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 20, 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
Third Quarter Earnings
On September 20, 2000, Lehman Brothers Holdings Inc. (the "Registrant")
issued a press release with respect to its third quarter 2000 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 2000 Earnings
99.2 Consolidated Statement of Income
(Three Months Ended August 31, 2000)
(Preliminary and Unaudited)
99.3 Consolidated Statement of Income
(Nine Months Ended August 31, 2000)
(Preliminary and Unaudited)
99.4 Segment Net Revenue Information
(Three and Nine Months Ended August 31, 2000)
(Preliminary and Unaudited)
99.5 Selected Statistical Information
(Preliminary and Unaudited)
<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/ David Goldfarb
------------------------------------
David Goldfarb
Chief Financial Officer
(Principal Financial Officer)
Date: September 20, 2000
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.1 Press Release Relating to Third Quarter 2000 Earnings
Exhibit 99.2 Consolidated Statement of Income
(Three Months Ended August 31, 2000)
(Preliminary and Unaudited)
Exhibit 99.3 Consolidated Statement of Income
(Nine Months Ended August 31, 2000)
(Preliminary and Unaudited)
Exhibit 99.4 Segment Net Revenue Information
(Three and Nine Months Ended August 31, 2000)
(Preliminary and Unaudited)
Exhibit 99.5 Selected Statistical Information
(Preliminary and Unaudited)
<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
EARNINGS OF
$457 MILLION IN THIRD QUARTER, UP 58%
2 FOR 1 STOCK SPLIT ANNOUNCED
Posts Record Nine Months Earnings of $1.376 Billion, Up 66%
NEW YORK, Sept. 20, 2000 -- Lehman Brothers Holdings Inc. (NYSE: LEH) today
reported net income of $457 million, or $3.37 per common share (diluted), for
the third quarter ended August 31, 2000. Net income rose 58 percent from the
$290 million of net income the Firm reported in the third quarter of fiscal
1999, while net income per common share increased by 53 percent from $2.20 per
share a year ago. The quarter's performance represented the second-highest total
of quarterly earnings and net revenues that Lehman Brothers has ever posted.
The Firm also announced that its Board of Directors approved a two-for-one
common stock split. The stock split will be effected in the form of a 100%
common stock
-- more --
<PAGE>
Third Quarter Earnings/Page 2
dividend, payable October 20, 2000, to shareholders of record as of October 5,
2000. (Per share amounts have not been adjusted for the stock split.)
For the first nine months of fiscal 2000, net income was a record $1.376
billion, an increase of 66 percent from $830 million in net income for the first
nine months of fiscal 1999. In the first nine months of 2000, Lehman Brothers
earned more than it had in any full year since going public in 1994.
"By all measures, this was an extremely strong quarter for Lehman Brothers, even
though this is typically the time of year when business is at its slowest," said
Richard S. Fuld, Jr., Chairman and Chief Executive Officer. "Our excellent
performance this quarter is another confirmation that the Firm has built a
powerful franchise that can compete effectively and perform well across our
major business lines, in all markets, and in differing economic conditions."
Mr. Fuld, noting that the three quarters of 2000 represent the three best
quarters in the Firm's 150-year history, said that the planned stock split
underscored the sustained strength of the Firm's stock price.
Net revenues (total revenues less interest expense) for the third quarter were
$2.052 billion, an increase of 51 percent from $1.356 billion in the third
quarter of fiscal 1999. Mr. Fuld noted that the quarter was the second best the
Firm had ever posted in terms of net revenues, and reflected significant
strength in Lehman Brothers' investment banking and capital markets activities
globally. Within investment banking, M&A advisory revenues for the third quarter
were the highest the Firm ever posted, he said. Lehman Brothers' non-U.S.
activities accounted for approximately 38 percent of total net revenues, with
Europe representing approximately 31 percent.
-- more --
<PAGE>
Third Quarter Earnings/Page 3
For the first nine months of fiscal 2000, net revenues were a record $6.009
billion, an increase of 53 percent from $3.929 billion in the fiscal 1999 first
nine months.
"The third-quarter and nine-months revenues not only illustrate the balance
Lehman Brothers has achieved among its equity, fixed income and investment
banking businesses, but also show the financial and strategic potential of new
businesses the Firm has been building, including private equity and
high-net-worth activities," Mr. Fuld said.
Non-interest expenses for the third quarter were $1,379 million. Nonpersonnel
expenses for the same period were $312 million, compared with $251 million in
the previous fiscal year's third quarter. Nonpersonnel expenses as a percentage
of net revenues decreased in the quarter to 15.2 percent from 18.5 percent a
year ago. Compensation and benefits as a percentage of net revenues were 52
percent, unchanged from the fiscal 2000 first and second quarters, as the Firm
continued its aggressive growth plan in investment banking, equities, and in
Europe, as well as investing in information technology and e-commerce
activities.
For the fiscal 2000 third quarter, the Firm's pre-tax margin was 32.8 percent,
up from 30.8 percent in the third quarter of fiscal 1999. Return on common
equity was 27.5 percent for the quarter ended August 31, 2000, compared with
22.1 percent a year ago. For the first nine months of fiscal 2000, the Firm's
pre-tax margin was 33.7 percent, compared with 30.3 percent for the first nine
months of fiscal 1999; for the same period, return on common equity was 29.2
percent, compared with 21.9 percent in fiscal 1999. Return on common equity for
all periods is calculated using net income before adjusting for a special
preferred dividend.
As of August 31, 2000, Lehman Brothers stockholders' equity and trust
preferred
-- more --
<PAGE>
Third Quarter Earnings/Page 4
securities were $8.25 billion and total capital (stockholders' equity, trust
preferred, and long-term debt) was $43.7 billion. Book value per common share
was $55.16. At the end of the third quarter, Lehman Brothers' market
capitalization exceeded $17 billion.
Earnings per share calculations include the impact of a special preferred
dividend of $50 million in the first fiscal quarter of 2000 and the second
fiscal quarter of 1999. The dividend is expected to be paid to American Express
Company and to Nippon Life Insurance Company at fiscal 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 (NYSE: LEH), an innovator in global finance, focuses on serving
the financial needs of corporations, governments and municipalities,
institutional clients, and high-net-worth individuals worldwide. Founded in
1850, Lehman Brothers maintains leadership positions in equity and fixed income
sales, trading and research, investment banking, private equity, and private
client services. The Firm is headquartered in New York, London, and Tokyo and
operates in 44 offices around the world. For further information about Lehman
Brothers' services, products, and recruitment opportunities, visit our Web site
at www.lehman.com.
# # #
Financial Information Attached
<PAGE>
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
-------------------------------------
Aug 31 Aug 31 Dollar Change
2000 1999 Inc/(Dec)
<S> <C> <C>
Revenues:
Principal transactions $ 1,071 $ 492
Investment banking 582 499
Commissions 234 151
Interest and dividends 5,461 3,590
Other 11 33
----------------- ------------------
Total revenues 7,359 4,765
Interest expense 5,307 3,409
----------------- ------------------
Net revenues 2,052 1,356 51%
----------------- ------------------
Non-interest expenses:
Compensation and benefits 1,067 688
Technology and communications 80 79
Brokerage and clearance fees 68 56
Business development 52 33
Professional fees 53 31
Occupancy 35 29
Other 24 23
----------------- ------------------
Total non-interest expenses 1,379 939 47%
----------------- ------------------
Income from operations
before taxes and dividends on
trust preferred securities 673 417
Provision for income taxes 202 112
Dividends on trust preferred securities 14 15
----------------- ------------------
Net income 457 290 58%
Preferred stock dividends 13 11
----------------- ------------------
Net income applicable to
common stock $ 444 $ 279 59%
================= ==================
Earnings per common share
Basic $ 3.67 $ 2.30
================= ==================
Diluted $ 3.37 $ 2.20
================= ==================
</TABLE>
<PAGE>
EXHIBIT 99.3
LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Percentage Of
-------------------------------------
Aug 31 Aug 31 Dollar Change
2000 1999 Inc/(Dec)
<S> <C> <C>
Revenues:
Principal transactions $ 3,055 $ 1,718
Investment banking 1,664 1,250
Commissions 690 465
Interest and dividends 14,512 10,798
Other 113 57
----------------- -----------------
Total revenues 20,034 14,288
Interest expense 14,025 10,359
----------------- -----------------
Net revenues 6,009 3,929 53%
----------------- -----------------
Non-interest expenses:
Compensation and benefits 3,125 1,992
Technology and communications 250 242
Brokerage and clearance fees 188 175
Business development 128 91
Professional fees 128 82
Occupancy 97 85
Other 68 70
----------------- -----------------
Total non-interest expenses 3,984 2,737 46%
----------------- -----------------
Income from operations
before taxes and dividends on
trust preferred securities 2,025 1,192
Provision for income taxes 607 334
Dividends on trust preferred securities 42 28
----------------- -----------------
Net income 1,376 830 66%
Preferred stock dividends 83 85
----------------- -----------------
Net income applicable to
common stock $ 1,293 $ 745 74%
================= =================
Earnings per common share
Basic $ 10.54 $ 6.12
================= ==================
Diluted $ 9.81 $ 5.86
================= ==================
</TABLE>
<PAGE>
EXHIBIT 99.4
LEHMAN BROTHERS HOLDINGS INC.
SEGMENT NET REVENUE INFORMATION
(Preliminary and Unaudited)
(In millions)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- ------------------------------------
Aug 31 Aug 31 Aug 31 Aug 31
2000 1999 2000 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Investment Banking:
Advisory 227 140 534 375
Equity 194 116 682 301
Debt 150 239 419 563
---------------- ---------------- ---------------- ----------------
Total 571 495 1,635 1,239
---------------- ---------------- ---------------- ----------------
Capital Markets:
Equity 725 466 2,300 1,105
Fixed Income 557 234 1,403 1,160
---------------- ---------------- ---------------- ----------------
Total 1,282 700 3,703 2,265
---------------- ---------------- ---------------- ----------------
Client Services:
Private Client 186 165 638 420
Private Equity 13 (4) 33 5
---------------- ---------------- ---------------- ----------------
Total 199 161 671 425
---------------- ---------------- ---------------- ----------------
Total Lehman 2,052 1,356 6,009 3,929
================ ================ ================ ================
</TABLE>
<PAGE>
EXHIBIT 99.5
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarters Ended
-------------------------------------------------- --------------------------------------------------------------------------------
------------ ------------ -------------- ------------- ------------ -------------
8/31/00 5/31/00 2/29/00 11/30/99 8/31/99 5/31/99
-------------------------------------------------- ------------ ------------ -------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------
Income Statement
--------------------------------------------------
Net Revenues $ 2,052 $ 1,755 $ 2,202 $ 1,411 $ 1,356 $ 1,455
--------------------------------------------------
Non-Interest Expenses:
--------------------------------------------------
Compensation and Benefits 1,067 912 1,145 715 688 738
--------------------------------------------------
Nonpersonnel Expenses 312 285 263 258 251 251
--------------------------------------------------
Net Income 457 378 541 301 290 330
--------------------------------------------------
Net Income Applicable to
Common Stock 444 366 482 292 279 268
--------------------------------------------------
Earnings per Common Share
--------------------------------------------------
Basic $3.67 $2.97 $3.92 $2.41 $2.30 $2.19
Diluted $3.37 $2.78 $3.69 $2.28 $2.20 $2.09
--------------------------------------------------
--------------------------------------------------
Financial Ratios (%)
--------------------------------------------------
Return on Common Equity
--------------------------------------------------
(annualized) (a) 27.5 24.0 36.8 21.6 22.1 26.3
--------------------------------------------------
Return on Common Equity
(annualized) (b) 27.5 24.0 33.3 21.6 22.1 22.1
--------------------------------------------------
Pretax Operating Margin 32.8 31.8 36.1 31.1 30.8 32.0
--------------------------------------------------
Compensation & Benefits/
--------------------------------------------------
Net Revenues 52.0 52.0 52.0 50.7 50.7 50.7
--------------------------------------------------
Effective Tax Rate 30.0 29.7 30.1 28.0 27.0 27.0
--------------------------------------------------
--------------------------------------------------
Balance Sheet
--------------------------------------------------
Total Assets $ 228,000 $ 233,433 $ 213,889 $ 192,244 $ 202,149 $ 191,543
--------------------------------------------------
Total Assets Excluding Matched Book (c) 155,000 149,691 137,125 130,022 136,106 128,822
--------------------------------------------------
Common Stockholders' Equity 6,690 6,246 5,986 5,595 5,192 4,935
--------------------------------------------------
Total Stockholders' Equity + Trust Preferred
Securities 8,250 7,806 7,296 6,993 6,660 6,453
--------------------------------------------------
Total Capital (d) 43,661 41,383 39,610 37,684 36,517 34,915
--------------------------------------------------
Book Value per Common Share (e) 55.16 51.19 48.79 45.50 42.91 40.58
--------------------------------------------------
--------------------------------------------------
Other Data (#s)
--------------------------------------------------
Employees 10,512 9,343 9,026 8,893 8,729 8,511
--------------------------------------------------
Common Stock Outstanding 121,111,536 121,708,431 120,150,218 119,912,810 120,070,089 119,700,830
--------------------------------------------------
Average Shares
Basic 121,129,367 123,172,650 123,027,441 120,761,065 121,317,358 122,144,018
Diluted (f) (g) 132,521,562 132,632,845 131,205,984 128,994,372 129,063,197 130,364,705
--------------------------------------------------
--------------------------------------------------
</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, Trust Preferred Securities and
stockholders' equity.
(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.
(g) For the quarters ended August 31 and May 31, 2000, the assumed conversion
of Series A and B convertible Preferred Stock into 1,219,188, common shares
had the effect of decreasing diluted earnings per share by $0.01. For the
quarter ended February 29, 2000, the assumed conversion of Series A and B
convertible Preferred Stock into 1,219,302 common shares had the effect of
decreasing diluted earnings per share by $0.02.
