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Past Quarterly Earnings
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Fourth Quarter 2002
Lehman Brothers Reports Net Income Of $187
Million, Or $0.69 Per Common Share For The Fourth Quarter
Lehman Brothers Records Recently Announced Research
Analyst Settlement in Fourth Quarter 2002
NEW YORK, January 9, 2003 —
Lehman Brothers Holdings Inc. today announced that it will record
in its 2002 fourth quarter the recently announced settlement regarding
allegations of research analyst conflicts of interest. As such,
a pre-tax charge of $80 million ($56 million after-tax, and $0.21
per common share) will now be included in the Firm’s 2002 full year
results. This amends the previous
earnings announcement on December 19, 2002.
For the full year of fiscal 2002, the Firm will report
net income of $975 million, or $3.47 per common share (diluted)
compared to $1.26 billion, or $4.38 per common share (diluted) in
fiscal 2001. Fourth quarter 2002 net income will be $187 million,
or $0.69 per common share (diluted) compared to $130 million, or
$0.46 per common share (diluted) in the fourth quarter of 2001.
Although this settlement was agreed to subsequent to
the Firm’s fiscal year end and subsequent to the Firm’s
fourth quarter 2002 earnings release, it is appropriate and conservative
to account for it in fourth quarter 2002, based on accounting rules
governing this type of subsequent event.
Lehman Brothers (ticker symbol NYSE: LEH), an innovator
in global finance, serves 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 a network of offices around the world. For further information
about Lehman Brothers’ services, products, and recruitment opportunities,
visit our Web site at www.lehman.com.
Amended financial information and other data follows.
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LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
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Twelve Months
Ended
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Quarters Ended
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2002
|
2001
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11/30/02
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8/31/02
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5/31/02
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2/28/02
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11/30/01
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| Income Statement |
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| Net Revenues |
$6,155 |
$6,736 |
$1,539 |
$1,347 |
$1,663 |
$1,606 |
$1,203 |
Non-Interest
Expenses: |
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|
|
|
|
|
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Compensation
and Benefits |
3,139 |
3,437 |
785 |
687 |
848 |
819 |
615 |
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Nonpersonnel
Expenses |
1,517 |
1,424 |
400 |
391 |
379 |
347 |
345 |
| |
September 11, 2001
related (recoveries)/
expenses, net |
(108) |
127 |
(108) |
- |
- |
- |
127 |
| |
Other real estate
reconfiguration costs |
128 |
- |
128 |
- |
- |
- |
- |
| |
Regulatory settlement |
80 |
- |
80 |
- |
- |
- |
- |
| Net Income (a) |
975 |
1,255 |
187 |
194 |
296 |
298 |
130 |
Net Income Applicable
to
Common Stock |
906 |
1,161 |
176 |
183 |
285 |
262 |
119 |
Earnings per
Common Share (b) |
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Basic |
$3.69 |
$4.77 |
$0.72 |
$0.74 |
$1.16 |
$1.07 |
$0.49 |
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Diluted |
$3.47 |
$4.38 |
$0.69 |
$0.70 |
$1.08 |
$0.99 |
$0.46 |
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| Financial
Ratios (%) |
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Return on
Common Equity
(annualized) (c) |
11.2% |
15.9% |
8.6% |
8.9% |
14.1% |
13.4% |
6.3% |
Return on
Common Equity
(annualized, excluding the
special preferred dividends,
where applicable) (d) |
11.5% |
16.5% |
8.6% |
8.9% |
14.1% |
14.6% |
6.3% |
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Pretax Operating
Margin (e) |
22.7% |
26.0% |
16.5% |
20.0% |
26.2% |
27.4% |
9.6% |
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Compensation &
Benefits/Net
Revenues |
51.0% |
51.0% |
51.0% |
51.0% |
51.0% |
51.0% |
51.1% |
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| Effective Tax Rate
(f) |
26.3% |
25.0% |
20.7% |
22.6% |
29.0% |
29.0% |
(24.4)% |
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| Balance Sheet |
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| Total Assets |
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$260,000 |
$265,213 |
$267,787 |
$260,061 |
$247,816 |
Total Assets
Excluding
Matched Book (g) |
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165,000 |
159,879 |
173,671 |
168,850 |
164,538 |
Common Stockholders'
Equity |
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8,242 |
8,209 |
8,206 |
7,948 |
7,759 |
Total Stockholders'
Equity + Preferred
Securities Subject
to Mandatory
Redemption |
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9,652 |
9,619 |
9,616 |
9,358 |
9,169 |
| Total Capital (h) |
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48,329 |
48,530 |
46,259 |
47,343 |
47,470 |
| Net Leverage (i) |
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17.1x |
16.6x |
18.1x |
18.0x |
17.9x |
Book Value per
Common Share (j) |
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34.15 |
33.49 |
33.22 |
32.47 |
31.81 |
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| Other Data
(#s) |
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| Employees |
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12,343 |
12,980 |
12,694 |
12,851 |
13,090 |
Common Stock Outstanding
(in millions) |
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231.1 |
239.0 |
243.6 |
244.2 |
237.5 |
Weighted Average Shares
(in millions) |
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Basic |
245.4 |
243.1 |
243.9 |
246.7 |
245.8 |
245.3 |
241.9 |
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Diluted |
261.2 |
265.3 |
255.1 |
261.0 |
263.5 |
265.2 |
261.6 |
| (a) |
Fourth quarter
2002 net income includes a $128 million pre-tax charge ($82
million after tax) related to the reconfiguration of certain
of the Firm's global real estate, $108 million pretax gain ($60
million after tax) from September 11th related (recoveries)/expenses,
net and pre-tax charge of $80 million ($56 million after tax)
related to the Firm's regulatory settlement. Fourth quarter
2001 net income includes a $127 million pre-tax charge ($71
million after tax) for September 11th related (recoveries)/expenses,
net. |
| (b) |
For the year and quarter ended
November 30, 2002 basic EPS was reduced by $0.32, and fully
diluted EPS was reduced by $0.30 and $0.31, respectively, as
a result of the other real estate charge, September 11th related
(recoveries)/expenses, net and regulatory settlement charge.
For the year and quarter ended November 30, 2001 basic EPS was
reduced $0.29 and $0.30 and fully diluted EPS was reduced by
$0.26 and $0.27, respectively, as a result of September 11th
related (recoveries)/expenses, net. |
| (c) |
For the year and quarter
ended November 30, 2002, the Company’s return on common
equity was reduced by 1.0% and 3.7%, as a result of the other
real estate charge, September 11th related (recoveries)/expenses,
net and regulatory settlement charge. For the year and quarter
ended November 30, 2001, the Company’s return on common
equity was reduced by 1.0% and 3.7%, respectively as a result
of the September 11th related (recoveries)/expenses, net. |
| (d) |
Return on common equity calculated
using net income before adjusting for special preferred dividends
of $25 million in the first quarter of 2002 and $50 million
in the second quarter of 2001. These dividends have been excluded
on an adjusted basis, as they will no longer be recurring after
2002. |
| (e) |
Pre-tax operating margin for
the year and quarter ended November 30, 2002 was reduced by
approximately 1.7% and 6.5%, respectively, as a result of the
other real estate charge, September 11th related (recoveries)/expenses,
net and regulatory settlement charge. Pre-tax operating margin
for the year and quarter ended November 30, 2001 was reduced
by approximately 1.8% and 10.6%, respectively, as a result of
the September 11th related (recoveries)/expenses, net. |
| (f) |
The effective tax rate for
the year and quarter ended November 30, 2002 increased/(decreased)
by approximately 0.3% and (0.5%), respectively, as a result
of the other real estate charge, September 11th related (recoveries)/expenses,
net and regulatory settlement charge. The effective tax rate
for the year and quarter ended November 30, 2001 decreased by
approximately 1.3% and 35.9%, respectively as a result of the
September 11th related (recoveries)/expenses, net. |
| (g) |
Matched book is defined as
the lower of securities purchased under agreements to resell
or securities sold under agreements to repurchase. |
| (h) |
Total capital includes long-term
debt, stockholders' equity and preferred securities subject
to mandatory redemption. |
| (i) |
Net leverage ratio is calculated
using total assets excluding matched book to total stockholders'
equity and other preferred securities. |
| (j) |
The book value per common
share calculation includes restricted stock units granted under
Lehman Stock Award Programs included in stockholders' equity. |
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LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
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Three Months
Ended
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Percentage of
Dollar Change
Inc/(Dec)
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November 30
2002
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November 30
2001
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| Revenues: |
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Principal transactions |
$ 520 |
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$ 161 |
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Investment banking |
409 |
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461 |
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Commissions |
308 |
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264 |
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Interest and dividends |
2,885 |
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3,400 |
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Other |
11 |
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14 |
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Total revenues |
4,133 |
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4,300 |
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Interest expense |
2,594 |
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3,097 |
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Net revenues |
1,539 |
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1,203 |
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28% |
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| Non-interest expenses: |
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Compensation and benefits |
785 |
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615 |
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Technology and communications |
148 |
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125 |
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Brokerage and clearance |
92 |
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76 |
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Occupancy |
74 |
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61 |
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Professional fees |
39 |
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26 |
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Business development |
34 |
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34 |
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Other |
13 |
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23 |
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September 11, 2001 related
(recoveries)/expenses, net |
(108) |
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127 |
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Other real estate
reconfiguration costs |
128 |
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- |
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Regulatory settlement |
80 |
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- |
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Total non-interest expenses |
1,285 |
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1,087 |
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18% |
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Income before
taxes and dividends
on trust preferred securities |
254 |
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116 |
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| Provision (Benefit)
for income taxes |
53 |
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(28) |
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Dividends on trust preferred
securities |
14 |
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14 |
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| Net income |
$ 187 |
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$ 130 |
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44% |
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Preferred stock dividends |
11 |
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11 |
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Net income applicable to
common stock |
$ 176 |
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$ 119 |
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48% |
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| Earnings per common share |
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Basic |
$ 0.72 |
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$ 0.49 |
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Diluted |
$ 0.69 |
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$ 0.46 |
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LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
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Twelve Months Ended
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Percentage of
Dollar Change
Inc/(Dec)
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November 30
2002
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November 30
2001
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| Revenues: |
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Principal transactions |
$ 1,951 |
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$ 2,779 |
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Investment banking |
1,771 |
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2,000 |
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Commissions |
1,286 |
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1,091 |
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Interest and dividends |
11,728 |
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16,470 |
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Other |
45 |
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52 |
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Total revenues |
16,781 |
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22,392 |
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Interest expense |
10,626 |
|
15,656 |
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Net revenues |
6,155 |
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6,736 |
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(9%) |
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| Non-interest expenses: |
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Compensation and benefits |
3,139 |
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3,437 |
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Technology and communications |
552 |
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501 |
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Brokerage and clearance |
329 |
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308 |
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Occupancy |
287 |
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198 |
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Business development |
146 |
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183 |
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Professional fees |
129 |
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152 |
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Other |
74 |
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82 |
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September 11, 2001 related
(recoveries)/expenses, net |
(108) |
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127 |
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Other real estate
reconfiguration costs |
128 |
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- |
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Regulatory settlement |
80 |
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- |
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Total non-interest expenses |
4,756 |
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4,988 |
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(5%) |
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Income before
taxes and dividends
on trust preferred securities |
1,399 |
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1,748 |
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Provision for income taxes |
368 |
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437 |
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Dividends on trust preferred
securities |
56 |
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56 |
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| Net income |
$ 975 |
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$ 1,255 |
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(22%) |
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Preferred stock dividends |
69 |
|
94 |
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Net income applicable to
common stock |
$ 906 |
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$ 1,161 |
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(22%) |
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| Earnings per common share |
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Basic |
$ 3.69 |
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$ 4.77 |
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Diluted |
$ 3.47 |
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$ 4.38 |
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