FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Catherine M. Conroy Kevin Zuccala
212-892-3275 212-892-4693
DLJ SECOND QUARTER NET A RECORD $165.7 MILLION
NEW YORK - JULY 20, 1999 - Donaldson, Lufkin & Jenrette, Inc. (NYSE:
DLJ) today reported record net income of $165.7 million, 16 percent more than
the previous quarterly record of $142.3 million established in the second
quarter of 1998 and 36 percent greater than the first quarter of 1999. Second
quarter earnings per share (diluted) of $1.14 were 9 percent greater than the
$1.05 per share reported a year ago and 36 percent greater than the $0.84 per
share reported for the first quarter of 1999.
Total revenues for the second quarter of 1999 grew 16 percent to a
record $1.8 billion as quarterly underwriting income, fees, commissions and
trading gains reached their highest levels ever in DLJ's 40-year history. Net
revenues for the second quarter of 1999, or total revenues minus interest
expense, increased 21 percent to a record $1.4 billion.
Average return on equity for the second quarter of 1999 was 22.2 percent
and book value per common share at June 30, 1999 was $25.19. The weighted
average number of common shares (diluted) outstanding during the current quarter
increased 7 percent compared to the second quarter of 1998. DLJ's common equity
capital increased 50 percent to $3.2 billion during the 12-month period ended
June 30, 1999.
In a joint statement, Joe L. Roby, President and Chief Executive Officer
of Donaldson, Lufkin & Jenrette, Inc., and John S. Chalsty, DLJ's Chairman,
said, "These record results underscore the powerful franchises that DLJ has
established in serving the needs of corporations, institutions and individual
investors in the United States and abroad. We bring our clients a unique blend
of strategic expertise, global origination and distribution capabilities, as
well as the efficiencies of proprietary, world-class technology."
RECORD FEE INCOME; GLOBAL M&A MARKET SHARE DOUBLES AT MID-YEAR
DLJ earned record fee income of $333 million in the second quarter of
1999, largely attributable to the outstanding performance of its domestic and
international merger and acquisition specialists. As measured by the dollar
volume of assignments completed during the first six months of 1999, DLJ's
market share doubled to rank it fifth globally - up from tenth place a year ago.
Year-to-date, DLJ is involved in four of the 10 largest announced transactions
involving U.S. targets. For financial institutions, DLJ is representing clients
involved in four of that sector's five largest transactions.
STILL NUMBER ONE IN HIGH YIELD
DLJ continued as the number-one-ranked underwriter of high-yield bonds
for the first half of 1999. By mid-year, DLJ had lead managed $10.9 billion of
new issues and increased its market share to 18.4 percent - more than 23 percent
larger than that of its nearest competitor - despite industrywide new issue
volume that was down 40 percent compared to the first six months of 1998.
Overall, firmwide underwriting income for the second quarter was a record $409
million, 19 percent higher than the second quarter of 1998 and 59 percent
greater than for the first quarter of 1999.
INTERNATIONAL EXPANSION AHEAD OF PLAN
During the first six months of 1999, DLJ's international businesses
generated more revenues than in all of 1998. Revenues for the period ending June
30, 1999 approximated $300 million, representing a 77 percent increase over the
comparable period a year ago. Highlights of the first half included DLJ's role
as financial advisor to Olivetti S.p.A in its $35 billion acquisition of a
majority interest in Telecom Italia S.p.A.
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The transaction represented the largest tender offer ever completed in Europe.
DLJ also provided financing for the transaction, acting as joint lead manager of
two offerings that stand as Europe's largest syndicated offering of senior bank
debt and corporate bonds.
$60 MILLION QUARTERLY REVENUES FOR DLJDIRECT
DLJdirect earned net income of $5.1 million for the second quarter of
1999 on total revenues of $59.7 million. DLJdirect experienced quarterly and
sequential increases in the number of new accounts opened, daily trading volume
and assets in customer accounts. In late May, DLJ issued a new class of common
stock (NYSE: DIR) to track the financial performance of this important
e-commerce business unit, raising more than $343 million of new equity capital,
$236 million of which was allocated to DLJdirect to expand its marketing
efforts. (A separate news release contains more details about DLJdirect's second
quarter results.)
SOLID GROWTH IN FINANCIAL SERVICES GROUP
Worldwide, during the second quarter of 1999, DLJ's commission revenues
increased 44 percent to a record $291 million. DLJ's Financial Services Group
generated pre-tax income that was 58 percent higher than for the comparable
quarter a year ago. At June 30, 1999, assets held by DLJ's Pershing
correspondent clearing division - in 2.9 million customer accounts - increased
22 percent from a year ago to a record $341 billion.
RECORD TRADING GAINS
Principal trading gains were a record $218 million for the second
quarter of 1999. Overall percentage comparisons of trading gains between the
current quarter and the comparable quarter a year ago are not meaningful because
DLJ's emerging markets proprietary trading business was discontinued in the
third quarter of 1998.
A RECORD SIX MONTHS
For the first six months of 1999, DLJ's net income was a record $287
million, 4 percent greater than the previous record of $276 million reported for
the comparable period a year ago. Earnings per share (diluted) were $1.99
compared to $2.05 for the comparable period a year ago. The weighted average
number of diluted common shares
3
outstanding increased 7 percent versus the comparable period in 1998. Total
revenues for the first six months of 1999 rose 8 percent to a record $3.3
billion.
Donaldson, Lufkin & Jenrette is a leading integrated investment and
merchant bank serving institutional, corporate, government and individual
clients. DLJ's businesses include securities underwriting; sales and trading;
investment and merchant banking; financial advisory services; investment
research; venture capital; correspondent brokerage services; online, interactive
brokerage services; and asset management. Founded in 1959 and headquartered in
New York City, DLJ employs approximately 9,100 people worldwide and maintains
offices in 13 cities in the United States and 13 cities in Europe, Latin America
and Asia. The company has two classes of common stock trading on the New York
Stock Exchange. Shares trading under the ticker symbol "DLJ" represent
Donaldson, Lufkin & Jenrette, Inc. Shares trading under the ticker symbol "DIR"
track the performance of DLJdirect, Inc., its online brokerage business. For
more information on Donaldson, Lufkin & Jenrette, refer to the company's world
wide web site at www.dlj.com. The firm's world headquarters are located at 277
Park Avenue, New York, NY 10172; telephone number (212) 892-3000.
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DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Consolidated Summary of Operations (Unaudited)
(in thousands, except per share data and financial ratios)
----------------------------------------------------------------------
QUARTERS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
----------------------------------------------------------------------
Revenues:
Commissions $ 291,112 $ 201,942 $ 572,104 $ 400,466
Underwritings 409,454 343,146 666,368 649,304
Fees 332,673 318,436 619,748 573,807
Interest-net (3) 499,902 590,264 976,563 1,155,053
Principal transactions-net:
Trading 218,418 39,949 392,463 158,893
Investment 25,155 47,195 28,179 88,493
Other 33,802 15,813 48,541 24,150
----------- ----------- ----------- -----------
Total revenues 1,810,516 1,556,745 3,303,966 3,050,166
----------- ----------- ----------- -----------
Costs and expenses:
Compensation and benefits 800,009 672,966 1,435,723 1,317,050
Interest 380,651 378,241 736,604 752,107
Brokerage, clearing, exchange
fees, and other 76,326 72,916 147,547 129,237
Occupancy and equipment 77,343 64,614 150,666 124,048
Communications 27,216 21,658 53,656 41,159
Other operating expenses 189,971 115,850 323,770 238,815
----------- ----------- ----------- -----------
Total costs and expenses 1,551,516 1,326,245 2,847,966 2,602,416
----------- ----------- ----------- -----------
Income before provision for income taxes 259,000 230,500 456,000 447,750
----------- ----------- ----------- -----------
Provision for income taxes 93,350 88,200 168,700 171,300
----------- ----------- ----------- -----------
Net income 165,650 142,300 287,300 276,450
Dividends on preferred stock 5,289 5,289 10,578 10,732
----------- ----------- ----------- -----------
Earnings applicable to common shares $ 160,361 $ 137,011 $ 276,722 $ 265,718
=========== =========== =========== ===========
Earnings applicable to common shares (1)
- ----------------------------------------
DLJ $ 160,312 $ 137,011 $ 276,673 $ 265,718
=========== =========== =========== ===========
DLJdirect $ 49 $ 49
=========== ===========
Earnings per share (2):
- -----------------------
DLJ
Basic $ 1.28 $ 1.17 $ 2.22 $ 2.29
Diluted $ 1.14 $ 1.05 $ 1.99 $ 2.05
=========== =========== =========== ===========
DLJdirect
Basic $ 0.00 $ 0.00
Diluted $ 0.00 $ 0.00
=========== ===========
Weighted average common shares (2):
- -----------------------------------
DLJ
Basic 125,567 117,394 124,783 116,244
Diluted 140,400 130,661 139,313 129,795
=========== =========== =========== ===========
DLJdirect
Basic 18,400 18,400
Diluted 20,423 20,423
=========== ===========
DLJdirect
- ---------
Net income (loss) (included in
consolidated earnings applicable
to common shares) $ 5,076 $ 1,156 $ 12,249 $ (1,101)
=========== =========== =========== ===========
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DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Consolidated Summary of Operations (Unaudited)
(in thousands, except per share data and financial ratios)
--------------------------------------------------------------------------
QUARTERS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
-------------------------------------------------------------------------
DLJ INC.
- --------
BALANCE SHEET DATA AT END OF PERIOD:
Long-term borrowings (3) $ 4,534,928 $ 2,563,206
============ ============
Redeemable preferred stock $ 200,000 $ 200,000
============ ============
Total stockholders' equity (1) $ 3,611,305 $ 2,538,768
============ ============
Book value per common share
outstanding
DLJ common stock $ 25.19 $ 18.12
Common shares and RSUs outstanding
at end of period
DLJ common stock 126,820 119,438
DLJdirect common stock 18,400 N/A
DLJ INC.
- --------
OTHER FINANCIAL DATA AT END OF PERIOD:
Ratio of long-term borrowings to total
capitalization (5) 53.1% 48.3%
Return on average common stockholders'
equity (6) 22.2% 26.1% 20.1% 26.4%
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DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Consolidated Summary of Operations (Unaudited)
(in thousands, except per share data and financial ratios)
(1) In March 1999, the Board of Directors of Donaldson, Lufkin & Jenrette("DLJ
Inc. or the Company") and the majority shareholder of the Company approved
the authorization of the issuance by DLJ Inc. of a new series of common
stock, DLJdirect Common Stock. The DLJdirect Common Stock is intended to
track the separate performance of the Company's existing online discount
brokerage and related investment services business ("Tracking Stock").
Prior to issuing DLJdirect Common Stock, the Company's existing Common
Stock was designated as DLJ Common Stock and reflects the performance of
the Company's primary businesses, i.e., Banking, Fixed Income, Equities and
Financial Services, plus a 100% interest in DLJdirect. These operations are
referred to as DLJ. On May 28, 1999, ("the closing date"), the Company
issued in an initial public offering, 18.4 million shares of DLJdirect
Common Stock. The shares of DLJdirect Common Stock have no voting rights,
except in certain limited circumstances. Net proceeds from the offering
amounted to $343.2 million of which $235.9 million was allocated to
DLJdirect Common Stock.
Earnings applicable to common shares for DLJ includes a 100% retained
interest in DLJdirect for periods prior to the closing date and 82.1% for
subsequent periods. Quarterly results reported by DLJ prior to the closing
date were not affected by the issuance of the tracking stock. DLJ's
retained interest in the earnings of DLJdirect for the quarter equals 100%
for the period April1-May 27, 1999 and 82.1% thereafter through June 30,
1999.
(2) Earnings per common share amounts for periods after the closing date have
been calculated using the two class method. The two class method is an
earnings allocation formula that determines the earnings per share for each
class of common stock according to participation rights in undistributed
earnings.
For DLJ, basic earnings per common share represents earnings applicable to
common shares (including its retained interest in DLJdirect) divided by the
weighted average actual common shares outstanding, i.e., excluding the
effect of potentially dilutive securities. Diluted earnings per common
share include the dilutive effects of the Restricted Stock Unit Plan and
the dilutive effect of options calculated under the treasury stock method.
For DLJdirect, basic earnings per share is calculated by dividing earnings
applicable to common shares for the period the tracking stock was
outstanding (May 28, 1999 to June 30, 1999) by the weighted average actual
common shares outstanding. Diluted earnings per common share include the
dilutive effect of options calculated under the treasury stock method. Net
income for DLJdirect for such period was $271 thousand of which 82.1% or
$222 thousand is applicable to the retained interest of DLJ and 17.9% or
$49 thousand is applicable to common shareholders of DLJdirect. DLJ's
retained interest excludes the effect of the 10 million shares of common
stock that have been reserved for issuance under the DLJdirect Stock Option
Plan. For the quarter and six months ended June 30, 1999, earnings per
share for DLJdirect rounds to less than $0.01. Earnings per share for
DLJdirect for periods prior to the closing date are not presented as such
amounts are not meaningful.
(3) Interest-net is net of interest expense to finance U.S. Government, agency
and mortgage-backed securities of $789.6 million, $782.7 million, $1,494.9
million and $1,548.8 million, respectively.
(4) In the first quarter of 1999, the Company filed a shelf registration
statement which enables the Company to issue from time to time up to $2.0
billion in aggregate principal amount of debt securities or preferred
stock. In March 1999, the Company issued $650.0 million 5 7/8% Senior Notes
due 2002 from this shelf. In the second quarter of 1999, the Company issued
an aggregate of $330.0 million medium-term notes, $290.0 million of which
were from the $2.0 billion shelf.
(5) Long-term borrowings and total capitalization (the sum of long-term
borrowings, preferred stock, and stockholders' equity) exclude current
maturities (one year or less) of long-term borrowings.
(6) Return on average common stockholders' equity is calculated on an
annualized basis for periods of less than one full year using a monthly
average and is based on earnings applicable to common shares.
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