld, Jr.,
Chairman and Chief Executive Officer. "We saw across-the-board strength in all
our major businesses -- equities, fixed income and investment banking. The
usual summer lull in underwriting, M&A, and trading never materialized."
- more -
<PAGE>
Mr. Fuld also noted that the latest quarter builds on the record performance
Lehman Brothers posted over the first half of fiscal 1997, resulting in the
highest net income Lehman Brothers has recorded for the first nine months of a
fiscal year since it became a public company in 1994. In fact, earnings for the
first nine months of fiscal 1997 surpassed the Firm's record $416 million in
earnings for the full 12 months of fiscal 1996.
Net revenues (total revenues less interest expense) for the third quarter were
$1.071 billion, an increase of 48 percent from $722 million in the third quarter
of fiscal 1996. Mr. Fuld noted that the increase in net revenues reflected
particular strength in a number of strategic, higher margin businesses on which
Lehman Brothers is focusing, including the Firm's global merger and acquisition
advisory business, equity underwriting, merchant banking, and mortgage and real
estate activities.
For the first nine months of fiscal 1997, net revenues were $2.850 billion,
an increase of 20 percent from $2.376 billion in the fiscal 1996 first nine
months.
Non-interest expenses for the quarter were $790 million. Non-personnel expenses
for the same period were $247 million, an increase of 3 percent from $240
million in the previous fiscal year's third quarter, and down from $249 million
in the second quarter of fiscal 1997. Compensation and benefits as a percentage
of net revenues remained at 50.7 percent for the 10th successive quarter.
For the first nine months of fiscal 1997, non-interest expenses were $2.178
billion. Non-personnel expenses were $733 million, compared with $729 million in
the first nine months of fiscal 1996.
For the fiscal 1997 third quarter, the Firm's pre-tax margin was 26.2 percent,
compared with 16 percent in the third quarter of fiscal 1996. Return on common
equity was 20.5 percent for the quarter ended August 31, 1997, compared with 9
percent for the third quarter of 1996. For the first nine months of fiscal 1997,
the Firm's pre-tax margin was 23.6 percent, compared with 18.6 percent for the
first nine months of fiscal 1996; for the same period, return on common equity
was 16.5 percent, compared with 11.5 percent in fiscal 1996.
The discussion of the Firm's third quarter and year-to-date return on common
equity excludes the effect of a special preferred dividend payable to American
Express Company and to Nippon Life Insurance Company at fiscal year end 1997.
American Express and Nippon Life are entitled to receive an annual
non-cumulative preferred dividend equal to 50 percent of the amount by which the
Firm's net income for the full fiscal year exceeds $400 million, up to a maximum
of $50 million per year, through 2002. Including the effect of the dividend, the
Firm's return on common equity for the third quarter of fiscal 1997 is 17.2
percent.
<PAGE>
As of August 31, 1997, Lehman Brothers stockholders' equity was $4.303 billion,
and total capital (stockholders' equity and long-term debt) was $23.207 billion.
Book value per common share was $31.86.
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>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
Three Months Ended Percentage of
August 31 August 31 Dollar Change
1997 1996 Inc/(Dec)
-------------- ------------- -------------
<CAPTION>
<S> <C> <C> <C>
Revenues:
Principal transactions $ 389 $ 303 28%
Investment banking 396 237 67
Commissions 111 77 44
Interest and dividends 3,554 2,964 20
Other 19 4 #
------- --------
Total revenues 4,469 3,585 25
Interest expense 3,398 2,863 19
----- -----
Net revenues 1,071 722 48
----- ------
Non-interest expenses:
Compensation and benefits 543 366 48
Brokerage, commissions and clearance fees 54 62 (13)
Professional services 43 38 13
Communications 35 35 -
Occupancy and equipment 35 37 (5)
Business development 25 23 9
Depreciation and amortization 22 22 -
Other 33 23 43
------- -------
Total non-interest expenses 790 606 30
------ ------
Income before taxes 281 116 #
Provision for income taxes 84 39 #
------ -------
Net income $ 197 $ 77 #
====== =======
Net income applicable to common stock $ 160 $ 71 #
====== =======
Average common and common
equivalent shares outstanding 122.4 117.2
===== =====
Earnings per common share $1.30 $0.60
===== =====
</TABLE>
# denotes greater than 100%
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Nine Months Ended Percentage of
August 31 August 31 Dollar Change
1997 1996 Inc/(Dec)
-------------- ------------- -------------
Revenues:
Principal transactions $1,061 $1,114 (5)%
Investment banking 910 671 36
Commissions 299 267 12
Interest and dividends 9,931 8,369 19
Other 73 27 #
-------- --------
Total revenues 12,274 10,448 17
Interest expense 9,424 8,072 17
------ -----
Net revenues 2,850 2,376 20
------ -----
Non-interest expenses:
Compensation and benefits 1,445 1,205 20
Brokerage, commissions and clearance fees 172 176 (2)
Professional services 131 111 18
Communications 105 114 (8)
Occupancy and equipment 104 114 (9)
Business development 76 75 1
Depreciation and amortization 65 68 (4)
Other 80 71 13
------- ------
Total non-interest expenses 2,178 1,934 13
----- -----
Income before taxes 672 442 52
Provision for income taxes 210 153 37
------ -------
Net income $ 462 $ 289 60
====== =======
Net income applicable to common stock $ 412 $ 265 55
====== =======
Average common and common
equivalent shares outstanding 120.4 116.3
===== =====
Earnings per common share $3.42 $2.28
===== =====
</TABLE>
# denotes greater than 100%
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
Quarters Ended
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
8/31/97 5/31/97 2/28/97 11/30/96 8/31/96 5/31/96
Income Statement
Net Revenues $1,071 $ 854 $ 925 $1,068 $722 $833
Non-Interest Expenses:
Compensation and Benefits 543 433 469 542 366 422
Nonpersonnel Expenses (a) 247 249 237 247 240 242
Net Income from Operations
Excluding Special Items 197 121 144 177 77 108
Special Charges (after-tax):
Severance charge (50)
Net Income 197 121 144 127 77 108
Net Income Applicable to
Common Stock 160 114 138 113 71 102
Earnings per Common Share $1.30 $0.95 $1.16 $0.96 $0.60 $0.89
Financial Ratios (%) (b)
Return on Common Equity
(annualized) 20.5 12.8 16.1 20.6 9.0 13.4
Pretax Operating Margin 26.2 20.2 23.7 26.1 16.0 20.2
Compensation & Benefits/
Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7
Effective Tax Rate (c) 30.0 30.0 34.0 36.7 33.6 36.0
Balance Sheet
Total Assets $149,000 $145,118 $149,493 $128,596 $125,666 $133,725
Total Assets Excluding
Matched Book (d) 106,000 105,025 114,474 96,256 90,216 89,864
Common Stockholders' Equity (e) 3,795 3,630 3,504 3,366 3,233 3,058
Total Stockholders' Equity 4,303 4,138 4,012 3,874 3,741 3,566
Total Capital (long-term debt
plus
stockholders' equity) 23,207 22,083 21,308 19,796 17,955 17,135
Book Value per Common Share (f) 31.86 30.67 29.76 28.84 27.74 27.29
Other Data (#s)
Employees 8,190 7,788 7,602 7,556 7,762 7,794
Common Stock Outstanding 101,939,516 101,541,385 101,263,173 100,449,144 100,027,645 100,398,499
Average Common and Common
Equivalent Shares Outstanding 122,363,228 120,420,733 118,460,215 116,947,549 117,205,775 114,788,688
</TABLE>
(a) Excludes special items of $84 million relating to severance in the quarter
ended November 30, 1996.
(b) Financial ratios exclude the severance charge in the quarter ended November
30, 1996 and the dividend on the Company's Redeemable Voting Preferred
Stock in the quarters ended August 31, 1997 and November 30, 1996.
(c) The effective tax rate, including the severance charge was 34.9% for the
quarter ended November 30, 1996.
(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, 1996.
(f) This calculation includes restricted stock units granted under the Lehman
Stock Award Programs included in stockholders'equity.
