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 25, 1998
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
First Quarter Earnings
On March 25, 1998, Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its first quarter 1998 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 1998
Earnings
99.2 Consolidated Statement of Operations
(Three Months Ended February 28, 1998)
(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 25, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No Exhibit
Exhibit 99.1 Press Release Relating to
First Quarter 1998 Earnings
Exhibit 99.2 Consolidated Statement of Operations
(Three Months Ended February 28, 1998)
(Preliminary and Unaudited)
Exhibit 99.3 Selected Statistical Information
<PAGE>
Exhibit 99.1
[GRAPHIC OMITTED]
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 $187 MILLION,
UP 30 PERCENT FROM A YEAR AGO
NEW YORK, March 25, 1998 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported net income of $187 million, or $1.44 per common share (diluted), for
the first quarter ended February 28, 1998. Net income increased by 30 percent
over the $144 million reported for the first quarter of fiscal 1997. Net income
per share increased by 24 percent from $1.16 (diluted) in the year-ago quarter.
On an earnings-per-share basis, the fiscal 1998 first quarter was the best in
the Firm's history.
"The first quarter was another excellent one for Lehman Brothers," said Richard
S. Fuld, Jr., Chairman and Chief Executive Officer. "Despite seasonal lulls in
trading and underwriting that extended well into January, the full quarter
reflected the across-the-board strength we have seen in our major businesses for
the past year-and-a-half. The Firm's earnings momentum and profitability
increased significantly throughout the quarter."
- more -
<PAGE>
First Quarter 1998/page 2
Net revenues (total revenues less interest expense) for the first quarter were
$1.045 billion, an increase of 13 percent from $925 million in the first quarter
of fiscal 1997. Mr. Fuld noted that the Firm's revenue gains in the first
quarter reflected continued strong performance in a number of its higher-margin
businesses, such as mergers and acquisition advisory, equity trading,
derivatives, mortgages and real estate, and high yield trading and origination.
Non-interest expenses for the quarter were $770 million, compared with $706
million in the fiscal 1997 first quarter. Nonpersonnel expenses in the fiscal
1998 quarter were $240 million, an increase of 1.3 percent from the previous
year's first quarter. Reflecting the Firm's continued successful focus on
expense management, nonpersonnel expenses as a percentage of net revenues
decreased to 23 percent from 25.6 percent a year ago. Compensation and benefits
as a percentage of net revenues remained at 50.7 percent for the 12th successive
quarter.
For the 1998 first quarter, the Firm's pre-tax operating margin was 26.3
percent, compared with 23.7 percent in the fiscal year-ago first quarter. Return
on common equity increased to 17.6 percent for the quarter ended February 28,
1998, compared with 16.1 percent a year ago. For all of fiscal 1997, pre-tax
operating margin was 24.2 percent; return on common equity was 17 percent.
As of February 28, 1998, Lehman Brothers stockholders' equity was $4.683 billion
and total capital (stockholders' equity and long-term debt) was $28.597 billion.
Book value per common share was $34.56.
<PAGE>
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.
# # #
<PAGE>
Exhibit 99.2
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Percentage of
February 28 February 28 Dollar Change
1998 1997 Inc/(Dec)
-------------- ------------- -------------
Revenues:
<S> <C> <C> <C>
Principal transactions $ 423 $ 346 22%
Investment banking 348 240 45
Commissions 117 97 21
Interest and dividends 3,674 3,278 12
Other 18 38 (53)
-------- --------
Total revenues 4,580 3,999 15
Interest expense 3,535 3,074 15
----- -----
Net revenues 1,045 925 13
------ ------
Non-interest expenses:
Compensation and benefits 530 469 13
Brokerage, commissions and clearance fees 54 57 (5)
Professional services 42 41 2
Occupancy and equipment 36 35 3
Communications 36 34 6
Business development 26 25 4
Depreciation and amortization 22 22
Other 24 23 4
------- -------
Total non-interest expenses 770 706 9
------ ------
Income before taxes 275 219 26
Provision for income taxes 88 75 17
------- -------
Net income $ 187 $ 144 30
====== ======
Net income applicable to common stock $ 180 $ 138 30
====== ======
Average shares
Basic 120.6 117.0
===== =====
Diluted 124.8 119.1
===== =====
Earnings per common share
Basic $ 1.49 $ 1.18
====== ======
Diluted $ 1.44 $ 1.16
====== ======
</TABLE>
<PAGE>
Exhibit 99.3
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarters Ended Twelve Months
2/28/98 11/30/97 8/31/97 5/31/97 2/28/97 1997
------- -------- ------- ------- ------- ----
Income Statement
<S> <C> <C> <C> <C> <C> <C>
Net Revenues $1,045 $1,023 $1,071 $ 854 $ 925 $3,873
Non-Interest Expenses:
Compensation and Benefits 530 519 543 433 469 1,964
Nonpersonnel Expenses 240 239 247 249 237 972
Net Income 187 185 197 121 144 647
Net Income Applicable to
Common Stock 180 160 160 114 138 572
Earnings per Common Share (a)
Basic $1.49 $1.34 $1.34 $0.97 $1.18 $4.84
Diluted $1.44 $1.30 $1.30 $0.95 $1.16 $4.72
Financial Ratios (%) (b)
Return on Common Equity
(annualized) 17.6 18.3 20.5 12.8 16.1 17.0
Pretax Operating Margin 26.3 25.9 26.2 20.2 23.7 24.2
Compensation & Benefits/
Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7
Effective Tax Rate 32.0 30.0 30.0 30.0 34.0 30.9
Balance Sheet
Total Assets $176,000 $151,705 $147,894 $145,118 $149,493
Total Assets Excluding
Matched Book (c) 124,000 108,099 104,626 105,025 114,474
Common Stockholders' Equity 4,175 4,015 3,795 3,630 3,504
Total Stockholders' Equity 4,683 4,523 4,303 4,138 4,012
Total Capital (long-term debt
plus stockholders' equity) 28,597 24,784 23,207 22,083 21,308
Book Value per Common Share (d) 34.56 33.39 31.86 30.67 29.76
Other Data (#s)
Employees 8,314 8,340 8,190 7,788 7,602
Common Stock Outstanding (e) 118,551,437 116,612,074 101,939,516 101,541,385 101,263,173
Average Shares
Basic 120,638,144 118,976,492 118,722,434 118,009,833 116,994,151 118,162,896
Diluted 124,797,348 123,003,138 122,363,228 120,420,733 119,085,890 121,064,929
</TABLE>
(a) Effective December 1997, basic and diluted earnings per share replaced the
primary and fully diluted calculations in accordance with Statement of
Financial Accounting Standards No. 128.
(b) Financial ratios exclude the severance charge and the dividend on the
Company's Redeemable Voting Preferred Stock.
(c) Matched book is defined as the lower of securities purchased under
agreements to resell or securities sold under agreements to repurchase.
(d) This calculation includes restricted stock units granted under the
Lehman Stock Award Programs included in stockholders' equity.
(e) The increase at 11/30/97 represents the establishment of a trust to provide
common stock voting rights to employees who hold restricted stock units.
The establishment of the trust did not impact the total number of shares
used in the computation of earnings per common share.
