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 19, 1999
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 19, 1999 Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its first quarter 1999 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 1999 Earnings
99.2 Consolidated Statement of Income
(Three Months Ended February 28, 1999)
(Preliminary and Unaudited)
99.3 Selected Statistical Information
<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/ John L. Cecil
John L. Cecil
Chief Financial Officer
(Principal Financial Officer)
Date: March 19, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to First Quarter 1999 Earnings
Exhibit 99.2 Consolidated Statement of Income
(Three Months Ended February 28, 1999)
(Preliminary and Unaudited)
Exhibit 99.3 Selected Statistical Information
Exhibit 99.1
[OBJECT 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 $211 MILLION,
UP 13% FROM A YEAR AGO
Firm Posts Second Best Quarter Ever
NEW YORK, March 19, 1999 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported net income of $211 million, or $1.57 per common share (diluted), for
the first quarter ended February 28, 1999. Net income increased by 13 percent
over the $187 million reported for the first quarter of fiscal 1998. Net income
per share increased from $1.44 (diluted) in the year-ago quarter. The results
for the fiscal 1999 first quarter were the second best in the Firm's history.
"The first quarter was a very good one for Lehman Brothers," said Richard S.
Fuld, Jr., Chairman and Chief Executive Officer. "Across the board, our
businesses performed well, with fixed income and equities posting particularly
strong results. The factors that contributed to this solid start in fiscal 1999
included continued strong performances by high margin businesses like equities
and M&A, a tight rein on expenses, and a diligent
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<PAGE>
First Quarter 1999/page 2
focus on risk management."
Net revenues (total revenues less interest expense) for the first quarter were
$1.118 billion, an increase of 7 percent from $1.045 billion in the first
quarter of fiscal 1998. The revenue total was also the second highest the Firm
has ever posted. Mr. Fuld noted that the revenue gains in the first quarter
reflected significant increases in the Firm's institutional customer flow
activities across most fixed income and equity products, and significant
contributions from M&A advisory. He pointed out that the Firm priced a number of
notable equity offerings in February, including three high profile
Internet-related initial public offerings. He also noted that the Firm's forward
equity underwriting calendar had grown to almost $10 billion of filed and
yet-to-be-filed transactions.
Non-interest expenses for the quarter were $809 million, compared with $770
million in the fiscal 1998 first quarter. Nonpersonnel expenses in the fiscal
1999 quarter were $242 million, essentially unchanged from the previous year's
first quarter ($240 million), despite continued investments in a number of key
strategic businesses and increased technology expenditures related to the Year
2000. Reflecting the Firm's continued successful focus on expense management,
nonpersonnel expenses as a percentage of net revenues decreased in the quarter
to 21.7 percent from 23 percent a year ago. Compensation and benefits as a
percentage of net revenues remained at 50.7 percent for the 16th successive
quarter.
For the 1999 first quarter, the Firm's pre-tax operating margin was 27.6
percent, compared with 26.3 percent in the fiscal year-ago first quarter. Return
on common equity was 17.2 percent for the quarter ended February 28, 1999,
compared with 17.6 percent a year ago, as the Firm's average common equity
increased by 13 percent.
As of February 28, 1999, Lehman Brothers stockholders' equity and trust
preferred securities totaled $5.96 billion and total capital (stockholders'
equity, trust preferred
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<PAGE>
First Quarter 1999/page 3
securities, and long-term debt) was $32.7 billion. Mr. Fuld noted that the
Firm's total capital has increased by approximately $4 billion since the end of
the fiscal 1998 first quarter. At February 28, 1999, the Firm's net leverage -
the ratio of net assets to common and preferred equity - was 20.4X, down from
26.5X at the end of last year's first quarter. Book value per common share was
$38.72.
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
Exhibit 99.2
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Percentage of
February 28 February 28 Dollar Change
1999 1998 Inc/(Dec)
-------------- ------------- ---------------
Revenues:
<S> <C> <C> <C>
Principal transactions $526 $423 24%
Investment banking 321 348 (8)
Commissions 146 117 25
Interest and dividends 3,581 3,674 (3)
Other 17 18 (6)
------- -------
Total revenues 4,591 4,580
Interest expense 3,473 3,535 (2)
----- -----
Net revenues 1,118 1,045 7
----- -----
Non-interest expenses:
Compensation and benefits 567 530 7
Technology and communications 82 81 1
Brokerage and clearance 58 56 4
Occupancy 28 29 (3)
Business development 28 25 12
Professional fees 22 24 (8)
Other 24 25 (4)
------ --------
Total non-interest expenses 809 770 5
----- -------
Income before taxes and dividends
on trust preferred securities 309 275 12
Provision for income taxes 96 88 9
Dividends on trust preferred securities 2 ____ #
-------
Net income $211 $187 13
==== ====
Net income applicable to common stock $198 $180 10
==== ====
Average shares
Basic 121.9 120.6
===== =====
Diluted 125.8 124.8
===== =====
Earnings per common share
Basic $1.62 $1.49
===== =====
Diluted $1.57 $1.44
===== =====
</TABLE>
# denotes greater than 100%
Exhibit 99.3
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Twelve
Quarters Ended Months
---------------- -------------- --------------- -------------- -------------- Ended
2/28/99 11/30/98 8/31/98 5/31/98 2/28/98 11/30/98
---------------- -------------- --------------- -------------- -------------- --------------
Income Statement
<S> <C> <C> <C> <C> <C> <C>
Net Revenues $1,118 $665 $930 $1,473 $1,045 $4,113
Non-Interest Expenses:
Compensation and Benefits 567 337 472 747 530 2,086
Nonpersonnel Expenses 242 234 251 250 240 975
Net Income 211 74 151 324 187 736
Net Income Applicable to
Common Stock 198 62 139 268 180 649
Earnings per Common Share (a)
Basic $1.62 $0.51 $1.15 $2.22 $1.49 $5.37
Diluted $1.57 $0.51 $1.10 $2.12 $1.44 $5.19
Financial Ratios (%)
Return on Common Equity
(annualized) (b) 17.2 5.6 13.0 29.9 17.6 16.3
Return on Common Equity
(annualized) (c) 17.2 5.6 13.0 25.2 17.6 15.2
Pretax Operating Margin 27.6 14.1 22.3 32.4 26.3 25.6
Compensation & Benefits/
Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7
Effective Tax Rate 31.0 20.5 27.0 32.0 32.0 30.0
Balance Sheet
Total Assets $179,300 $153,890 $191,074 $179,067 $175,643
Total Assets Excluding
Matched Book (d) 121,900 111,509 133,787 130,140 124,225
Common Stockholders' Equity 4,731 4,505 4,391 4,326 4,175
Total Stockholders' Equity + Trust 5,084
Preferred Securities 5,964 5,413 5,349 4,683
Total Capital (e) 32,682 32,754 33,730 31,929 28,597
Book Value per Common Share (f) 38.72 37.06 36.35 35.93 34.56
Other Data (#s)
Employees 8,695 8,873 8,839 8,387 8,314
Common Stock Outstanding 118,977,746 113,657,877 116,673,240 117,114,203 118,551,437
Average Shares
Basic 121,942,892 120,726,366 121,523,227 120,633,663 120,638,144 120,909,920
Diluted 125,776,277 122,527,953 126,222,483 126,301,259 124,797,348 24,991,831
</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) Return on common equity calculated using net income before adjusting for
special preferred dividends.
(c) Return on common equity calculated using net income after adjusting for
special preferred dividends.
(d) Matched book is defined as the lower of securities purchased under
agreements to resell or securities sold under agreements to repurchase.
(e) Total capital includes long-term debt and stockholders' equity, as well as,
Trust Preferred Securities, where applicable.
(f) This calculation includes restricted stock units granted under the Lehman
Stock Award Programs included in stockholders' equity.
