LEHMAN BROTHERS HOLDINGS INC.
3 WORLD FINANCIAL CENTER NEW YORK, NY 10285-1000
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 26, 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
Second Quarter Earnings
On June 26, 1997, Lehman Brothers Holdings Inc. (the "Registrant") issued a
press release with respect to its second 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 Second Quarter 1997
Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended May 31, 1997)
(Preliminary and Unaudited)
99.3 Consolidated Statement of Operations
(Six Months ended May 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: June 26, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
Second Quarter 1997 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended May 31, 1997)
(Preliminary and Unaudited)
Exhibit 99.3 Consolidated Statement of Operations
(Six Months Ended May 31, 1997)
(Preliminary and Unaudited)
Exhibit 99.4 Selected Statistical Information
<PAGE>
[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
SECOND QUARTER EARNINGS OF $121 MILLION,
UP 12 PERCENT FROM A YEAR AGO
NEW YORK, June 26, 1997 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported net income of $121 million, or $0.95 per common share, for the second
quarter ended May 31, 1997. Net income increased by 12 percent over the $108
million reported for the second quarter of 1996. Earnings per share increased by
7 percent from $0.89 in the year-ago quarter.
For the first six months of 1997, net income was a record $265 million, an
increase of 25 percent from $212 million in net income for the first half
of 1996.
"Despite an extremely difficult trading and underwriting environment in March
and April, the second quarter earnings reflect continued progress in building on
Lehman Brothers' position as a leading global investment bank," said Richard S.
Fuld, Jr., Chairman and Chief Executive Officer. "While our results were below
the strong levels of the 1997 first quarter, we still saw
<PAGE>
Second Quarter 1997/page 2
year-over-year improvement in revenues and earnings, which illustrates our
success in positioning the institution so that it can perform well even in the
volatile market conditions we experienced early in the quarter. Overall, the
first half of 1997 was a very good one for the Firm."
Net revenues (total revenues less interest expense) for the second quarter were
$854 million, an increase of 3 percent from $833 million in the second quarter
of 1996. Mr. Fuld noted that the increase in net revenues reflected particular
strength in a number of strategic, higher margin businesses that Lehman Brothers
is focusing on in 1997 and beyond. In particular, the Firm's global merger and
acquisition advisory business, merchant banking, equity derivatives, and
mortgage activities showed strength in the second quarter.
For the first six months of 1997, net revenues were $1.779 billion, an
increase of 8 percent from $1.654 billion in the 1996 first half.
Non-interest expenses for the quarter were $682 million. Nonpersonnel expenses
for the same period were $249 million, an increase of 3 percent from $242
million in the previous year's second quarter, and up from $237 million in the
first quarter of 1997, reflecting planned investments in a number of key
strategic businesses. Compensation and benefits as a percentage of net revenues
remained at 50.7 percent for the ninth successive quarter.
For the 1997 first half, non-interest expense was $1.388 billion.
Nonpersonnel expenses were $486 million, compared with $488 million in the
first six months of 1996.
For the 1997 second quarter, the Firm's pre-tax margin was 20.2 percent,
unchanged from the second quarter of 1996. Return on common equity was 12.8
percent for the quarter ended May
<PAGE>
Second Quarter 1997/page 3
31, 1997, compared with 13.4 percent for the second quarter of 1996. For the
first six months of 1997, the Firm's pre-tax margin was 22.0 percent, compared
with 19.7 percent for the first six months of 1996; for the same period, return
on common equity was 14.4 percent, compared with 13.0 percent in 1996.
As of May 31, 1997, Lehman Brothers stockholders' equity was $4.138 billion and
total capital (stockholders' equity and long-term debt) was $22.083 billion.
Book value per common share was $30.67.
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>
<CAPTION>
Three Months Ended Percentage of
May 31 May 31 Dollar Change
1997 1996 Inc/(Dec)
-------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Principal transactions $ 326 $ 398 (18)%
Investment banking 274 223 23
Commissions 91 94 (3)
Interest and dividends 3,099 2,749 13
Other 16 12 33
------- -------
Total revenues 3,806 3,476 9
Interest expense 2,952 2,643 12
----- -----
Net revenues 854 833 3
------ ------
Non-interest expenses:
Compensation and benefits 433 422 3
Brokerage, commissions and clearance fees 61 58 5
Professional services 47 39 21
Communications 36 38 (5)
Occupancy and equipment 34 37 (8)
Business development 26 25 4
Depreciation and amortization 21 22 (5)
Other 24 23 4
------- -------
Total non-interest expenses 682 664 3
------ ------
Income before taxes 172 169 2
Provision for income taxes 51 61 (16)
------- -------
Net income $ 121 $ 108 12
====== ======
Net income applicable to common stock $ 114 $ 102 12
====== ======
Average common and common
equivalent shares outstanding 120.4 114.8
===== =====
Earnings per common share $0.95 $0.89
===== =====
</TABLE>
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Six Months Ended Percentage of
May 31 May 31 Dollar Change
1997 1996 Inc/(Dec)
-------------- ------------- -------------
<S> <C> <C> <C>
Principal transactions $ 672 $ 811 (17)%
Investment banking 514 433 19
Commissions 188 190 (1)
Interest and dividends 6,377 5,405 18
Other 54 23 135
------- -------
Total revenues 7,805 6,862 14
Interest expense 6,026 5,208 16
------ -----
Net revenues 1,779 1,654 8
----- -----
Non-interest expenses:
Compensation and benefits 902 839 8
Brokerage, commissions and clearance fees 118 115 3
Professional services 88 73 21
Communications 70 78 (10)
Occupancy and equipment 69 77 (10)
Business development 51 52 (2)
Depreciation and amortization 43 46 (7)
Other 47 47
------- ------
Total non-interest expenses 1,388 1,327 5
----- -----
Income before taxes 391 327 20
Provision for income taxes 126 115 10
------ -------
Net income $ 265 $ 212 25
====== =======
Net income applicable to common stock $ 252 $ 195 29
====== =======
Average common and common
equivalent shares outstanding 119.4 115.9
===== =====
Earnings per common share $2.11 $1.68
===== =====
</TABLE>
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarters Ended
5/31/97 2/28/97 11/30/96 8/31/96 5/31/96 2/29/96
<S> <C> <C> <C> <C> <C> <C>
Income Statement
Net Revenues $ 854 $ 925 $1,068 $722 $833 $821
Non-Interest Expenses:
Compensation and Benefits 433 469 542 366 422 416
Nonpersonnel Expenses (a) 249 237 247 240 242 246
Net Income from Operations
Excluding Special Items 121 144 177 77 108 104
Special Charges (after-tax):
Severance charge (50)
Net Income 121 144 127 77 108 104
Net Income Applicable to
Common Stock 114 138 113 71 102 93
Earnings per Common Share $0.95 $1.16 $0.96 $0.60 $0.89 $0.79
Financial Ratios (%) (b)
Return on Common Equity
(annualized) 12.8 16.1 20.6 9.0 13.4 12.6
Pretax Operating Margin 20.2 23.7 26.1 16.0 20.2 19.2
Compensation & Benefits/
Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7
Effective Tax Rate (c) 30.0 34.0 36.7 33.6 36.0 34.0
Balance Sheet
Total Assets $145,000 $149,493 $128,596 $125,666 $133,725 $128,702
Total Assets Excluding
Matched Book (d) 105,000 114,474 96,256 90,216 89,864 84,608
Common Stockholders' Equity (e) 3,630 3,504 3,366 3,233 3,058 3,015
Total Stockholders' Equity (f) 4,138 4,012 3,874 3,741 3,566 3,523
Total Capital (long-term debt
plus
stockholders' equity) 22,083 21,308 19,796 17,955 17,135 16,994
Book Value per Common Share (g) 30.67 29.76 28.84 27.74 27.29 26.41
f
Other Data (#s)
Employees 7,788 7,602 7,556 7,762 7,794 7,703
Common Stock Outstanding 101,541,385 101,263,173 100,449,144 100,027,645 100,398,499 102,443,232
Average Common and Common
Equivalent Shares Outstanding 120,420,733 118,460,215 116,947,549 117,205,775 114,788,688 116,932,697
</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 and the dividend on the
Company's Redeemable Voting Preferred Stock in the quarter ended 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) 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.
(g) This calculation includes restricted stock units granted under the Lehman
Stock Award Programs included in stockholders' equity.
