FOR IMMEDIATE RELEASE
Media Contact: Investor Contact:
Catherine M. Conroy Kevin Zuccala
Donaldson, Lufkin & Jenrette Donaldson, Lufkin & Jenrette
212-892-3275 212-892-4693
DLJDIRECT SECOND QUARTER NET $5.1 MILLION, OR $0.05 PER SHARE
REVENUES INCREASE 111 PERCENT OVER SECOND QUARTER 1998
NEW YORK, NY - JULY 20, 1999 - Donaldson, Lufkin & Jenrette, Inc.
(NYSE: DLJ), announced today that DLJdirect, its online brokerage service,
earned net income of $5.1 million, or $0.05 per share (pro forma diluted), for
the second quarter of 1999. This compares to $1.2 million, or $0.01 per share
(pro forma diluted), for the second quarter of 1998. Total revenues for the
second quarter of 1999 were $59.7 million, double those for the comparable
period a year ago and 26 percent ahead of revenues for the first quarter of
1999.
On May 26, Donaldson, Lufkin & Jenrette issued 18.4 million shares of a
new series of common stock (NYSE: DIR) that tracks the performance of DLJdirect.
Net proceeds from the offering were $343.2 million, of which $235.9 million was
allocated to DLJdirect.
Commissions, DLJdirect's largest source of revenues, were $35.7 million
during the second quarter of 1999, 91 percent greater than the second quarter of
1998. Highlighting DLJdirect's emphasis on the serious online investor, the
number of total accounts, active accounts, assets in customer accounts and
average number of trades per day continued to increase versus the second quarter
of 1998.
Blake Darcy, Chief Executive Officer of DLJdirect, said, "We are
delighted with DLJdirect's performance during the second quarter, especially in
the context of low advertising expenditures. Our new $65 million campaign began
its initial rollout in late
June. The bulk of these advertising expenditures, however, will be incurred as
the campaign moves into full gear later this year. We anticipate that the
benefits of increased brand awareness will be realized in subsequent quarters."
Glenn Tongue, DLJdirect's President said, "We are also especially
pleased with the growth in our underwriting business in the quarter. DLJdirect
received its underwriting powers from the NASD late in the first quarter of 1999
and acted as either a co-manager or internet distributor in a record 26
offerings of common stock during the first half of 1999, distributing over 5
million shares to its customers."
GROWTH IN CUSTOMERS, ASSETS AND TRADING ACTIVITY
As of June 30, 1999, DLJdirect had 656,000 customer accounts, 42
percent more than the second quarter a year ago. Active customer accounts at the
end of the second quarter of 1999 increased 56 percent to 277,000 when compared
to the end of the same year earlier period. During the second quarter of 1999,
DLJdirect opened 1,050 new accounts per day, double the daily average opened in
the second quarter in 1998. Assets in customer accounts on June 30, 1999 were
$13.3 billion, up from $6.7 billion at the end of the second quarter of 1998.
DLJdirect executed 1.4 million trades during the second quarter of
1999, compared to 675,000 trades executed during the second quarter of 1998.
DLJdirect executed 22,200 trades per day during the second quarter of 1999, more
than double the number of trades per day during the same year earlier period.
NEW INITIATIVES AND AWARDS
Through a joint venture between DLJdirect Inc. and Japanese partners,
including companies from Sumitomo Group, DLJdirect began offering online
brokerage services to Japanese investors in June, under the brand name DLJdirect
SFG. As the first U.S. online brokerage firm to offer trading in Japan, the
company's services include internet trading of stocks on the Tokyo and Osaka
Stock Exchanges, over-the-counter stocks, money market funds, real-time and
historical stock prices and charts, company and economic news, and equities
research. Also in June, DLJdirect was rated the best E-broker in Worth
magazine's first annual "Reader's Choice" awards, adding to the firm's number
2
one ranking among U.S. online brokerage firms by Barron's, TheStreet.com, and
Time Digital (a supplement to Time magazine).
SIX MONTH HIGHLIGHTS
Net income reported for the first six months of 1999 was $12.2 million,
as opposed to a loss of $1.1 million for the first half of 1998. Earnings per
share (pro forma diluted) for the first six months of 1999 were $0.12. Total
revenues for the first half of 1999 were $106.9 million, double the $52.3
million for the same period in 1998.
DLJdirect is one of America's premier online brokerage firms.
Established in 1988, DLJdirect offers a broad range of investment products and
services to sophisticated, self-directed investors, representing approximately
$13.3 billion in assets. For more information on DLJdirect, refer to the
company's world wide web site at www.dljdirect.com.
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. 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. 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.
Financial Tables Follow
3
DLJDIRECT
Combined 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 $ 35,711 $ 18,741 $ 67,765 $ 34,871
Fees 15,554 6,155 25,150 11,295
Interest-net 8,409 3,382 13,961 6,169
------------ ----------- ---------- ---------
Total revenues 59,674 28,278 106,876 52,335
------------ ----------- ---------- ---------
Costs and expenses:
Compensation and benefits 13,532 6,920 24,215 12,679
Brokerage, clearing, exchange
fees, and other 9,220 6,669 18,074 12,740
Advertising 13,232 4,323 19,333 13,333
Occupancy and equipment 1,968 1,231 3,471 2,312
Communications 2,719 1,546 5,424 2,735
Technology costs 531 1,204 1,811 2,307
Other operating expenses 7,231 4,431 12,046 8,091
------------ ----------- ---------- ---------
Total costs and expenses 48,433 26,324 84,374 54,197
------------ ----------- ---------- ---------
Income (loss) before income tax provision
(benefit) and equity in net loss of joint venture 11,241 1,954 22,502 (1,862)
------------ ----------- ---------- ---------
Income tax provision (benefit) 5,209 798 9,297 (761)
Equity in net loss of joint venture (2) (956) 0 (956) 0
------------ ----------- ---------- ---------
Net income (loss) $ 5,076 $ 1,156 $ 12,249 $ (1,101)
============ =========== ========== =========
Pro forma earnings (loss) per share (3):
Basic $ 0.05 $ 0.01 $ 0.12 $ (0.01)
Diluted $ 0.05 $ 0.01 $ 0.12 $ (0.01)
============ =========== ========== =========
Weighted average notional and outstanding shares:
Basic 102,650 102,650 102,650 102,650
Diluted 104,673 104,673 104,673 104,673
============ =========== ========== =========
Earnings (loss) attributable to:
DLJ Retained Interest (Pro forma) $ 4,167 $ 1,156 $ 10,056 $ (1,101)
DLJdirect Tracking Stock (Pro forma) (1) 909 0 2,193 0
============ =========== ========== =========
Tracking Stock pro forma earnings per share (3):
Basic $ 0.05 $ 0.12
Diluted $ 0.04 $ 0.11
============ ==========
Earnings for period
May 28-June 30, 1999 $ 271 $ 271
============ ==========
Earnings attributable to:
DLJ Retained Interest $ 222 $ 222
DLJdirect Tracking Stock 49 49
============ ==========
Tracking Stock earnings per share (4):
Basic $ 0.00 $ 0.00
Diluted $ 0.00 $ 0.00
============ ==========
Tracking Stock weighted average common shares (4):
Basic 18,400 18,400
Diluted 20,423 20,423
============ ==========
4
DLJDIRECT
COMBINED SUMMARY OF OPERATIONS (UNAUDITED)
(in thousands, except per share data and financial ratios)
---------------------------------------------------------
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1999
---------------------------------------------------------
BALANCE SHEET DATA AT END OF PERIOD:
Total allocated equity $ 235,992
============
Common shares at end of period:
DLJ Retained Interest (Notional) 84,250
DLJdirect Tracking Stock Outstanding 18,400
============
OTHER FINANCIAL DATA AT END OF PERIOD:
Pro forma return on average common
stockholders' equity (5) 15.2% 30.7%
(1) In March 1999, the Board of Directors of Donaldson, Lufkin & Jenrette ("DLJ
Inc.") and the majority shareholder of DLJ Inc. approved the authorization
of the issuance by DLJ Inc. of a new series of common stock, DLJdirect
Common Stock. The DLJdirect Common Stock will track the separate
performance of DLJ Inc.'s existing online discount brokerage and related
investment services business for periods subsequent to the date of the
offering ("Tracking Stock") . On May 28, 1999 ("the closing date"), DLJ
Inc. 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.
As a result of the offering, DLJ Inc. has a retained interest of 82.1% in
DLJdirect represented by 84.3 million notional shares. The 18.4 million
shares of DLJdirect Tracking Stock reflects the 17.9% owned by the public.
Prior to the offering DLJ Inc. had a 100% interest in the earnings of
DLJdirect.
(2) In March 1999, DLJdirect entered into a joint venture agreement with a
Japanese bank. DLJdirect has a 50% interest in this joint venture which
amount is included in equity from net loss of joint venture in the
statement of operations.
(3) Pro forma earnings per share amounts have been calculated by dividing net
income (loss) by the weighted average notional and outstanding tracking
shares as if the issuance of the DLJdirect Tracking Stock occurred at the
beginning of 1999. The notional shares represent DLJ's 82.1% retained
interest in DLJdirect. Prior to the offering, DLJ Inc. had a 100% interest
in the earnings of DLJdirect. These pro forma amounts are presented for
comparative purposes only.
Tracking Stock pro forma earnings per common share amounts have been
calculated by dividing earnings applicable to common shares by the weighted
average actual common shares outstanding as if the issuance of the
DLJdirect Tracking Stock occurred at the beginning of 1999. These pro forma
amounts are presented for comparative purposes only.
(4) Basic earnings per share for DLJdirect 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. Earnings per share amounts for such period
rounds to less than $0.01. 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 17.9% or
$49 thousand is applicable to common shareholders of DLJdirect and 82.1% or
$222 thousand is applicable to the retained interest of DLJ. 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.
Earnings per share for periods prior to the closing date are not presented
as such amounts are not meaningful.
(5) Pro forma 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 Tracking Stock (pro forma
for the quarter ended June 30, 1999).