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New York, NY - Donaldson, Lufkin & Jenrette, Inc. (NYSE: DLJ) today reported the strongest
quarterly earnings ever in the history of the 40-year-old investment bank.
DLJ said today that its net income for the first quarter of 2000 was a record
$245.2 million, or $1.72 per diluted share. These results were more than double the
$121.7 million, or $0.84 per diluted share, reported for the first quarter of 1999,
and were 28 percent greater than the previous quarterly record of $191.2 million
reported for the fourth quarter of 1999. DLJ's return on average equity for the first
quarter of 2000 was 26.4 percent and book value per common share at March 31, 2000
was $29.35.
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, "This was a
blockbuster quarter for DLJ! Revenue growth was impressive across the board and margins
and returns improved substantially. All of our major business units had operating
results well ahead of last year's first quarter, and significant progress was made in
the development of our international businesses. While DLJ's international businesses
were not profitable in the aggregate, important strides toward profitability were
made in the first quarter. Our new international equity business achieved
profitability after only five quarters of operations."
DLJ was once again the world's number-one-ranked underwriter of high-yield bonds with a
market share of 19.2 percent.
First Quarter Revenue Summary
DLJ's total revenues for the first quarter of 2000 increased 67 percent to $2.5 billion.
Net revenues, or total revenues minus interest expense, rose 66 percent to $1.9 billion.
Commission revenues increased 68 percent to $472.0 million, while underwriting income
declined 2 percent to $250.6 million. Fee income increased 47 percent to $422.0 million,
and trading gains more than doubled, rising 121 percent to $384.8 million. Investment gains
from DLJ's merchant banking and venture capital businesses increased dramatically to
$129.9 million for the first quarter of this year.
First Quarter Highlights
Strong Worldwide Equity Volume Boosts DLJ's Clearing, Online, Retail and Institutional Equity
Businesses
DLJ's Financial Services Group, which encompasses its Pershing correspondent
clearing business, as well as its online and traditional brokerage and asset management
businesses, led the firm in profitability for the first quarter of 2000. The Financial
Services Group generated net revenues of $675.5 million, an increase of 66 percent versus
the comparable quarter a year ago, and earned record pretax profits of $170.5 million -
88 percent greater than in the first quarter of 1999. Included in this record performance
are results for DLJdirect, which turned in the strongest quarter ever in its 12-year
history and earned pretax profits of $25.5 million on net revenues of $114.2 million.
DLJ's Pershing correspondent clearing business generated net revenues of $367.2 million
in the first quarter. As of March 31, 2000, Pershing maintained 3.4 million individual
investment accounts holding $466 billion of assets for its 650 correspondent customers.
Net revenues earned by DLJ's Investment Services Group, a worldwide network of 440
investment professionals, who serve the needs of high-net-worth individual investors,
increased 67 percent to $158.5 million.
Benefiting from similar trends in worldwide equity volume, DLJ's Global Institutional Equities Group
doubled its net revenues to $450.0 million and saw its first-quarter pretax profits increase nearly
threefold to $94.1 million. Net revenues generated by the group's U.S. institutional equities business
rose 65 percent to $280.3 million. Revenues generated by its new International Equities business grew
more than threefold to $112.1 million; after operating for only five quarters, this new business
attained profitability for the first time in the first quarter of 2000. DLJ's International Equities
department employs more than 300 individuals around the world, who provide institutional investors
with research, sales and trading services in non-U.S. equities.
Strong M&A Fees and Surging Investment Gains Drive DLJ's Banking Group
DLJ's Banking Group generated net revenues of $548.0 million during the first quarter of
2000, approximately 70 percent more than for the comparable quarter a year ago. The group's
pretax profits nearly doubled, rising to $154.4 million. The firm's global mergers and
acquisitions practice was a major contributor to the group's fee income, which rose 45
percent over the first quarter a year ago.
In initial public offerings, DLJ lead managed its largest initial public offering ever
during the first quarter of 2000: a €1.7 billion (euro) IPO for e.Biscom S.p.A, a provider
of broadband telecommunications and internet services in Italy. The offering was the first
IPO of the year in Italy and the largest non-privatization ever of an Italian company.
DLJ reported net investment gains of approximately $130 million during the first quarter of
2000. Both of the Banking Group's investment businesses - its $10 billion family of Merchant
Banking partnerships and its $2 billion Sprout Group of venture capital funds - realized
significant investment gains in the quarter. DLJ's Merchant Banking funds accounted for
approximately two-thirds of the quarter's investment gains. The technology-weighted portfolios
of the Sprout Group continued to benefit from initial public offerings by technology companies
in which Sprout has invested.
Strong Trading Gains Offset Industrywide Decline in High-Yield Underwriting
Revenues from dealer and trading gains increased by more than 120 percent to a record $384.8 million
for the first quarter, as DLJ's global trading desks benefited from the ongoing strong volume in
the world's equity markets and traded adroitly in the fixed-income markets. DLJ's High Yield
Department, enjoying the benefits of a three-year program to diversify its revenues and broaden its
business mix, almost doubled its revenues during the first quarter and tripled its pretax profits.
It was the most significant contributor to the results of DLJ's Fixed Income Group, which
generated net revenues of $245.2 million and earned pretax profits of $81.0 million, 29 percent
more than during the comparable quarter a year ago.
For the first quarter of 2000, DLJ reported underwriting revenues of $250.6 million,
approximately $6 million less than the first quarter of 1999. Solid results in equity and
equity-related underwriting were offset by the low level of activity in the new issue market
for high-yield bonds. DLJ was once again the world's number-one-ranked underwriter of
high-yield bonds with a market share of 19.2 percent.
International Revenues Up 173 Percent as Investment Spending Declines
Net revenues from DLJ's various non-U.S. businesses almost tripled rising from $141.0 million
for the first quarter of 1999 to $385.3 million during the first quarter of 2000. The largest gains
were achieved by DLJ's new International Equities unit - a business that began operating only five
quarters ago - and that attained profitability for the first time during the first quarter.
Revenues generated by DLJ's international banking business more than doubled. International
revenues generated within the Financial Services Group increased by 96 percent, as a result of
strong performances by the London office of the firm's Investment Services Group and by Pershing
Ltd., which is the leading provider of clearing services to European financial services
organizations.
About Donaldson, Lufkin & Jenrette
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 10,600 people worldwide and
maintains offices in 13 cities in the United States and 16 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, its online brokerage business. For more information on Donaldson, Lufkin &
Jenrette, refer to the company's world wide web site at http://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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