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): January 6, 2000
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
Fourth Quarter Earnings
On January 6, 2000 Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its fourth 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 Fourth Quarter 1999 Earnings
99.2 Consolidated Statement of Income
(Three Months Ended November 30, 1999)
(Preliminary and Unaudited)
99.3 Consolidated Statement of Income
(Twelve Months ended November 30, 1999)
(Preliminary and Unadudited)
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/ John L. Cecil
-------------------------
John L. Cecil
Chief Financial and
Administrative Officer
(Principal Financial Officer)
Date: January 6, 2000
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to
Fourth Quarter 1999 Earnings
Exhibit 99.2 Consolidated Statement of Income
(Three Months Ended November 30, 1999)
(Preliminary and Unaudited)
Exhibit 99.3 Consolidated Statement of Income
(Twelve Months ended November 30, 1999)
(Preliminary and Unadudited)
Exhibit 99.4 Selected Statistical Information
<PAGE>
[GRAPHIC OMITTED]
For Immediate Release Media Contact: William J. Ahearn
(212) 526-4379
Investor Contact: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS
RECORD 1999 EARNINGS OF $1.13 BILLION
UP 54% FROM 1998
Fourth Quarter Earnings Quadruple to $301 Million
NEW YORK, January 6, 2000 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported that net income was a record $1.13 billion for the full year of fiscal
1999, an increase of 54 percent from the $736 million of net income reported in
fiscal 1998. For the full year, earnings per common share increased 57 percent
to a record $8.15 (diluted), compared with $5.19 per share (diluted) in fiscal
1998.
For the quarter ended November 30, 1999, net income was $301 million, or $2.28
per common share (diluted), an increase of 307 percent from $74 million, or
$0.51 per share (diluted), reported in the fourth quarter of fiscal 1998.
"By any measure, this was a terrific year for Lehman Brothers," said Richard S.
Fuld, Jr.,
-- more --
<PAGE>
1999 Earnings/Page 2
Chairman and Chief Executive Officer. "This year's record results reflect how
far the Firm has come since becoming a public company five years ago.
Underscoring our position as a leading global investment bank, our earnings in
1999 represent a tenfold increase from our first year's net income level."
In addition to posting record net income, Lehman Brothers also posted record
revenues and return on equity for the full year of 1999. Mr. Fuld noted that
1999 marked the first year that the Firm has passed the billion-dollar level for
earnings, and the $5 billion-level for net revenues. He said that both the
quarterly and full-year results reflect a number of successes for the Firm,
including the successful diversification of its business mix, its global
expansion, and the effective management of both expenses and risk.
For the full year, Lehman Brothers posted record results in its investment
banking and capital markets businesses, including equities, fixed income, and
high net worth retail. The Firm also posted a record year in its European
operations.
For the full fiscal year, net revenues (total revenues less interest expense)
were $5.3 billion, an increase of 30 percent from $4.1 billion in fiscal 1998.
Net revenues for the fourth quarter were $1.4 billion, an increase of 112
percent from $665 million in the fourth quarter of fiscal 1998.
For the full 12 months of fiscal 1999, non-interest expenses were $3.7 billion.
Non-personnel expenses were $1 billion, compared with $975 million in the 1998
fiscal year. Non-interest expenses for the fourth quarter were $973 million.
Non-personnel expenses for the same period were $258 million, compared with $234
million in the previous fiscal year's fourth quarter, reflecting continued
investments in a number of key strategic businesses and increased technology
expenditures related to the Year 2000. Mr. Fuld noted that compensation and
benefits as a percentage of net revenues remained at 50.7
-- more --
<PAGE>
1999 Earnings/page 3
percent for the 19th successive quarter.
For the full year, the Firm's pre-tax margin was 31 percent, compared with 26
percent for the 12 months of fiscal 1998. Return on common equity was 22
percent, compared with 16 percent in fiscal 1998. For the fiscal 1999 fourth
quarter, the Firm's pre-tax margin was also 31 percent, compared with 14 percent
in the fourth quarter of fiscal 1998. Return on common equity was 22 percent for
the quarter ended November 30, 1999, compared with 6 percent for the fourth
quarter of fiscal 1998. Return on common equity is calculated before any
adjustments for special preferred dividends.
As of November 30, 1999, Lehman Brothers stockholders' equity and trust
preferred securities totaled $7 billion, and total capital (stockholders'
equity, trust preferred securities, and long-term debt) was $37.7 billion. Book
value per common share was $45.50.
As a result of the level of earnings Lehman Brothers attained in 1999 and 1998,
earnings per share calculations include the impact of a special preferred
dividend of $50 million paid to American Express Company and to Nippon Life
Insurance Company at year end. 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 mid-year 2002.
Lehman Brothers is a global investment bank with leadership positions in
corporate finance, advisory services, private equity, 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 Information Attached
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Percentage of
November 30 November 30 Dollar Change
1999 1998 Inc/(Dec)
-------------- ------------- ---------------
Revenues:
<S> <C> <C>
Principal transactions $ 623 $ 90
Investment banking 432 246
Commissions 186 135
Interest and dividends 3,453 3,307
Other 7 19
-------- -------
Total revenues 4,701 3,797
Interest expense 3,290 3,132
----- -----
Net revenues 1,411 665 112%
----- ------
Non-interest expenses:
Compensation and benefits 715 337
Technology and communications 85 73
Brokerage and clearance 57 57
Business development 31 29
Occupancy 32 27
Professional fees 33 30
Other 20 18
---- ----
Total non-interest expenses 973 571 70%
--- ---
Income before taxes and dividends
on trust preferred securities 438 94 366%
Provision for income taxes 122 20
Dividends on trust preferred securities 15 ____
------
Net income $ 301 $ 74 307%
===== =====
Net income applicable to common stock $ 292 $ 62 371%
===== =====
Earnings per common share
Basic $2.41 $0.51
===== =====
Diluted $2.28 $0.51
===== =====
</TABLE>
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Twelve Months Ended Percentage of
November 30 November 30 Dollar Change
1999 1998 Inc/(Dec)
-------------- ------------- ---------------
Revenues:
<S> <C> <C>
Principal transactions $ 2,341 $ 1,232
Investment banking 1,682 1,582
Commissions 651 513
Interest and dividends 14,251 16,542
Other 64 25
-------- --------
Total revenues 18,989 19,894
Interest expense 13,649 15,781
------ ------
Net revenues 5,340 4,113 30%
------- -------
Non-interest expenses:
Compensation and benefits 2,707 2,086
Technology and communications 327 316
Brokerage and clearance 232 239
Business development 122 109
Occupancy 116 113
Professional fees 115 109
Other 90 89
------- -------
Total non-interest expenses 3,709 3,061 21%
----- -----
Income before taxes and dividends
on trust preferred securities 1,631 1,052 55%
Provision for income taxes 457 316
Dividends on trust preferred securities 42 _____
----------
Net income $ 1,132 $ 736 54%
======= ======
Net income applicable to common stock $ 1,037 $ 649 60%
======= ======
Earnings per common share
Basic $8.53 $5.37
===== ===== =
Diluted $8.15 $5.19
===== ===== =
</TABLE>
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Twelve Months Quarters Ended
-------------------------- -------------------------------------------------------------
1999 1998 11/30/99 8/31/99 5/31/99 2/28/99 11/30/98
------------ ------------- ------------ ------------ ------------- ----------- ----------
Income Statement
<S> <C> <C> <C> <C> <C> <C> <C>
Net Revenues $5,340 $4,113 $1,411 $1,356 $1,455 $1,118 $665
Non-Interest Expenses:
Compensation and Benefits 2,707 2,086 715 688 738 567 337
Nonpersonnel Expenses 1,002 975 258 251 251 242 234
Net Income 1,132 736 301 290 330 211 74
Net Income Applicable to
Common Stock 1,037 649 292 279 268 198 62
Earnings per Common Share
Basic $8.53 $5.37 $2.41 $2.30 $2.19 $1.62 $0.51
Diluted $8.15 $5.19 $2.28 $2.20 $2.09 $1.57 $0.51
Financial Ratios (%)
Return on Common Equity
(annualized) (a) 21.8 16.3 21.6 22.1 26.3 17.2 5.6
Return on Common Equity
(annualized) (b) 20.8 15.2 21.6 22.1 22.1 17.2 5.6
Pretax Operating Margin 30.5 25.6 31.1 30.8 32.0 27.6 14.1
Compensation & Benefits/
Net Revenues 50.7 50.7 50.7 50.7 50.7 50.7 50.7
Effective Tax Rate 28.0 30.0 28.0 27.0 27.0 31.0 20.5
Balance Sheet
Total Assets $192,000 $202,149 $191,543 $179,305 $153,890
Total Assets Excluding Matched Book (c) 130,000 136,106 128,822 121,881 111,509
Common Stockholders' Equity 5,595 5,192 4,935 4,731 4,505
Total Stockholders' Equity + Trust
Preferred Securities 6,993 6,660 6,453 5,964 5,413
Total Capital (d) 37,684 36,517 34,915 32,682 32,754
Book Value per Common Share (e) 45.50 42.91 40.58 38.72 37.06
Other Data (#s)
Employees 8,893 8,729 8,511 8,695 8,873
Common Stock Outstanding 119,912,810 120,070,089 119,700,830 118,977,746 113,657,877
Average Shares
Basic 121,477,059 120,909,920 120,761,065 121,317,358 122,144,018 121,942,892 120,726,366
Diluted (f) 129,282,672 124,991,831 128,994,372 129,063,197 130,364,705 125,776,277 122,527,953
</TABLE>
(a) Return on common equity calculated using net income before adjusting for
special preferred dividends.
(b) Return on common equity calculated using net income after adjusting for
special preferred dividends.
(c) Matched book is defined as the lower of securities purchased under
agreements to resell or securities sold under agreements to repurchase.
(d) Total capital includes long-term debt and stockholders' equity, as well as,
Trust Preferred Securities, where applicable.
(e) This calculation includes restricted stock units granted under the Lehman
Stock Award Programs included in stockholders' equity.
(f) For the quarters ended November 30, August 31 and May 31, 1999, the assumed
conversion of Series A and B Convertible Preferred Stock into 2,118,396,
2,607,680 and 2,912,505 common shares had the effect of decreasing diluted
earnings per share by $0.01. For the year ended November 30, 1999 the assumed
conversion of Series A and B Convertible Preferred Stock into 2,779,737 common
shares had the effect of decreasing diluted earnings per share by $0.04.
