Exhibit 99.1
LEHMAN BROTHERS
Press Release
For Immediate Release Media Contact: Hannah Burns
(212) 526-4064
Investor Contact: Shaun Butler
(212) 526-8381
LEHMAN BROTHERS REPORTS SECOND QUARTER RESULTS
- NET INCOME OF $609 MILLION AND EPS OF $2.01 -
SECOND HIGHEST LEVELS EVER -
NEW YORK - June 15, 2004 -- Lehman Brothers Holdings Inc. (ticker symbol: LEH)
today reported net income of $609 million, or $2.01 per common share (diluted),
for the second quarter ended May 31, 2004, a significant increase from $437
million, or $1.67 per common share (diluted), reported for the second quarter of
fiscal 2003, and the second highest level of net income ever, after the $670
million, or $2.21 per common share (diluted), reported in the first quarter of
fiscal 2004 ended February 29, 2004. (Included in the second quarter 2003 and
the first quarter 2004 results are real estate-related charges of $77 million
pretax ($45 million after tax) and $19 million pretax ($11 million after tax),
respectively.)
For the first six months of fiscal 2004, net income was $1.3 billion, or $4.23
per common share (diluted), increases of 73% and 51%, respectively, from $738
million, or $2.81 per common share (diluted), reported in the first half of
fiscal 2003.
Second Quarter Business Highlights
o Named Joseph M. Gregory President and Chief Operating Officer
o Elected Marsha Johnson Evans, president and chief executive officer of
the American Red Cross, to Lehman Brothers' Board of Directors
o Earned record revenues in the Client Services segment for second
consecutive quarter; the integration with Neuberger Berman continues to
progress smoothly
o Received 40 "Best in Class" awards in the 2004 Prime Brokerage
survey by Global Custodian, a clear recognition of the Firm's
continued progress in its Prime Brokerage business
Richard S. Fuld, Jr., chairman and chief executive officer, said, "We achieved
another quarter of excellent results, again demonstrating the strength and
global reach of our franchise. All of our businesses and regions contributed
strongly to our performance, making the most recent six month period our best
ever. This quarter is further evidence that the strategy we've set for the Firm
and our consistent focus on our clients are helping us drive more value to our
shareholders. "
Net revenues (total revenues less interest expense) for the second quarter were
$2.9 billion, up significantly, 28%, from $2.3 billion for the same period in
fiscal 2003, and down slightly, 7%, from the record $3.1 billion in the first
quarter of 2004. A strong Firmwide financial performance contributed to the
second highest quarterly revenues ever. Investment Banking revenues increased
for the fifth consecutive quarter. In debt underwriting, industry-wide softness
in U.S. investment grade issuance was more than offset by an increase in
leveraged finance and asset-backed transactions, in addition to heightened
investment grade origination activity in Europe. M&A and equity underwriting
levels were significantly higher compared to the second quarter of 2003 and
stable compared to the first quarter of 2004. The Firm's Capital Markets segment
had revenues of approximately $2.0 billion, a 19% increase from the prior year's
quarter, and a 12% decrease from the record level achieved in the first quarter
of 2004. Within Capital Markets, the Fixed Income business posted a 21% revenue
increase over the prior year, driven by continued growth in customer flow
activity across most products, including derivatives and mortgages, partially
offset by lower results in credit products. A 16% increase in Equities revenues
reflected strong results in equity derivatives, as clients continued to hedge
downside risk or reduce concentrations. The Client Services segment achieved
record revenues for the quarter with total assets under management growing to
$125 billion. The Private Client business reported its second consecutive record
quarter, with increased distribution of both fixed income and equity products to
high-net-worth clients.
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For the first six months of fiscal 2004, net revenues were $6.1 billion, a 52%
increase from $4.0 billion for the first half of fiscal 2003.
Non-interest expenses for the quarter were $2.0 billion, compared to $1.7
billion for the second quarter of fiscal 2003. Compensation and benefits as a
percentage of net revenues was 49.8% during the second quarter of fiscal 2004,
compared to 51.0% for the second quarter of fiscal 2003. Nonpersonnel expenses
in the fiscal 2004 second quarter were $585 million, compared to $495 million in
the same period a year ago (which included a $77 million real estate-related
charge), with the increase due largely to incremental expenses associated with a
number of acquisitions completed subsequent to the second quarter of 2003.
For the quarter ended May 31, 2004, the Firm's pretax margin was 30.2%, compared
to 27.4% in the fiscal 2003 second quarter, and 32.8% in the first quarter of
2004. For the fiscal 2004 second quarter, the Firm's return on average common
equity was 18.6%, compared to 19.6% in the fiscal 2003 second quarter, and 21.1%
in the trailing quarter ended February 29, 2004. Return on average tangible
common equity was 26.0% for the second quarter of fiscal 2004, compared with
20.1% in the second quarter of fiscal 2003, and 29.7% in the trailing quarter
ended February 29, 2004.
As of May 31, 2004, Lehman Brothers stockholders' equity totaled $14.0 billion,
and total capital (stockholders' equity and long-term debt) was approximately
$66.6 billion. Book value per common share was $47.05.
Lehman Brothers (ticker symbol: 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 wealth and asset
management 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.
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Conference Call
A conference call to discuss the Firm's financial results and outlook will be
held at 9:30 a.m., EDT on Tuesday, June 15, 2004. Members of the public who
would like to access the conference call should dial, from the U.S.,
888-456-0338, or, from outside the U.S., 212-547-0182. The passcode for all
callers is LEHMAN. The conference call will also be accessible through the
"Shareholders" section of the Firm's Web site, www.lehman.com, under the
subcategory "Webcasts." For those unable to listen to the live broadcast, a
replay will be available on the Firm's Web site or by dialing 800-873-4054
(within the U.S.) or 402-220-4773 (from outside the U.S.). The replay will be
available beginning approximately one hour after the event and will remain
available on the Firm's Web site until 5:00 p.m., EDT, on July 16, 2004, and by
phone until 5:00 p.m., EDT, on June 30, 2004.
Please direct any questions regarding the conference call to Shaun Butler at
212-526-8381, or sbutler@lehman.com, or Elizabeth Besen at 212-526-2733, or
ebesen@lehman.com .
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements. These statements are
not historical facts, but instead represent only the Firm's expectations,
estimates, and projections regarding future events. These statements are not
guarantees of future performance and involve certain risks and uncertainties
that are difficult to predict, which may include risks and uncertainties
relating to market fluctuations and volatility, industry competition and changes
in the competitive environment, investor sentiment, liquidity risks, credit
ratings changes, credit exposures and legal and regulatory changes and
proceedings. The Firm's actual results and financial condition may differ,
perhaps materially, from the anticipated results and financial condition in any
such forward-looking statements, and, accordingly, readers are cautioned not to
place undue reliance on such statements. The Firm undertakes no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise. For more information concerning the risks and other
factors that could affect the Firm's future results and financial condition, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Firm's most recent Annual Report to Shareholders and
Quarterly Report on Form 10-Q.
# # #
4
LEHMAN BROTHERS HOLDINGS INC.
SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
Quarters Ended
--------------------------------------------------------------
--------------------------------------------------------------
5/31/04 2/29/04 11/30/03 8/31/03 5/31/03
------- ------- -------- ------- -------
Income Statement
Net Revenues $2,926 $3,144 $2,298 $2,347 $2,291
Non-Interest Expenses:
Compensation and Benefits 1,457 1,566 1,103 1,174 1,168
Non-personnel Expenses 585 527 473 424 418
Real Estate Related Charge - 19 - - 77
Net Income (a) 609 670 481 480 437
Net Income Applicable to Common Stock 592 653 464 469 426
Earnings per Common Share: (b)
Basic $2.14 $2.37 $1.82 $1.92 $1.76
Diluted $2.01 $2.21 $1.71 $1.81 $1.67
Financial Ratios (%)
Return on Average Common Stockholders' Equity (annualized) (c) 18.6% 21.1% 18.9% 20.7% 19.6%
Return on Average Tangible Common Stockholders' Equity
(annualized) (d) 26.0% 29.7% 20.6% 21.2% 20.1%
Pretax Margin (e) 30.2% 32.8% 31.4% 31.9% 27.4%
Compensation and Benefits/Net Revenues 49.8% 49.8% 48.0% 50.0% 51.0%
Effective Tax Rate (f) 31.1% 32.8% 30.5% 33.4% 27.5%
Financial Condition
Total Assets $342,000 $328,064 $312,061 $291,638 $302,410
Net Assets (g) 174,000 171,600 163,182 156,985 160,407
Long-Term Debt (h) 52,558 50,982 43,529 41,693 43,530
Preferred Securities Subject to Mandatory Redemption (h) - - 1,310 1,010 1,010
Common Stockholders' Equity (i) 12,831 12,601 12,129 9,231 8,935
Total Stockholders' Equity 14,006 13,776 13,174 10,276 9,635
Total Stockholders' Equity plus Junior Subordinated Debt(j) 15,391 15,086 14,484 11,286 10,645
Tangible Equity Capital (k) 11,562 11,296 10,681 11,040 10,410
Total Capital (l) 66,564 64,758 58,013 52,979 54,175
Gross Leverage (m) 24.4x 23.8x 23.7x 28.4x 31.4x
Net Leverage (g) 15.0x 15.2x 15.3x 14.2x 15.4x
Book Value per Common Share (n) 47.05 45.45 44.17 37.95 36.77
Other Data (#s)
Employees 17,625 16,505 16,188 14,497 13,247
Assets Under Management (in billions) $125.4 $123.8 $116.2 $42.5 $38.7
Common Stock Outstanding (in millions) 272.7 277.2 266.7 239.2 242.4
Weighted Average Shares (in millions):
Basic 276.8 275.5 254.7 243.8 242.3
Diluted 294.2 294.7 271.2 259.5 255.8
See Footnotes to Selected Statistical Information on Page 6.
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LEHMAN BROTHERS HOLDINGS INC.
FOOTNOTES TO SELECTED STATISTICAL INFORMATION
(Preliminary and Unaudited)
(Dollars in millions, except per share data)
(a) For the quarters ended February 29, 2004 and May 31, 2003 net income
includes a $19 million pre-tax ($11 million after tax) charge and a $77
million pre-tax ($45 million after tax) charge, respectively, related to
reconfiguration of certain of the Company's real estate.
(b) For the quarter ended February 29, 2004 basic EPS and diluted EPS were
reduced by $0.04 as a result of the real estate charge. For the quarter
ended May 31, 2003 basic EPS was reduced by $0.19 and diluted EPS was
reduced by $0.17 as a result of the real estate charge.
(c) Return on average common stockholders' equity is computed by dividing
annualized net income applicable to common stock for the period by average
common stockholders' equity. (See the reconciliation on page 10.) For the
quarter ended November 30, 2003 average common stockholders' equity was
appropriately weighted for the effect of the equity issued in connection
with the Neuberger Berman Inc. acquisition on October 31, 2003. For the
quarters ended February 29, 2004 and May 31, 2003 return on average common
stockholders' equity was reduced by 0.4% and 2.1%, respectively, as a
result of the real estate charges.
(d) Return on average tangible common stockholders' equity is computed by
dividing annualized net income applicable to common stock for the period by
average tangible common stockholders' equity. Tangible common stockholders'
equity equals total common stockholders' equity less identifiable
intangible assets and goodwill. (See the reconciliation on page 10.) For
the quarter ended November 30, 2003 average tangible common stockholders'
equity was appropriately weighted for the effect of the equity issued in
connection with the Neuberger Berman Inc. acquisition on October 31, 2003.
Management believes average tangible common stockholders' equity is a
meaningful measure because it reflects the common stockholders' equity
deployed in the Company's businesses. For the quarters ended February 29,
2004 and May 31, 2003 return on average tangible common stockholders'
equity was reduced by 0.5% and 2.2%, respectively, as a result of the real
estate charges.
(e) Pretax margin for the quarters ended February 29, 2004 and May 31, 2003 was
reduced by approximately 0.6% and 3.4%, respectively, as a result of the
real estate charges.
(f) The effective tax rates for the quarters ended February 29, 2004 and May
31, 2003 were reduced by approximately 0.2% and 1.5%, respectively, as a
result of the real estate charges.
(g) Net assets represents total assets excluding cash and securities segregated
and on deposit for regulatory and other purposes, secured financing
arrangements, collateral received recognized in inventory pursuant to SFAS
140 and identifiable intangible assets and goodwill. (See the
reconciliation on page 12.) Net leverage is defined as net assets divided
by tangible equity capital (See the reconciliation on page 12.) The Company
believes net assets and net leverage are useful to investors when comparing
companies in the securities industry because they exclude certain assets
considered to have a low risk profile. The Company believes tangible equity
capital to be a more meaningful measure of the Company's equity for
purposes of calculating net leverage because the Company does not view the
amount of equity used to support identifiable intangible assets and
goodwill as available to support the Company's remaining net assets. Net
leverage, as so defined, is used by many of the Company's creditors and a
leading rating agency. These measures as presented by the Company are not
necessarily comparable to similarly-titled measures presented by other
companies in the securities industry because of different methods of
calculation.
(h) At May 31, 2004 and February 29, 2004, long-term debt includes $1,385
million and $1,310 million, respectively, of junior subordinated debt
issued to trusts that prior to February 29, 2004 was classified as
preferred securities subject to mandatory redemption. On and after February
29, 2004 these amounts are classified as long-term debt pursuant to the
adoption of FASB Interpretation No. 46, Consolidation of Variable Interest
Entities - an interpretation of ARB No. 51 ("FIN 46"). See "Management's
Discussion and Analysis--New Accounting Developments" and Note 12 to the
Consolidated Financial Statements in the Company's 2003 Annual Report to
Stockholders. The junior subordinated debt issued to trusts at May 31, 2004
and February 29, 2004 and the preferred securities subject to mandatory
redemption at the prior period ends are collectively referred to
hereinafter as junior subordinated debt.
(i) On October 31, 2003, the Company acquired Neuberger Berman Inc. for a net
purchase price of $2,788 million, including cash consideration and
incidental costs of $690 million, equity consideration of $2,374 million
and excluding net cash and short-term investments acquired of $276 million.
(j) The Company believes total stockholders' equity plus junior subordinated
debt to be a more meaningful measure of the Company's equity, because the
junior subordinated debt is subordinated and has a maturity at issuance of
49 years, and the Company can defer interest payments for up to 20
consecutive quarters if the junior subordinated debt is not in default. In
addition, a leading rating agency views these securities as equity capital
for purposes of calculating net leverage. (See the reconciliation on page
12.)
(k) Tangible equity capital is defined as total stockholders' equity plus
junior subordinated debt less identifiable intangible assets and goodwill.
(See the reconciliation on page 12.) The Company believes tangible equity
capital to be a more meaningful measure of the Company's equity for
purposes of calculating net leverage because the Company does not view the
amount of equity used to support identifiable intangible assets and
goodwill as available to support the Company's remaining net assets.
(l) Total capital includes long-term debt (including junior subordinated debt)
and total stockholders' equity. The Company believes total capital is
useful to investors as a measure of the Company's financial strength.
(m) Gross leverage is defined as total assets divided by total stockholders'
equity.
(n) The book value per common share calculation includes amortized restricted
stock units granted under stock award programs, which have been included in
total stockholders' equity.
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LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
Three Months Ended % Change from
------------------------------------------ -------------------------
May 31, Feb 29, May 31, Feb 29, May 31,
2004 2004 2003 2004 2003
----------- ----------- ---------- ---------- -----------
Revenues:
Principal transactions $1,479 $1,739 $1,275
Investment banking 546 508 426 (a)
Commissions 407 390 299
Interest and dividends 2,609 2,304 2,445
Asset management and other 187 184 25 (a)
----------- ----------- ----------
Total revenues 5,228 5,125 4,470
Interest expense 2,302 1,981 2,179
----------- ----------- ----------
Net revenues 2,926 3,144 2,291 (7)% 28%
----------- ----------- ----------
Non-interest expenses:
Compensation and benefits 1,457 1,566 1,168
Technology and communications 185 170 147
Brokerage and clearance fees 116 107 90
Occupancy 104 102 73
Professional fees 70 47 41
Business development 55 44 37
Other 55 57 30
Real estate related charge - 19 77
----------- ----------- ----------
Total non-interest expenses 2,042 2,112 1,663 (3)% 23%
----------- ----------- ----------
Income before taxes and dividends on trust
preferred securities (b) 884 1,032 628
Provision for income taxes 275 338 173
Dividends on trust preferred
securities (b) - 24 18
----------- ----------- ----------
Net income $609 $670 $437 (9)% 39%
=========== =========== ==========
Net income applicable to common stock $592 $653 $426 (9)% 39%
=========== =========== ==========
Earnings per common share:
Basic $2.14 $2.37 $1.76
=========== =========== ==========
Diluted $2.01 $2.21 $1.67
=========== =========== ==========
(a) Reclassified to conform to the May 31, 2004 presentation.
(b) At February 29, 2004, preferred securities subject to mandatory redemption
were reclassified to junior subordinated debt (a component of long-term
debt) pursuant to the adoption of FIN 46. In periods subsequent to February
29, 2004, dividends on trust preferred securities are included in interest
expense. See note (h) to the Selected Statistical Information on page 6.
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LEHMAN BROTHERS HOLDINGS INC.
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
(In millions, except per share data)
Six Months Ended % Change from
--------------- ---- -------------- -------------------
May 31, May 31, May 31,
2004 2003 2003
--------------- -------------- -------------------
Revenues:
Principal transactions $3,218 $2,043
Investment banking 1,054 792 (a)
Commissions 797 561
Interest and dividends 4,913 5,132
Asset management and other 371 42 (a)
--------------- --------------
Total revenues 10,353 8,570
Interest expense 4,283 4,568
--------------- --------------
Net revenues 6,070 4,002 52%
--------------- --------------
Non-interest expenses:
Compensation and benefits 3,023 2,041
Technology and communications 355 290
Brokerage and clearance fees 223 176
Occupancy 206 155
Professional fees 117 70
Business development 99 69
Other 112 59
Real estate related charge 19 77
--------------- --------------
Total non-interest expenses 4,154 2,937 41%
--------------- --------------
Income before taxes and dividends on trust preferred
securities (b) 1,916 1,065
Provision for income taxes 613 295
Dividends on trust preferred
securities (b) 24 32
--------------- --------------
Net income $1,279 $738 73%
=============== ==============
Net income applicable to common stock $1,245 $716 74%
=============== ==============
Earnings per common share:
Basic $4.50 $2.96
=============== ==============
Diluted $4.23 $2.81
=============== ==============
(a) Reclassified to conform to the May 31, 2004 presentation.
(b) At February 29, 2004, preferred securities subject to mandatory redemption
were reclassified to junior subordinated debt (a component of long-term
debt) pursuant to the adoption of FIN 46. In periods subsequent to February
29, 2004, dividends on trust preferred securities are included in interest
expense. See note (h) to the Selected Statistical Information on page 6.
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LEHMAN BROTHERS HOLDINGS INC.
SEGMENT NET REVENUE INFORMATION
(Preliminary and Unaudited)
(In millions)
Three Months Ended % Change from
------------------------------------------ ---------------------------
May 31, Feb 29, May 31, Feb 29, May 31,
2004 2004 2003 2004 2003
----------- ----------- ------------ ------------ -----------
Investment Banking:
Debt Underwriting $256 $217 $258
Equity Underwriting 142 143 75
Merger and Acquisition Advisory 148 148 93
----------- ----------- ------------
Total 546 508 426 7% 28%
----------- ----------- ------------
Capital Markets:
Fixed Income 1,431 1,601 1,186
Equities 520 619 450
----------- ----------- ------------
Total 1,951 2,220 1,636 (12)% 19%
----------- ----------- ------------
Client Services:
Private Client 237 212 204 (a)
Asset Management 192 204 25 (a)
----------- ----------- ------------
Total 429 416 229 3% 87%
----------- ----------- ------------
Total Net Revenues $2,926 $3,144 $2,291 (7)% 28%
=========== =========== ============
Six Months Ended % Change from
-------------------------- ----------------
May 31, May 31, May 31,
2004 2003 2003
----------- ----------- ----------------
Investment Banking:
Debt Underwriting $473 $473
Equity Underwriting 285 134
Merger and Acquisition Advisory 296 185
----------- ------------
Total 1,054 792 33%
----------- ------------
Capital Markets:
Fixed Income 3,032 2,077
Equities 1,139 726
----------- ------------
Total 4,171 2,803 49%
----------- ------------
Client Services:
Private Client 449 363(a)
Asset Management 396 44(a)
----------- ------------
Total 845 407 108%
----------- ------------
Total Net Revenues $6,070 $4,002 52%
=========== ============
(a) Reclassified to conform to the May 31, 2004 presentation.
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LEHMAN BROTHERS HOLDINGS INC.
RECONCILIATION OF AVERAGE COMMON STOCKHOLDERS' EQUITY TO
AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY
(Preliminary and Unaudited)
(In millions)
Quarter Ended
---------------------------------------------------------------------------
May 31, Feb 29, Nov 30, Aug 31, May 31,
2004 2004 2003 2003 2003
------------ ----------- ----------- ------------ -------------
Average common stockholders' equity
$12,716 $12,365 $9,836 $9,083 $8,696
Less: average identifiable
intangible assets and goodwill (3,605) (3,586) (836) (241) (235)
------------ ----------- ----------- ------------ -------------
Average tangible common stockholders'
equity $9,111 $8,779 $9,000 $8,842 $8,461
============ =========== =========== ============ =============
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LEHMAN BROTHERS HOLDINGS INC.
ASSETS UNDER MANAGEMENT
(Preliminary and Unaudited)
(In billions)
As of
-------------------------------------------------
May 31, Feb 29, May 31,
2004 2004 2003
----------- ------------ ------------
Money Markets $18.2 $15.9 $5.0
Fixed Income 50.0 50.5 28.0
Equity 46.9 47.5 0.4
Alternative Investments 10.3 9.9 5.3
----------- ------------ ------------
Assets under Management $125.4 $123.8 (a) $38.7
=========== ============ ============
Three Months Ended
-------------------------------------------------
May 31, Feb 29, May 31,
2004 2004 2003
----------- ------------ ------------
Balance, beginning of period $123.8 $116.2 (a) $39.6
Net additions (withdrawals) 2.3 2.6 (0.6)
Net market appreciation (depreciation) (0.7) 5.0 (0.3)
----------- ------------ ------------
Total increase (decrease) 1.6 7.6 (0.9)
----------- ------------ ------------
Balance, end of period $125.4 $123.8 $38.7
=========== ============ ============
(a) Increase from May 31, 2003 primarily reflects the addition of Neuberger
Berman.
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LEHMAN BROTHERS HOLDINGS INC.
GROSS LEVERAGE and NET LEVERAGE CALCULATIONS
(Preliminary and Unaudited)
(In millions)
May 31, Feb 29, Nov 30, Aug 31, May 31,
2004 2004 2003 2003 2003
-------------- -------------- ------------- ------------- ------------
Net assets:
Total assets $342,000 $328,064 $312,061 $291,638 $302,410
Less:
Cash and securities segregated and on
deposit for regulatory and other purposes (4,600) (3,633) (3,100) (4,473) (3,692)
Secured financing arrangements
(reverse repo and securities borrowed) (155,200) (143,563) (138,812) (127,462) (136,526)
Collateral received recognized in
inventory pursuant to SFAS 140 (4,600) (5,658) (3,406) (2,472) (1,550)
Identifiable intangible assets
and goodwill (3,600) (3,610) (3,561) (246) (235)
-------------- -------------- ------------- ------------- ------------
Net assets $174,000 $171,600 $163,182 $156,985 $160,407
============== ============== ============= ============= ============
Tangible equity capital:
Total stockholders' equity $14,006 $13,776 $13,174 $10,276 $9,635
Junior subordinated debt issued to trusts
(subject to a limit) (a) 1,156 1,130 1,068 1,010 1,010
Less: Identifiable intangible assets
and goodwill (3,600) (3,610) (3,561) (246) (235)
-------------- -------------- ------------- ------------- ------------
Tangible equity capital $11,562 $11,296 $10,681 $11,040 $10,410
============== ============== ============= ============= ============
Gross leverage (total assets/ total
stockholders' equity) 24.4x 23.8x 23.7x 28.4x 31.4x
Net leverage (net assets/ tangible
equity capital) 15.0x 15.2x 15.3x 14.2x 15.4x
(a) Under the definition of tangible equity capital used by a leading rating
agency, the maximum equity credit given to junior subordinated debt issued to
trusts is 10% of tangible equity capital. (Junior subordinated debt issued to
trusts is included in the calculation to determine the limit). Prior to
February 29, 2004, junior subordinated debt was classified as preferred
securities subject to mandatory redemption. See note (h) to the Selected
Statistical Information on page 6.
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