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Exhibit 99
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LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
(IN MILLIONS)
(UNAUDITED)
ASSETS
Quarter Ended March 31, 1994
-----------------------------------------
Actual Pro Forma
------ --------------------------
Adjustments Total
----------- -----
Cash and cash equivalents $ 1,385 $ 1,385
Cash and securities segregated and on deposit
for regulatory and other purposes 1,360 1,360
Securities and other financial instruments owned 44,615 44,615
Collateralized short-term agreements:
Securities purchased under agreements to resell 41,130 41,130
Securities borrowed 9,969 9,969
Receivables:
Brokers and dealers 4,792 4,792
Customers 4,314 4,314
Other 3,103 3,103
Property, equipment and leasehold
improvements (net of accumulated
depreciation and amortization of $456
in 1994) 535 535
Deferred expenses and other assets 803 803
Excess of cost over fair value of net assets
acquired (net of accumulated amortization
of $110 in 1994) 271 271
-------- -------- --------
$112,277 $ $112,277
======== ======== ========
See notes to pro forma consolidated financial statements.
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LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (CONTINUED)
(IN MILLIONS, EXCEPT SHARE DATA)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Quarter Ended March 31, 1994
--------------------------------------------------
Actual Pro Forma
------ ------------------------------
Adjustments Total
----------- -----
Commercial paper and short-term debt $ 14,353 $ (1,193) (a) $ 13,160
Securities and other financial instruments sold
but not yet purchased 16,724 16,724
Securities sold under agreements to repurchase 57,204 57,204
Securities loaned 965 965
Payables:
Brokers and dealers 3,150 3,150
Customers 4,334 4,334
Accrued liabilities and other payables 2,939 (57) (b) 2,882
Senior notes 8,516 8,516
Subordinated indebtedness 2,059 2,059
-------- -------- ---------
Total liabilities 110,244 (1,250) 108,994
-------- -------- ---------
Stockholders' equity:
Preferred stock, $1 par value; 38,000,000 shares authorized:
5% Cumulative Convertible Voting, Series A, 13,000,000
shares authorized, issued and outstanding; $39.10
liquidation preference per share 508 508
Money Market Cumulative, 3,300 shares authorized; 250
shares issued and outstanding; $1,000,000 liquidation
preference per share 250 (250) (c)
Cumulative Voting, 8,000,000 shares issued and
outstanding pro forma; $25.00 liquidation preference
per share 200 (d) 200
Redeemable Voting, 1,000 shares issued and outstanding
pro forma; $1.00 liquidation preference per share -- (d) --
Common stock, $.10 par value; 300,000,000 shares
authorized; 168,235,284 shares (53,494,158 as adjusted
for the Reverse Stock Split) issued and outstanding;
105,776,664 shares issued and outstanding pro forma 17 (6) (e) 11
Additional paid-in capital 1,871 904 (f) 3,177
250 (c)
89 (g)
57 (b)
6 (e)
Foreign currency translation adjustment (9) (9)
Accumulated deficit (604) (604)
-------- -------- ---------
Total stockholders' equity 2,033 1,250 3,283
-------- -------- ---------
$112,277 $ $ 112,277
======== ======== =========
See notes to pro forma consolidated financial statements.
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LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
Quarter Ended March 31, 1994
-------------------------------------------------
Actual Pro Forma
------ -------------------------------
Adjustments Total
----------- -----
Revenues
Market making and principal transactions $ 434 $ 434
Investment banking 175 175
Commissions 141 141
Interest and dividends 1,527 1,527
Other 17 17
------ ----- ------
Total revenues 2,294 2,294
Interest expense 1,453 $ (11) (h) 1,442
------ ----- ------
Net revenues 841 11 852
------ ----- ------
Non-interest expenses
Compensation and benefits 450 450
Communications 50 50
Brokerage, commissions and clearance fees 45 45
Occupancy and equipment 42 42
Professional services 42 42
Advertising and market development 31 31
Depreciation and amortization 31 31
Severance charge 33 33
Other 29 29
------ ----- ------
Total non-interest expenses 753 753
------ ----- ------
Income from continuing operations before taxes 88 11 99
Provision for income taxes 33 5 (i) 38
------ ----- ------
Income from continuing operations 55 6 61
Preferred stock dividends 12 (1) (j) 11
------ ----- ------
Income from continuing operations
applicable to Common Stock $ 43 $ 7 $ 50
====== ===== ======
Income from continuing operations per share
of Common Stock (k) $ .41 $ .47
====== ======
See notes to pro forma consolidated financial statements.
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LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED STATEMENT
1. Basis of Reporting
The pro forma financial data has been prepared by the Company based
on certain adjustments to the consolidated financial statements of the Company.
The pro forma statement of operations reflects adjustments for the Concurrent
Transactions as if such transactions had occurred as of January 1, 1994. The
pro forma balance sheet reflects adjustments for the Concurrent Transactions as
if such transactions had occurred as of March 31, 1994.
The pro forma financial data does not purport to present the
financial position and results of operations of the Company had the Concurrent
Transactions actually occurred as of such dates, nor is it necessarily
indicative of results of operations that may be achieved in the future.
The Company will incur certain costs in connection with the
Concurrent Transactions and certain other related expenses estimated to be $20
million which will be charged primarily to operating expenses in the second
quarter of 1994. In addition, the Company will recognize compensation expense
in 1994 equal to (i) the increase in book value attributable to the Phantom
Shares and (ii) the excess, if any, of the market value of the Common Stock
issued pursuant to the Phantom Share Conversion over the price paid by
employees for the Phantom Shares.
PRO FORMA BALANCE SHEET ADJUSTMENTS:
The pro forma adjustments to the balance sheet give effect to the
items described below:
(a) Reflects the repayment of commercial paper and short-term
debt with gross proceeds from the Equity Investment.
(b) Reflects the Phantom Share Conversion.
(c) Reflects the MMP Exchange.
(d) Reflects the Preferred Stock Purchases.
(e) Reflects the decrease in the aggregate par value of Common
Stock outstanding and corresponding increase in additional
paid-in-capital from the Reverse Stock Split, partially
offset by the increase in the aggregate par value due to the
issuance of Common Stock.
(f) Reflects the American Express Common Stock Purchase.
(g) Reflects the NL Common Stock Purchase.
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LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED STATEMENT -- (CONTINUED)
PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS:
The pro forma adjustments to the statement of operations give effect
to the items described below:
(h) Reduced interest expense of approximately $11 million in
the first quarter of 1994 resulting from the utilization
of the cash proceeds to the Company from the Equity
Investment.
(i) Adjustment (h) above, tax effected at an assumed rate of
40%.
(j) Elimination of the dividend on the Money Market
Cumulative Preferred Stock partially offset by the
addition of the dividend on the Cumulative Preferred
Stock. An 8 1/2% dividend rate has been assumed on the
Cumulative Preferred Stock. However, this rate will be
based on prevailing market rates at the time of issuance
and is therefore subject to adjustment. A 1/4% change in
the dividend rate would increase or decrease the
Company's annual dividend payment by $0.5 million.
Holders of the Redeemable Preferred Stock will be
entitled to receive, in the aggregate, an annual dividend
equal to 50% of the Company's net income in excess of
$400 million per year, with a maximum dividend of $50
million per year, for each of the next eight years
commencing on or about the Distribution Date.
(k) Income (loss) from continuing operations per share of
Common Stock is calculated based on 105,776,664 pro forma
number of shares of Common Stock outstanding immediately
following the Concurrent Transactions.
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