1
Exhibit 99
2
LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
Year ended December 31, 1993
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Adjustments
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Concurrent
Revenues Historical Shearson SLHMC Transactions Pro forma
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Market making and principal
transactions $ 1,967 $ (323) (a) $1,644
Investment banking 972 (170) (a) 802
Commissions 1,316 (828) (a) 488
Interest and dividends 5,840 (148) (a) $ (13) (d) 5,679
Other 491 (356) (a) (56) (d) 79
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Total revenues 10,586 (1,825) (69) 8,692
Interest expense 5,368 (116) (a),(b) (7) (d) $ (42) (f) 5,203
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Net revenues 5,218 (1,709) (62) 42 3,489
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Non-interest expenses
Compensation and benefits 2,989 (1,147) (a) (17) (d) 1,825
Communications 318 (126) (a) (4) (d) 188
Occupancy and equipment 254 (104) (a) (3) (d) 147
Professional services 203 (40) (a) (2) (d) 161
Advertising and market
development 161 (33) (a) (1) (d) 127
Depreciation and amortization 157 (44) (a) 113
Brokerage, commissions and
clearance fees 140 32 (a) 172
Other 282 (110) (a) (35) (d) 137
Loss on sale of Shearson 535 (535) (a)
Reserves for non-core businesses 152 (120) (e) 32
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Total non-interest expenses 5,191 (2,107) (182) 2,902
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Income from continuing operations
before taxes 27 398 120 42 587
Provision for (benefit from)
income taxes 318 (157) (a),(c) 41 (e) 17 (c) 219
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Income (loss) from continuing
operations (291) 555 79 25 368
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Preferred stock dividends 48 (6) (g) 42
------ ------ ----- ----- -----
Income (loss) from continuing
operations applicable to
Common Stock $ (339) $ 555 $ 79 $ 31 $ 326
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Number of shares used in earnings
per share computation (h) 110.9
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Pro forma earnings per common share $ 2.94
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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)
Six months ended June 30, 1994
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Pro Forma
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Actual Adjustments Total
------ ----------- -------
Revenues
Market making and principal
transactions $ 802 $ $ 802
Investment banking 326 326
Commissions 258 258
Interest and dividends 3,226 3,226
Other 30 30
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Total revenues 4,642 4,642
Interest expense 3,098 (18)(f) 3,080
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Net revenues 1,544 18 1,562
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Non-interest expenses
Compensation and benefits 814 814
Communications 101 101
Brokerage, commissions and
clearance fees 95 95
Occupancy and equipment 85 85
Professional services 89 89
Advertising and market
development 63 63
Depreciation and amortization 65 65
Other 61 61
Severance charge 33 33
Spin-off expenses 15 (15)(i)
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Total non-interest expenses 1,421 (15) 1,406
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Income before taxes and cumulative
effect of change in accounting principle 123 33 156
Provision for income taxes 48 10 (c) 58
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Income before cumulative effect of
change in accounting principle 75 23 98
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Preferred stock dividends 19 2 (g) 21
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Income before cumulative effect of change
in accounting principle applicable to
common stock $ 56 $ 21 $ 77
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Number of shares used in earnings
per share computation (h) 110.9
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Pro forma earnings per common share $ .69
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See notes to pro forma consolidated financial statements.
4
LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
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 statements of operations reflect adjustments for Shearson, SLHMC,
the Concurrent Transactions and the Stock Award Program as if such transactions
had occurred on the first day of the period reported on.
The pro forma financial data does not purport to present the results
of operations of the Company had the Shearson, SLHMC, Concurrent and Stock
Award Program Transactions actually occurred as of such dates, nor is it
necessarily indicative of results of operations that may be achieved in the
future.
To broaden and increase the level of employee ownership in Holdings,
the Compensation Committee approved the Stock Award Program pursuant to which
it awarded, subject to vesting provisions and transfer restrictions, 5.2
million Employee RSUs and determined to award the Executive RSUs to the
executive officers of Lehman Brothers if certain performance goals are
achieved. The Employee RSUs and the Executive RSUs will comprise part of the
bonuses awarded for 1994. Stockholders' equity will increase by approximately
$78 million with an offsetting decrease in accrued liabilities with respect to
the award of the Employee RSUs; however, the number of Executive RSUs to be
awarded, if any, will be determined upon completion of the performance period.
Holdings will meet the share requirements for the Stock Award Program and other
Common Stock based compensation and benefit plans by repurchasing shares in the
open market or issuing such shares.
PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS:
The pro forma adjustments to the statement of operations give effect to the
items described below:
(a) The elimination of revenues and expenses of Shearson and the
loss on the sale of Shearson in 1993. Also eliminated is the
income tax expense of $149 million related to these items.
(b) Elimination of interest expense of approximately $52 million resulting
from the utilization of cash proceeds from the sales of The Boston
Company, Shearson and SLHMC to reduce the Company's commercial paper,
short-term debt and senior notes, offset by additional interest
expense of $72 million allocated to Shearson and SLHMC for the
carrying costs of buildings, improvements and equipment and certain
acquisition-related debt, which is not directly eliminated by the
Primerica Transaction or the sale of SLHMC other than through the
utilization of available sales proceeds.
(c) Adjustment (b) above and (f) below, tax effected at an assumed rate
of 40% plus the actual tax expense on (i) below.
(d) The elimination of the revenues and expenses of SLHMC.
(e) The elimination of the reserves related to the sale of SLHMC and the
related income tax benefit of $41 million.