SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

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|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR
  15(d) 
  OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 1999or|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
  
  OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ________ to __________Commission file number 1-6862

Donaldson, Lufkin & Jenrette, Inc.(Exact name of Registrant as specified in its charter)





|Delaware(State or other jurisdiction of
          incorporation or organization) | 13-1898818(I.R.S. Employer
          Identification No.)
|-------------------------------------------------------------------------------- | --------------------------------------------------------
|                                                                                 |                                                         
|277 Park Avenue, New York, New York(Address of principal executive office)       | 10172(Zip Code)                                         



Registrant's telephone number, including area code: (212) 892-3000 
  Securities registered pursuant to Section 12(b) of the Act:





|Title of Each Class                                                                                                 | Name of Each Exchange on Which Registered
|------------------------------------------------------------------------------------------------------------------- | -----------------------------------------
|                                                                                                                    |                                          
|DLJ Common Stock, par value $0.10 per share                                                                         | New York Stock Exchange                  
|                                                                                                                    |                                          
|DLJdirect Common Stock, par value
          $0.10 per share                                                         | New York Stock Exchange                  
|                                                                                                                    |                                          
|Series A Fixed/Adjustable Rate Cumulative
          Preferred Stock, $50 liquidation
          preference per share | New York Stock Exchange                  
|                                                                                                                    |                                          
|Series B Fixed/Adjustable Rate Cumulative
          Preferred Stock, $50 liquidation
          preference per share | New York Stock Exchange                  



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period than the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K |X|.

As of March 3, 2000, the latest practicable date, there were 127,255,530 shares
of DLJ Common Stock, $0.10 par value, outstanding and 18,400,000 shares of
DLJdirect Common Stock, $0.10 par value, outstanding.

At March 3, 2000, the aggregate market value of the voting stock of DLJ Common
Stock and DLJdirect Common Stock held by non-affiliates of the registrant
was approximately $1.7 billion and $226.1 million, respectively. For purposes of
this information, the outstanding shares of Common Stock owned by directors and
executive officers of the registrant were deemed to be shares of Common Stock
held by affiliates.

DOCUMENTS INCORPORATED BY REFERENCE:

The information required to be furnished pursuant to Part III of this Form 10-K
is set forth in, and incorporated by reference from, the registrant's definitive
proxy statement for the annual meeting of stockholders to be held May 9, 2000,
which definitive proxy statement (the "Proxy Statement") will be filed by the
registrant with the Securities and Exchange Commission not later than 120 days
after the year ended December 31, 1999.

Part I

ITEM 1.Business

Donaldson, Lufkin & Jenrette, Inc. (the "Company") is a leading integrated
investment and merchant bank serving institutional, corporate, governmental and
individual clients both domestically and internationally. The Company is a
holding company that conducts its business through various subsidiaries
including its principal domestic broker-dealer subsidiary, Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC"), and its principal international
broker-dealer subsidiary, DLJ International ("DLJI"). The business of the
Company includes:

- Securities underwriting, sales and trading
- Merchant banking
- Financial advisory services
- Investment research
- Venture capital
- Correspondent brokerage services
- Securities lending
- Online interactive brokerage services
- Asset management and other advisory services

Founded in 1959, the Company initially focused on providing in-depth investment
research to institutional investors. In 1970, the Company became the first
member firm of the New York Stock Exchange ("NYSE") to be owned publicly.
Fifteen years later, the Company was purchased by The Equitable Life Assurance
Society of the United States ("Equitable Life"). Prior to the Company's initial
public offering in October 1995, the Company was an independently operated
indirect wholly owned subsidiary of AXA Financial Inc. ("AXA Financial"),
formerly The Equitable Companies Incorporated. At December 31, 1999, AXA
Financial owned 70.3% of DLJ's issued and outstanding common stock. AXA
Financial is a diversified financial services organization and one of the
world's largest investment management organizations. AXA S.A., a French holding
company for an international group of insurance and related financial services
companies, is AXA Financial's largest stockholder, beneficially owning, at
December 31, 1999, approximately 60.0% of AXA Financial's outstanding common
stock.

On May 28, 1999 ("the closing date"), the Company issued in an initial public
offering 18.4 million shares of DLJdirect Common Stock. DLJdirect
Common Stock is what is sometimes referred to as "tracking stock." Tracking
stock is a type of common stock that is intended to reflect or "track" the
performance of a particular business. In this case, DLJdirect Common
Stock ("Tracking Stock") tracks the performance of the Company's existing online
discount brokerage and related investment services business for periods
subsequent to the closing date. As a result of the offering, the Company has a
retained interest of 82.1% in DLJdirect represented by 84.3 million
notional shares. The 18.4 million shares of Tracking Stock reflect the 17.9%
owned by the public. Prior to the offering, the Company had a 100% interest in
the earnings of DLJdirect. DLJdirect includes DLJdirect,
Inc., a registered broker-dealer.

The Tracking Stock is intended to reflect the performance of DLJdirect.
Holders of Tracking Stock are common stockholders of the Company. For this
reason, holders of Tracking Stock are subject to all of the risks associated
with an investment in the Company and all of its businesses, assets and
liabilities. The shares of Tracking Stock have no voting rights except in
certain limited circumstances. The Company does not expect to pay any dividends
on Tracking Stock in the foreseeable future.

The Company has the right to issue DLJ Common Stock in exchange for outstanding
Tracking Stock at a premium at any time. The premium was 25% for exchanges
occurring in the first 90 days after issuance and will decline ratably each
quarter thereafter over a period of three years to 15%. However, the premium
will be 10% in the event that certain legislative or administrative proposals are
enacted. Notwithstanding the foregoing, the Company has the right, at any time,
to exchange stock of a subsidiary of the Company for Tracking Stock if all of
the assets and liabilities of DLJdirect are transferred to the subsidiary. Upon
liquidation of the Company, holders of DLJ Common Stock and Tracking Stock will
be entitled to receive the net assets of the Company, if any, remaining for
distribution to stockholders after payment or provision for all liabilities of
the Company and payment of the liquidation preference payable to any holders of
preferred stock. Amounts due upon liquidation in respect of shares of DLJ Common
Stock and shares of Tracking Stock will be distributed pro rata in accordance
with the average market value of DLJ Common Stock and the average market value
of Tracking Stock over a 20-trading-day period prior to the liquidation.

Operating Segments

Prior to 1999, the Company  operated and managed its business in
three principal operating groups: the Banking Group, the Capital
Markets Group and the Financial Services Group.

Effective January 1, 1999, the Company changed its organizational structure
and began to operate and manage its business through four principal operating
groups:

- Banking Group
- Equities Group
- Fixed Income Group
- Financial Services Group

In 1999, the Company also continued to make strides toward establishing a
strong international presence. The Company opened investment banking offices in
Frankfurt and Taipei, and an equity sales office was established in Singapore.
The Merchant Banking Group expanded its international efforts, with investments
in the United Kingdom, Italy, France, Argentina and Brazil. At December 31, 1999
and 1998, total net revenues related to the Company's foreign operations were
approximately $782.2 million and $389.7 million, respectively. At December 31,
1999 and 1998, total foreign assets were approximately $20.0 billion and $10.9
billion, respectively.

Banking Group

The Company's Banking Group is a major participant in the raising of capital and
the providing of financial advice to companies throughout the United States and
continues to strengthen its presence in Europe, Asia and Latin America. Through
Investment Banking, the Company manages and underwrites public offerings of debt
and equity securities, arranges private placements, originates both investment
and non-investment-grade debt, underwrites and syndicates senior bank debt and
provides advisory and other services in connection with mergers, acquisitions,
restructurings and other financial transactions. The Company's Merchant Banking
Group pursues direct investments in a variety of areas through a number of
investment vehicles funded with capital provided primarily by institutional
investors, the Company and its employees. The Sprout Group is Wall Street's
oldest venture capital organization.

Equities Group

The Equities Group provides domestic and foreign institutional clients with
global research, trading and sales services in U.S. listed and over-the-counter
equities, and foreign equities trading in the United States, Europe and Asia. A
joint venture has also been established in Johannesburg, South Africa. The
Company's Equity Derivatives division provides a broad range of equity and index
option products. In addition, Autranet, Inc. ("Autranet") is one of the oldest
distributors of research and investment material.

Fixed Income Group

The Fixed Income Group provides institutional clients with research, trading and
sales services for a broad range of fixed-income products, and distributes
fixed-income securities in connection with offerings underwritten by the
Company. The group is focused on two major objectives. The first is enhancing
its core businesses, which are high-yield bonds, senior bank debt, U.S.
government and investment-grade corporate bonds and real estate
finance. The second objective is the development of new products and services
that will meet specific client needs. The Fixed Income Group's research
professionals include credit analysis teams knowledgeable in high-yield
corporate, investment-grade corporate and mortgage-backed securities as well as
quantitative and economic research.

Financial Services Group

The Financial Services Group provides a broad array of services to individual
investors and the financial intermediaries that represent them. Pershing is a
leading provider of correspondent brokerage services, clearing transactions for
financial institutions that collectively maintain over 3.2 million active
customer accounts. Through its Asset Management Group, the Company provides cash
management, investment advisory and trust services primarily to high-net-worth
individuals and families. The Company's Investment Services Group provides
access to the Company's equity and fixed-income research, trading services and
underwriting to a broad mix of private clients. DLJdirect is a leading provider
of online discount brokerage and related investment services, offering customers
automated securities order placement through the Internet and online service
providers. DLJdirect's broad range of investment services is targeted at
self-directed, sophisticated online investors.

Net Revenues by Operating Group

The following table illustrates the Company's revenue breakdown by its principal
operating groups, net of all interest. Net revenues, however, are not
necessarily indicative of the profitability of each group. Certain
reclassifications of prior year amounts have been made to conform to the 1999
presentation.

|                        
|------------------------
|                        
|                        
|                        
|                        
|Banking Group           
|Fixed Income Group      
|Equities Group          
|Financial Services Group
|Offsets and eliminations
|                        
|Net revenues            
|                        

The Company currently conducts its operations in 18 cities in the United
States. The Company also has international offices located in 18 cities.

Banking Group

Mergers and Acquisitions

The Company's global merger and acquisition ("M&A") practice is the
fastest-growing segment of the Banking Group, participating in a broad range of
domestic and international assignments. The M&A professionals use an
industry-intensive approach and work closely with the Company's industry
specialty groups in a broad range of sectors. The M&A specialists operate from
the firm's offices in the United States, Europe, Asia and Latin America. As a
result of the firm's focus on international expansion, one-third of the M&A
assignments in 1999 involved a party outside the United States.

Capital Raising

Equity and Equity-Linked Offerings.The Equity Capital Markets Group focuses on
providing financing for issuers of equity and equity-linked securities in the
public markets. The group assists in the origination, and is responsible for the
structuring and execution of transactions for a broad range of clients.

High-Yield Debt Underwriting.The High-Yield Securities Group focuses on providing financing in the public and private capital
markets. The group is responsible for originating, structuring and executing high-yield
transactions across a wide range of companies and industries, as well as
managing client relationships with both high-yield corporate issuers and
financial sponsors of leveraged transactions.

Investment-Grade Corporate Bonds.The investment-grade debt origination business provides strategic advice and execution services to clients. In 1999,
the group lead-managed investment-grade debt offerings totaling approximately
$15 billion.

Senior Bank Debt and Bridge Financing.The Senior Bank Debt Group underwrites and syndicates senior bank debt, offering clients the convenience of
"one-stop shopping." During 1999, the group arranged and syndicated $53.8
billion of senior bank debt. The Company also offers bridge financing to cover
gaps that may occur in the timing and financing of transactions.

Structured Products.The Structured Products Group offers clients financing
alternatives to traditional capital markets instruments. The products are
customized to meet each client's strategic objectives.

Private Fund Group.The Company's Private Fund Group raises private
capital, primarily from institutional investors, for direct investment by
venture capital, management buyout and other investment firms, and for certain
of the Company's merchant banking activities. The group raised over $14 billion
in private capital in 1999.

Other Advisory Services.The Company also offers clients a variety of other
advisory services. The Private Capital Placements Group raises capital within
the private debt and equity markets. Additionally, the Company's Restructuring
Group advises both corporations and creditors in the complex process of
corporate restructuring. The Company also participates in the structured finance
industry through its Asset-Backed Transactions Group, and specializes in
securitizing cash-flow-generating assets through public or private offerings of
debt or pass-through certificates.

Merchant Banking

The Company entered the merchant banking investment business in 1985. Through
the Merchant Banking Group, the Company makes investments across the entire
capital structure, from venture capital equity to investments in the largest
leveraged buyouts. The group invests in companies and real estate in the United
States, Europe, Asia, Latin America, Australia and Canada, through a variety of
investment vehicles. At December 31, 1999, the group had managed funds with
committed capital of $10 billion. These funds include DLJ Merchant Banking
Partners I and II, L.P. which focus primarily on equity investments in leveraged
transactions; the DLJ Bridge Fund, a leader in domestic bridge financing; DLJ
Investment Partners I and II, which focus on opportunities in lower risk
mezzanine securities; DLJ Real Estate Capital Partners I and II, which make
investments in a broad range of real estate-related assets in the United States
and abroad; Global Retail Partners, which pursues investment opportunities in
the retail and electronic commerce industries, and Phoenix Equity Partners II,
which provides private equity capital to established European businesses with
leading market shares.

Leveraged Equity Investing.The Company's flagship fund, DLJ Merchant
Banking Partners II, L.P. has committed capital of $3 billion, with 25% of the
capital committed by DLJ and its employees. The fund makes investments in equity
and mezzanine securities arising from leveraged acquisitions and
recapitalizations, restructurings of over-leveraged companies and other similar
types of transactions, which generally involve significant financial leverage.
Since its inception in 1996, the fund has invested approximately $2.4 billion in
companies with an aggregate transaction value of more than $27 billion.

DLJ Investment Partners.In late 1999, the Company raised DLJ Investment Partners II, L.P., as a successor to its $500 million
DLJ Investment  Partners L.P.,  which  commenced  operation in 1995. The new fund has committed  capital of $1.6 billion,  including
$300 million from the Company and its employees.

DLJ Real Estate Capital Partners.The initial closing of DLJ Real Estate
Capital Partners II, L.P. ("RECP II") was held in late 1999. RECP II is the
successor to DLJ Real Estate Capital Partners, L.P., a $680 million fund raised
in 1996. DLJ Real Estate Capital Partners, L.P., focuses on investments in a
broad range of real estate and real estate-related assets in the United States
and abroad. At its first closing, the new fund has committed capital of
approximately $900 million from its general and limited partners, including $125
million from the Company and its employees.

Global Retail Partners.Global Retail Partners, L.P., ("GRP") commenced
operation in 1996 and focuses on growth retailing and electronic commerce
opportunities. In 1999, the Company raised an $87.5 million interim fund to
continue GRP's investment activities until the closing of Global Retail Partners
II, L.P. GRP and the interim fund have committed capital of approximately $239
million.

Phoenix Equity Partners.Phoenix Equity Partners III ("PEP III") is a
£350 million fund, raised at the end of 1999, dedicated to investing in
mid-market companies in Europe. The fund focuses primarily on U.K. companies,
invests in management buyouts and buy-ins and provides development or expansion
capital for mid-market private companies. PEP III is the successor to the
£133 million Phoenix Equity Partners II.

Sprout.Founded in 1969, Sprout is one of the oldest and largest groups in
the private equity investment and venture capital industry. Since the
capitalization of Sprout's first fund at $11.5 million, nine major investment
partnerships have been formed primarily for large institutional investors.
Sprout has approximately $2.0 billion of committed capital and invests in
early-stage, high-growth companies; management buyouts; and mezzanine financing
of companies that are not yet ready to access the public capital markets. Its
most recent fund, Sprout Capital VIII and related funding is $860 million.
Sprout Capital VIII invests in growth companies at all stages of development.
Sprout's investors are major public and corporate pension funds, endowments,
insurance companies and wealthy individuals.

Equities Group

Research.The Company's institutional equities research department consists of
approximately 255 research analysts and associates, based in New York City,
London and Hong Kong, who are engaged in the analysis of economic trends and a
broad range of industries and companies. The department produces publications,
studies and forecasts on economic conditions, financial markets, portfolio
strategy, quantitative analysis, industry developments and individual companies.
Consistent with the Company's expansion in international markets, global
research efforts were expanded to cover the following sectors: Financials,
Defense & Aerospace, Pharmaceuticals, Motors, Energy & Utilities, Engineering,
Technology, Drinks, Telecoms, Transport and Media. Worldwide coverage now
includes more than 1,600 companies.

Sales and Trading.The Company's equity sales and trading operation covers
nearly 2,300 of the world's largest institutional investors, in 50 countries
around the world. Outside of the United States, there are sales offices in
London, Frankfurt, Geneva, Lugano, Tokyo, Hong Kong and Singapore. The Company's
trading strategy is client-driven. The Company does not accumulate large
positions for its own account, but provides clients with liquidity by taking a
position as a principal to facilitate their transactions. In U.S. equities
trading, the Company's traders actively trade 1,850 listed stocks and the
over-the-counter ("OTC") desk makes markets in approximately 420 stocks. The
Company also trades approximately 1,200 securities of companies in the developed
and emerging markets of Europe, Asia and Latin America. Internationally, the
Company executes and commits capital on all major exchanges. The convertible
securities business has also expanded to cover both U.S. and international
issuers.

Autranet.Autranet Inc., a registered  broker-dealer  and member firm of the NYSE, is active in the distribution of investment
research  products  purchased from  "independent  originators."  Independent  originators  are research  specialists not linked to a
broker-dealer organization and ranging in size and scope from large economic consulting firms to individual freelance analysts.

Equity Derivatives.The Equity Derivatives division, located in New York
and London, provides institutional clients with research, trading and sales
services in a broad range of products. The Company's activities in equity
derivative products have focused primarily on product innovations in the design
and origination of custom-tailored OTC options to meet the specific needs of
customers rather than on hedging the firm's own position. The Company offers
derivatives based on all traded products including equities, commodities, debt
instruments, currencies and indices.

Fixed Income Group

High-Yield Bonds.The High Yield department is ranked number one in the
origination of high-yield bonds in the United States and Western Europe. The
department provides institutional clients with research, trading and
sales services and distributes non-investment-grade securities in connection
with offerings underwritten by the Company. During 1999, the Company had
domestic underwritings of high-yield securities of over $16 billion.

Senior Bank Debt Group.The Senior Bank Debt Group syndicates leveraged
loans and enters into commitments to extend credit primarily to
non-investment-grade borrowers. This group provides the Company's clients with
the convenience of a single financing source. The group's base of institutional
investors has expanded to include pension funds, mutual funds and insurance
companies. In 1999, the group acted as lead agent on loans aggregating
approximately $53.8 billion.

Investment-Grade Corporate Bonds.The Company is a major participant in the
secondary trading and distribution of investment-grade corporate debt
instruments and has consistently ranked as one of the top providers of credit
research on those securities.

Government Bonds.The Company is a primary dealer in the U.S. Treasury
market. The Government Bond department acts as underwriter and market maker in
U.S. Treasury bills, notes, bonds, and securities of Federal agencies. The
Company also engages in the "stripping" of government and government-guaranteed
bonds to create zero-coupon securities. It also trades treasury futures and
options and develops hedging programs for its clients. Institutional clients
include insurance companies, money managers, commercial banks, hedge funds and
pension funds. The Government Bond department also maintains a money desk that
provides financing for its daily trading inventory positions, and to a lesser
extent, for other fixed-income departments through the use of repurchase
agreements. In addition, it acts as an intermediary between borrowers and
lenders of short-term funds utilizing repurchase and reverse repurchase
agreements.

Real Estate Finance Group.The group provides capital and financial
advisory services for major participants in the commercial and residential real
estate markets, originating loans secured by residential, multi-family and
commercial properties and, acting as agent, places mortgage-backed debt for
clients. In 1999, the total underwritings for the group exceeded $26 billion.
The Company's commercial mortgage lending subsidiary, Column Financial,
originates, acquires and enhances mortgage loans for securitization and sale to
investors in the form of Collateralized Mortgage Obligations ("CMOs"). In 1999,
Column Financial originated over $2.3 billion in loans.

Foreign Exchange.The Company's Foreign Exchange Group serves a broad range
of clients worldwide, including multinational corporations, money managers,
hedge funds, banks and high-net-worth individuals. The group is based in New
York and London.

Derivatives.The Company's Derivatives Group is a full-service unit that
provides hedging alternatives linked to high-yield and investment-grade
securities, to institutional investors and corporate issuers. The group offers
interest rate derivatives, emerging markets derivatives and credit-structured
products. This unit has offices in New York, London, Hong Kong and Tokyo.

Research.The Fixed Income Research Group provides investment analysis and
recommendations on more than 500 issuers. In addition, the group provides
proprietary research on a variety of structured products and global economic
analyses.

Financial Services Group

Pershing Division.Pershing is a leading provider of correspondent brokerage
services to many of the world's financial institutions, and through its Global
Investment Manager Services Group, a provider of prime brokerage services.
Founded in 1939 and acquired by the Company in 1977, Pershing now operates out
of 12 offices, with headquarters in Jersey City, New Jersey and regional client
coverage from our Charlotte, Chicago, Los Angeles, San Francisco, London, Hong
Kong, and Melbourne locations. Pershing provides execution, settlement and
clearance on a multi-currency basis in 40 international markets. Pershing's
broad range of services, including custody, cash management, product
development, information management, portfolio evaluation, financing, research,
securities lending, and related services are used by more than 600 customers,
which collectively maintain over 3.2 million active client accounts holding
nearly $400 billion of assets. As a wholesaler of these services, Pershing
operates on a fee-for-service basis.

Pershing  maintains  a  significant  presence  on the major  U.S.  securities  exchanges  and  provides  agency  execution  for
institutional block and retail orders. Pershing also supplies broad coverage of fixed-income securities
and money market funds, and offers access to over 10,000 mutual funds.
Through Pershing Trading Company, Pershing is also a market maker on regional
exchanges and in the OTC markets. Pershing's London subsidiary, Pershing
Securities Limited ("PSL"), is a correspondent clearing firm and provider of
private label discount brokerage service in the United Kingdom. Pershing
provides Internet-based solutions to approximately 12,000 investment
professionals. Pershing technology also allows over 100 broker-dealers to serve
nearly 400,000 clients online. Pershing utilizes a combination of in-house
products and content partnerships with other e-commerce firms to deliver a wide
range of high quality content to investment professionals and clients. In
addition, Pershing's Investment Research department offers retail oriented
investment analyses and recommendations through traditional and on-line
channels.

DLJ Global IMS ("IMS"), formerly London Global Securities, with operations
in London and Australia, specializes in international securities financing. IMS
uses securities lending, repurchase and reverse repurchase agreements and swap
transactions to provide financing and securities lending services to the
Company's businesses, customers, and market counterparties. IMS operates as a
principal in all major equity and fixed income markets. IMS's operations are
conducted within the Global Investment Manager Services Group of Pershing.

Investment Services Group.The Investment Services Group offers a full
range of investment and portfolio services to high-net-worth individual
investors and medium to smaller size financial institutions and corporations. At
the end of 1999, the group had 12 offices in the United States and one in
London. The London office has global trading capabilities in a broad range of
equity, fixed income and derivative products and also offers a Swiss banking
facility.

Asset Management Group.Prior to 1999, the Company's asset management
business consisted of two components, Wood, Struthers & Winthrop, which invested
on behalf of high-net-worth individuals and families, and DLJ Investment
Management Corp., an institutional money manager. At the end of 1999, all of the
Company's varied money management services were placed in DLJ Asset Management
Group.

The Asset Management Group currently manages $27.5 billion of which
approximately $16 billion is managed for institutional clients and approximately
$12 billion is managed for individual clients. Assets under management include
three open-end mutual fund families  the DLJ Winthrop Focus Funds, the DLJ
Winthrop Opportunity Funds and the DLJdirect Funds as well as one closed-end
fund, the DLJ High Yield Bond Fund. Investment activities are focused on large
and small cap domestic equity management, international and emerging markets
equity management, sector fund equity management, high-grade fixed income
management, and high-yield fixed income management.

The Asset Management Group also specializes in investment management, tax,
trust and estate planning for high-net-worth individuals and families and
provides personalized services for its clients through its Wood, Struthers &
Winthrop division. The Asset Management Group also manages approximately $6
billion in a portfolio of private placements which it originated. These include
private equity funds and exchange funds. The Asset Management Group also
provides tax, estate, and financial planning, along with custody and personal
fiduciary services through a wholly owned limited purpose trust company
subsidiary, Winthrop Trust Company. The Asset Management Group also manages
equity portfolios of various types and both dollar and non-dollar fixed income
portfolios ranging from short duration and high credit quality to long duration
and non-investment grade credit quality through its Institutional Services
Division.

DLJdirect.DLJdirect is a leading provider of online discount brokerage and
related investment services, offering customers automated securities order
placement and information and research capabilities through the Internet and
online service providers. DLJdirect's broad range of investment services is
targeted at self-directed, sophisticated online investors, who on average have
higher account balances than other online investors. DLJdirect was one of the
pioneers of online investing. DLJdirect started in the online brokerage business
in September 1988. In its 11-year history, DLJdirect has frequently been
recognized as a high-quality provider of online brokerage services.

DLJdirect's investment services and products include:

- online order entry for Nasdaq and exchange-listed securities, equity and
       index options, mutual funds and fixed income securities, including
       extended-hours order entry during pre- and post-market trading sessions
- access to selected DLJ-managed initial public offerings and other equity
     offerings
- online offerings of proprietary DLJ-managed mutual funds
- intraday company and industry research from DLJ
- online offerings of mortgages including products backed by
    securities held in DLJdirect accounts
- DLJdirect's MarketSpeed,  its proprietary software with enhanced
       graphics and greater ease of use permitting DLJdirect's customers to
       access DLJdirect's online services an average of four times faster than
       other major Internet brokers
- wireless access to customizable market and account alerts through a
       variety of devices including palm-top organizers, cellular telephones,
       and pagers, as well as order entry through palm-top organizers
- online access to account information including account balances and
     portfolio holdings updated on a real-time basis
- online automated portfolio evaluation
- stock and mutual fund evaluation tools, including its proprietary
    StockScan for screening over 9,500 public companies and its proprietary
    FundScan for analyzing over 7,500 mutual funds
- research and analysis from independent research organizations, including
       Standard & Poor's, Zacks Investment Research Incorporated, and Thomson
       Investors Network
- real-time news from Dow Jones Newswires and other leading news providers
- daily market commentary from TheStreet.com and Briefing.com

iNautix Technologies, DLJdirect's technology group, develops, designs, and
supports Internet-based products and services for DLJdirect, its affiliates, and
third parties.

In March 1999, DLJdirect entered into a 10-year joint venture agreement
with Sumitomo Bank, the second largest bank in Japan. Pursuant to the agreement,
a Japanese corporation, DLJdirect SFG Securities Inc. ("DLJdirect Japan") was
formed. Operations commenced as of April 1, 1999, and the corporation's Internet
site was launched on June 11, 1999. DLJdirect has a 50% interest in the joint
venture. DLJdirect Japan provides Japanese investors with online discount
brokerage and the ability to invest in Japanese and U.S. equities.

DLJdirect's online United Kingdom discount brokerage service, DLJdirect
Ltd. ("DLJdirect U.K."), commenced operations in the third quarter of 1999.
Through its Internet site launched September 1, 1999, DLJdirect U.K. provides
investors with the ability to invest in United Kingdom and United States
equities.

DLJdirect formed a strategic alliance with Scudder Investments, Inc.,
Scudder Kemper Investments' direct mutual fund business, to provide
broker-dealer services to Scudder's customers. DLJdirect will assume
responsibility for Scudder Investments' current brokerage clients, which
includes accounts with approximately $1.5 billion in assets. Effective February
5, 2000, Scudder's customers will be converted and serviced by DLJdirect under
the co-branded name "DLJdirect for Scudder Investments."

In February 2000, DLJdirect formed a joint venture to offer online
brokerage services in 14 countries throughout the Middle East and North Africa.
The joint venture, DLJdirect-eUnion will offer investors in the region online
access to U.S. securities markets. DLJdirect-eUnion intends to expand its
coverage to include other international and regional markets in the future.

In addition, DLJdirect recently announced a joint venture with Hutchison
Whampoa Ltd. in Hong Kong. The joint venture will offer online brokerage
services in Hong Kong, mainland China, Thailand, Singapore, Malaysia, the
Philippines, Taiwan and Indonesia as part of DLJdirect's international expansion
strategy.

Competition

The Company encounters significant competition in all aspects of the securities
business and competes directly worldwide with other domestic and foreign
securities firms, a number of which have greater capital, financial and other
resources than the Company. In addition to competition from firms currently in
the securities business, there has been increasing competition from other
sources, such as commercial banks and investment boutiques.
As a result of legislative and regulatory initiatives in the United States
removing certain restrictions on commercial banks, it is anticipated that
competition in some markets currently dominated by investment banks may increase
in the future. Such competition could also affect the Company's ability to
attract and retain highly skilled individuals to conduct its various businesses.
The principal competitive factors influencing the Company's business are its
professional staff, the firm's reputation in the marketplace, its existing
client relationships, the ability to commit capital to client transactions and
its mix of market capabilities. The Company's ability to compete effectively in
securities brokerage and investment banking activities will also be influenced
by the adequacy of its capital levels.

DLJdirect is part of the online discount brokerage industry, a new, rapidly
evolving and intensely competitive market, which is experiencing substantial
competition from established financial services firms as well as new entrants
who are trying to quickly establish their presence in the market. DLJdirect
expects competition to continue and intensify in the future. DLJdirect faces
direct competition from discount brokerage firms providing either touch-tone
telephone or online investing services, or both. DLJdirect also encounters
competition from the broker-dealer affiliates of established full commission
brokerage firms. In addition, it competes with financial institutions, mutual
fund sponsors and other organizations, some of which provide electronic
brokerage services. DLJdirect's future success depends in part on its ability to
develop and enhance its services and products.

As a result of intense competitive pressures, the industry has experienced
a significant increase in brand development costs, a lowering of commission
pricing and an increase in content development costs. DLJdirect expects to spend
significant amounts in the future to develop much greater brand recognition
within its targeted market, to stay competitively priced and to develop new
state-of-the-art products and services. In particular, DLJdirect expects to
spend significant amounts for advertising. Additionally, DLJdirect expects to
spend significant amounts in the future in order to expand its international
presence.

Employees

At December 31, 1999, the Company had approximately 8,500 domestic employees and
1,700 international employees. Professional personnel receive salary as well as
incentive compensation in the form of bonus and, in certain instances, through
long-term incentive and/or other compensation plans. Most of the Company's
securities sales force personnel receive a percentage of their gross revenues or
a percentage of a specified revenue pool as compensation. Other employees
receive a salary and, in certain cases, overtime compensation and compensation
in the form of profit sharing. None of the Company's employees are represented
by a labor union.

Regulation

The Company's business, and the securities industry in general, is subject to
extensive regulation in the United States at both the Federal and state level,
as well as by industry Self Regulatory Organizations ("SRO"). A number of
Federal regulatory agencies are charged with safeguarding the integrity of the
securities and other financial markets and with protecting the interests of
customers participating in those markets. The Securities and Exchange Commission
(the "Commission") is the Federal agency that is primarily responsible for the
regulation of broker-dealers and investment advisors doing business in the
United States, and the Commodity Futures Trading Commission ("CFTC") is
primarily responsible for the regulation of futures commission merchants. In
addition, the Department of the Treasury and the Municipal Securities Rulemaking
Board have the authority to promulgate regulations relating to U.S. government
and agency securities and to municipal securities, respectively. The Board of
Governors of the Federal Reserve System promulgates regulations applicable to
certain securities credit transactions. Broker-dealers and investment advisers
are subject to registration and regulation by state securities regulators in
those states in which they conduct business. Industry SROs, each of which has
authority over the firms that are its members, include the National Association
of Securities Dealers ("NASD"), the New York Stock Exchange ("NYSE"), and other
securities exchanges, the National Futures Association ("NFA") and the commodity
exchanges. Certain of the Company's international broker-dealer subsidiaries are
subject to the regulatory requirements of non-U.S. securities financial
regulatory authorities.

Each of DLJSC, Pershing Trading Company, L.P. ("Pershing Trading"),
DLJdirect, Inc. and Autranet (collectively, the "U.S. Broker-Dealers") is
registered as a broker-dealer with the Commission and is a member of, and
subject to regulation by, a number of securities industry SROs, including the
NYSE and/or the NASD. Both DLJSC and Pershing Trading are, in addition to being
NYSE members, members of most other major U.S. securities exchanges. DLJSC is
also registered as a broker-dealer in all 50 states and the District of
Columbia, as a futures commission merchant with the CFTC, as an investment
adviser with the Commission and in certain states, is also designated a primary
dealer in U.S. government securities by the Federal Reserve Bank of New York. In
connection with their business as futures commission merchants, DLJSC is a
member of, and subject to regulation by, the Chicago Board of Trade ("CBOT") and
Autranet is a member of, and subject to regulation by, the NFA. Pershing
Trading, Autranet and DLJdirect, Inc. are registered as broker-dealers in a
number of states. DLJ Asset Management Group, Inc. and DLJ Investment Partners,
Inc. are registered with the Commission and, in certain states as an investment
adviser. The Company also has certain other direct and indirect subsidiaries
that are registered with the Commission and certain states or with other
regulatory authorities as broker-dealers or investment advisers. The New York
State Banking Department regulates Winthrop Trust Company.

As a result of registration and SRO memberships, the U.S. Broker-Dealers
are subject to overlapping schemes of regulations, which cover all aspects of
their securities business. Such regulations cover matters including capital
requirements, the use and safekeeping of customers' funds and securities,
recordkeeping and reporting requirements, supervisory and organizational
procedures intended to assure compliance with securities laws and rules of the
SROs and to prevent the improper trading on "material nonpublic" information,
employee-related matters, limitations on extensions of credit in securities
transactions, required procedures for trading on securities exchanges and in the
over-the-counter market, and procedures for the clearance and settlement of
trades. A particular focus of the applicable regulations concerns the
relationship between broker-dealers and their customers. As a result, the U.S.
Broker-Dealers in some instances may be required to make "suitability"
determinations as to certain customer transactions, are limited in the amounts
that they may charge customers, cannot trade ahead of their customers and must
make certain required disclosures to their customers.

As investment advisers registered with the Commission, DLJ Asset Management
Group, Inc. and DLJSC are subject to the requirements of the Investment Advisers
Act of 1940 and the Commission's regulations thereunder. Such requirements
relate to, among other things, limitations on the ability of investment advisers
to charge performance-based or non-refundable fees to clients, recordkeeping and
reporting requirements, disclosure requirements, and limitations on principal
transactions between an adviser or its affiliates and advisory clients, as well
as general anti-fraud prohibitions. The state securities law requirements
applicable to registered investment advisers are in certain cases more
comprehensive than those imposed under the Federal securities laws.

DLJSC, as a registered futures commission merchant, is subject to the
capital and other requirements of the CFTC under the Commodity Exchange Act.
These requirements include the provision of certain disclosure documents,
prohibitions against trading ahead of customers and other fraudulent trading
practices, provisions as to the handling of customer funds and reporting and
recordkeeping requirements.

In addition to being regulated in the United States, the Company's business
is subject to regulation by various foreign governments and regulatory bodies.
The Company does business in the international equity and fixed income markets
and undertakes investment banking activities through several of its
international subsidiaries. The Company's London broker-dealer subsidiaries are
subject to regulation by the Securities and Futures Authority ("SFA"), which
governs all aspects of a United Kingdom investment business, including
regulatory capital, sales and trading practices, use and safekeeping of customer
funds and securities, recordkeeping, margin practices and procedures,
registration standards for individuals, and periodic reporting and settlement
procedures. In addition, the Company has broker-dealer subsidiaries that are
subject to regulation, including capital requirements, imposed by the Securities
and Futures Commission ("SFC") of Hong
Kong, the Monetary Authority of Singapore and the Ontario Securities
Commission. Certain other international activities of the Company are subject to
regulation by various other agencies.

Additional legislation and regulations, including those relating to the
activities of affiliates of broker-dealers, changes in rules promulgated by the
Commission, the CFTC or other U.S. or foreign governmental regulatory
authorities and SROs or changes in the interpretation or enforcement of existing
laws and rules may adversely affect the manner of operation and profitability of
the Company.

The Company's businesses may be materially affected not only by regulations
applicable to them as a financial market intermediary, but also by regulations
of general application. For example, the volume of the Company's underwriting,
merger and acquisition and merchant banking businesses in any year could be
affected by, among other things, existing and proposed tax legislation,
antitrust policy and other governmental regulations and policies (including the
interest rate policies of the Federal Reserve Board) and changes in
interpretation or enforcement of existing laws and rules that affect the
business and financial communities. From time to time, various forms of
anti-takeover legislation and legislation that could affect the benefits
associated with financing leveraged transactions with high-yield securities have
been proposed that, if enacted, could adversely affect the volume of merger and
acquisition and merchant banking business, which in turn could adversely affect
the Company's underwriting, advisory and trading revenues related thereto.

The Company believes that it has been in compliance in all material
respects with the regulations described herein.

In addition, several
states, including New York, which is Equitable Life's state of domicile,
regulate transactions between an
insurer and its affiliates under insurance holding company acts. Under such
laws, and an undertaking submitted by Equitable Life to the New York State
Insurance Department, certain transactions between the Company, on the one hand,
and Equitable Life and its subsidiaries on the other, may be subject to prior
notice or approval of the New York State Insurance Department depending on the
size of such transactions.

Capital Requirements

DLJSC, Pershing Trading, DLJdirect, Inc. and Autranet are broker-dealers
registered with the Commission and subject to the capital requirements of the
Commission. In addition, as member firms of the NYSE and/or NASD, they are
subject to the capital requirements of their respective SRO. These capital
requirements specify minimum levels of capital, computed in accordance with
regulatory requirements ("net capital"), that the U.S. Broker-Dealers are
required to maintain and also limit the amount of leverage that the U.S.
Broker-Dealers are able to obtain in their businesses. As a futures commission
merchant, DLJSC is also subject to the capital requirements of the CFTC and the
CBOT. Compliance with regulatory capital requirements could limit those
operations of the U.S. Broker-Dealers that require the intensive use of capital,
such as DLJSC's underwriting and trading activities, and the financing of
customer account balances, and also restrict the Company's ability to pay
dividends, pay interest, repay debt, and redeem or purchase shares of its
outstanding capital stock. A change in such rules, or the imposition of new
rules, affecting the scope, coverage, calculation or amount of capital
requirements, or a significant operating loss or any unusually large charge
against capital, would adversely affect the ability of the Company to pay
dividends or to expand or even maintain present levels of business. The Company
believes that at all times the U.S. Broker-Dealers have been in compliance in
all material respects with the applicable minimum capital rules of the
Commission, the NYSE, the CFTC and the CBOT.

The Company's non-U.S. broker-dealer subsidiaries may be subject to the net
capital requirements imposed by foreign financial regulatory authorities. At
December 31, 1999, the Company's foreign broker-dealer subsidiaries were in
compliance with all applicable regulatory capital adequacy requirements.

ITEM 2.Properties

The Company's principal executive offices are presently located at 277 Park
Avenue, New York, New York and occupy approximately 1.2 million square feet
under a lease expiring in 2021. The Company has leased space at 280 Park Avenue,
New York, New York, aggregating approximately 192,000 square feet under leases
expiring at various dates through 2014. The Company also leases space at 120 Broadway,
New York, New York, aggregating approximately 94,000 square feet. This lease
expires in 2006.

The Company's principal London-based broker-dealer subsidiary is located at
99 Bishopsgate and 111 Old Broad Street, and occupies approximately 225,000
square feet under leases expiring at various dates through 2018.

Pershing also leases approximately 471,000 square feet in Jersey City, New
Jersey, under leases that expire at various dates through 2009. In 1999, the
Company's online brokerage subsidiary entered into a lease at Harborside
Financial Center in Jersey City, New Jersey aggregating approximately 160,000
square feet. This lease expires in 2010. The Company also owns land and a
building with approximately 142,000 square feet in Florham Park, New Jersey.

In addition, the Company leases an aggregate of approximately 1.0 million
square feet for its domestic and international regional offices, the leases for
which expire at various dates through 2014. Other domestic offices are located
in Atlanta, Austin, Boston, Charlotte, Chicago, Dallas, Deerfield, Denver,
Houston, Jersey City, Los Angeles, Menlo Park, Miami, Oak Brook, Parsippany,
Philadelphia and San Francisco. Its foreign office locations are Bangalore,
Buenos Aires, Frankfurt, Geneva, Hong Kong, Johannesburg, London, Lugano,
Melbourne, Mexico City, Monterrey, Moscow, Paris, Sao Paulo, Seoul, Singapore,
Taipei and Tokyo.

The Company believes that its present facilities are adequate for its
current needs.

ITEM 3.Legal Proceedings

In October 1995, DLJSC was named as a defendant in a purported class action
filed in a Texas State Court on behalf of the holders of $550.0 million
principal amount of subordinated redeemable discount debentures of National
Gypsum Corporation ("NGC") canceled in connection with a Chapter 11 plan of
reorganization for NGC consummated in July 1993. The State Court named plaintiff
also filed an adversary proceeding in the U.S. Bankruptcy Court for the Northern
District of Texas seeking a declaratory judgment that the confirmed NGC plan of
reorganization does not bar the class action claims. Subsequent to the
consummation of NGC's plan of reorganization, NGC's shares traded for values
substantially in excess of, and in 1995 NGC was acquired for a value
substantially in excess of, the values upon which NGC's plan of reorganization
was based. The two actions arise out of DLJSC's activities as financial advisor
to NGC in the course of NGC's Chapter 11 reorganization proceedings. The class
action complaint alleges that the plan of reorganization submitted by NGC was
based upon projections by NGC and DLJSC which intentionally understated
forecasts, and provided misleading and incorrect information to hide NGC's true
value and that defendants breached their fiduciary duties by, among other
things, providing false, misleading or incomplete information to deliberately
understate the value of NGC. The class action complaint seeks compensatory and
punitive damages purportedly sustained by the class. On October 10, 1997, DLJSC
and others were named as defendants in a new adversary proceeding in the
Bankruptcy Court brought by the NGC Settlement Trust, an entity created by the
NGC plan of reorganization to deal with asbestos-related claims. The Trust's
allegations are substantially similar to the claims in the State Court action.
On January 21, 1998, the Bankruptcy Court ruled that the State Court plaintiff's
claims were not barred by the NGC plan of reorganization insofar as they alleged
nondisclosure of certain cost reductions announced by NGC in October 1993. DLJSC
has appealed the Bankruptcy Court's ruling. On May 7, 1998, DLJSC and others
were named as defendants in a second action in a Texas State Court brought by
the NGC Settlement Trust. The allegations of this second Texas State Court
action are substantially similar to those of the earlier class action pending in
State Court. In an amended order dated January 5, 1999, the State Court granted
the class action plaintiff's motion for class certification. In an order dated
March 1, 1999, the State Court granted motions for summary judgment filed by
DLJSC and the other defendants in both State Court actions. The plaintiffs have
appealed. DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaints.

On January 26, 1996, a purported purchaser of certain notes and warrants to
purchase shares of common stock of Rickel Home Centers, Inc. ("Rickel") filed a
class action complaint against DLJSC and certain other defendants for
unspecified compensatory and punitive damages in the U. S. District Court for
the Southern District of New York. The suit was brought on behalf of the
purchasers of 126,457 units consisting of $126,457,000 aggregate principal
amount of 13 1/2% senior notes due 2001 and 126,457 warrants to purchase shares
of common stock of Rickel (the "Units") issued by Rickel in October 1994. The
complaint alleges violations of federal securities laws and common law fraud
against DLJSC, as the underwriter of the Units and as an owner of 7.3% of the
common stock of Rickel, Eos Partners, L.P. and General Electric Capital
Corporation, each as owners of 44.2% of the common stock of Rickel, and members
of the board of directors of Rickel, including a DLJSC managing director. The
complaint seeks to hold DLJSC liable for alleged misstatements and omissions
contained in the prospectus and registration statement filed in connection with
the offering of the Units, alleging that the defendants knew of financial losses
and a decline in value of Rickel in the months prior to the offering and did not
disclose such information. The complaint also alleges that Rickel failed to pay
its semi-annual interest payment due on the Units on December 15, 1995 and that
Rickel filed a voluntary petition for reorganization pursuant to Chapter 11 of
the Bankruptcy Code on January 10, 1996. On April 22, 1999, the complaint
against DLJSC and the other defendants was dismissed. The plaintiffs have
appealed. DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaint.

In November 1998, three purported class actions (Gillet v. Goldman, Sachs &
Co. et al., Prager v. Goldman, Sachs & Co. et al., and Holzman v. Goldman, Sachs
& Co. et al) were filed in the U.S. District Court for the Southern District of
New York against more than 25 underwriters of initial public offering
securities, including DLJSC. The complaints allege that defendants conspired to
fix the "fee" paid for underwriting initial public offering securities by
setting the underwriters' discount or "spread" at 7%, in violation of the
federal antitrust laws. The complaints seek treble damages in an unspecified
amount and injunctive relief as well as attorney's fees and costs. On March 15,
1999, the plaintiffs filed a Consolidated Amended Complaint captioned In re
Public Offering Fee Antitrust Litigation. A motion by all defendants to dismiss
the complaints on several grounds is pending. Separately, the U.S. Department of
Justice has issued a Civil Investigative Demand to several investment banking
firms, including DLJSC, seeking documents and information relating to "alleged"
price fixing with respect to underwriting spreads in initial public offerings.
The government has not made any charges against DLJSC or the other investment
banking firms. DLJSC is cooperating with the Justice Department in providing the
requested information and believes that no violation of law by DLJSC has
occurred.

In addition to the matters described above, the Company has been named as a
defendant in various civil actions and arbitrations arising out of its
activities as a broker-dealer in securities, as an underwriter and as an
employer and arising out of alleged employee misconduct. The Company is also
involved, from time to time, in proceedings with, and investigations by,
governmental agencies and SROs. See "Regulation." The Company does not believe
that any such matters, claims or investigations will have a material adverse
effect on its results of operations or its consolidated financial condition.

ITEM 4.Submission of Matters to a Vote of Security Holders

During the fourth quarter of 1999, no matters were submitted to a vote of
security holders.

Part II

ITEM 5.Market for Registrant's Common Equity 
  and Related Stockholder Matters

Market and Dividend Information

The principal market for trading DLJ Common Stock (stock symbol
  "DLJ") and 
  DLJdirect Common Stock (stock symbol "DIR") is the New York Stock Exchange.

|                
|----------------
|                
|1999            
|                
|DLJ*            
|High            
|Low             
|Common dividends
|                
|DLJdirect       
|High            
|Low             
|                
|                
|1998            
|                
|DLJ*            
|High            
|Low             
|Common dividends
|                

The DLJdirect Common Stock was issued on May 28, 1999. No dividends were paid on
DLJdirect Common Stock in 1999. The approximate number of holders of DLJ Common
Stock and DLJdirect Common Stock was 25,000 and 40,000, respectively, at March
5, 2000.

* All figures are adjusted for the two-for-one split of DLJ
  Common Stock that occurred on May 12, 1998.

ITEM 6.
Selected Financial DataFor information required by Item 6, refer to Selected Consolidated
  Financial Data for Donaldson, Lufkin & Jenrette, Inc. on page 20 and Selected
  Combined Financial Information for DLJdirect on page 64.
ITEM 7.Management's Discussion and Analysis of Financial
  Condition and Results of Operations
For information required by Item 7, refer to Management's Discussion
  and Analysis of Financial Condition and Results of Operations for Donaldson,
  Lufkin & Jenrette, Inc. on page 22 and Management's Discussion and Analysis
  of Financial Condition and Results of Operations for DLJdirect on page
  66.
ITEM 7A.
Quantitative and Qualitative Disclosures About Market RiskFor information required by Item 7A, refer to Quantitative and
  Qualitative Disclosures About Market Risk for Donaldson, Lufkin & Jenrette,
  Inc. on page 29 and Quantitative and Qualitative Disclosures about Market Risk
  for DLJdirect on page 70.
ITEM 8.
Financial Statements and Supplementary DataFor information required by Item 8, refer to the Consolidated
  Financial Statements and Financial Statement Schedule for Donaldson, Lufkin
  & Jenrette, Inc. on page 33 and Combined Financial Statements for DLJdirect
  on page 71.
ITEM 9.Changes in and Disagreements with Accountants
  and Accounting and Financial Disclosure
None.
Selected Consolidated Financial DataDonaldson, Lufkin & Jenrette, Inc.

Years Ended December 31,1999
    
    1998
    
    1997
    
    1996
    
    1995(In millions, except share and per
        share data)Income Statement Data:RevenuesCommissions
    
    $
    1,200.7
    
    $
    854.7
    
    $
    690.2
    
    $
    573.3
    
    $
    460.2Underwritings
    
    
    1,246.4
    
    
    1,043.5
    
    
    911.3
    
    
    766.5
    
    
    473.4Fees
    
    
    1,611.9
    
    
    1,191.7
    
    
    767.3
    
    
    470.0
    
    
    369.1Interest, net(3)
    
    
    2,175.4
    
    
    2,189.1
    
    
    1,652.1
    
    
    1,074.2
    
    
    904.1Principal transactions-net:Trading
    
    
    718.6
    
    
    (58.6
    )
    
    357.5
    
    
    393.3
    
    
    305.0Investment
    
    
    107.3
    
    
    126.0
    
    
    194.5
    
    
    163.0
    
    
    163.7Other
    
    
    86.0
    
    
    60.6
    
    
    67.6
    
    
    60.7
    
    
    55.1Total revenues
    
    
    7,146.3
    
    
    5,407.0
    
    
    4,640.5
    
    
    3,501.0
    
    
    2,730.6Costs and ExpensesCompensation and benefits
    
    
    3,105.4
    
    
    2,231.7
    
    
    1,908.2
    
    
    1,549.0
    
    
    1,190.0Compensation expense-restricted
      stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.2Interest
    
    
    1,590.2
    
    
    1,455.9
    
    
    1,153.2
    
    
    733.2
    
    
    680.6Communications and technology
    
    
    445.2
    
    
    314.6
    
    
    270.5
    
    
    175.4
    
    
    126.3Brokerage, clearing, exchange fees
      and other
    
    
    313.8
    
    
    258.6
    
    
    231.4
    
    
    201.3
    
    
    168.1Occupancy and related costs
    
    
    178.9
    
    
    143.8
    
    
    108.4
    
    
    89.8
    
    
    73.0Other operating expenses
    
    
    559.3
    
    
    401.9
    
    
    307.7
    
    
    278.5
    
    
    187.9Total costs and expenses
    
    
    6,192.8
    
    
    4,806.5
    
    
    3,979.4
    
    
    3,027.2
    
    
    2,432.1Income before provision for income taxes
    
    
    953.5
    
    
    600.5
    
    
    661.1
    
    
    473.8
    
    
    298.5Provision for income taxes
    
    
    352.8
    
    
    229.7
    
    
    252.8
    
    
    182.5
    
    
    119.4Net income
    
    $
    600.7
    
    $
    370.8
    
    $
    408.3
    
    $
    291.3
    
    $
    179.1Dividends on preferred stock
    
    $
    21.2
    
    $
    21.3
    
    $
    12.2
    
    $
    18.7
    
    $
    19.9Earnings applicable to common shares
    
    $
    579.5
    
    $
    349.5
    
    $
    396.1
    
    $
    272.6
    
    $
    159.2Earnings (loss) applicable to common shares (1):DLJ
    
    $
    580.4
    
    $
    349.5
    
    $
    396.1
    
    $
    272.6
    
    $
    159.2DLJdirect
    
    $
    (0.9
    )Earnings (loss) per common share(2):DLJBasic
    
    $
    4.63
    
    $
    2.93
    
    $
    3.59
    
    $
    2.56
    
    $
    1.58Diluted
    
    $
    4.18
    
    $
    2.65
    
    $
    3.16
    
    $
    2.30
    
    $
    1.55DLJdirectBasic
    
    $
    (0.05
    )Diluted
    
    $
    (0.05
    )Weighted average common shares outstanding
      (in thousands) (2):DLJBasic
    
    
    125,433
    
    
    119,260
    
    
    110,318
    
    
    106,600
    
    
    101,140Diluted
    
    
    138,868
    
    
    131,980
    
    
    125,498
    
    
    118,712
    
    
    103,160DLJdirectBasic
    
    
    18,400Diluted
    
    
    18,400Years Ended December 31,1999
    
    1998
    
    1997
    
    1996
    
    1995(In millions, except share and per
        share data 
        and financial ratios)Balance Sheet Data (at end of period):Securities purchased under agreements 
           to resell and securities borrowed
    
    $
    59,886.8
    
    $
    44,031.0
    
    $
    43,227.4
    
    $
    29,954.2
    
    $
    27,793.1Total assets
    
    
    109,012.1
    
    
    72,225.7
    
    
    70,449.3
    
    
    55,447.2
    
    
    44,520.0Securities sold under agreements to 
           repurchase and securities loaned
    
    
    68,016.2
    
    
    43,097.8
    
    
    43,694.1
    
    
    32,103.1
    
    
    29,369.0Long-term borrowings
    
    
    5,160.5
    
    
    3,482.0
    
    
    2,128.2
    
    
    1,325.4
    
    
    958.9Exchangeable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225.0Redeemable trust securities
    
    
    200.0
    
    
    200.0
    
    
    200.0
    
    
    200.0
    
    
    Stockholders' equity
    
    
    3,907.2
    
    
    2,927.7
    
    
    2,061.5
    
    
    1,647.2
    
    
    1,198.7Other Financial Data (at end of period):Book value per common 
           share outstanding
    
    $
    27.46
    
    $
    20.44
    
    $
    15.72
    
    $
    12.40
    
    $
    10.25Ratio of net assets to 
           stockholders' equity(4)
    
    
    12.6
    x
    
    9.6
    x
    
    13.2
    x
    
    15.5
    x
    
    14.0
    xRatio of long-term borrowings 
           to total capitalization(5)
    
    
    0.53
    
    
    0.52
    
    
    0.48
    
    
    0.40
    
    
    0.37Return on average equity(6)
    
    
    19.1
    %
    
    16.5
    %
    
    24.1
    %
    
    20.6
    %
    
    17.1
    %Ratio of earnings to fixed charges
    
    
    1.19
    x
    
    1.13
    x
    
    1.16
    x
    
    1.16
    x
    
    1.11
    xRatio of earnings to combined 
           fixed charges and preferred 
           stock dividends(7)
    
    
    1.19
    x
    
    1.13
    x
    
    1.16
    x
    
    1.16
    x
    
    1.10
    x(1)
    DLJdirect Common Stock tracks 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, Equities, Fixed Income and Financial Services, plus a retained
        interest in DLJdirect. All of the Company's businesses other than those
        included in DLJdirect, plus the Company's retained interest in DLJdirect,
        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. Earnings applicable to common
        shares for DLJ include a 100% 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.(2)
    Earnings per 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, 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 December 31, 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. 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 DLJdirect for periods
        prior to the closing date are not presented, as such amounts are not meaningful.(3)
    Interest is net of interest expense to finance U.S. government,
        agency and mortgage-backed securities of $3.3 billion, $3.0 billion, $2.9
        billion, $2.1 billion and $2.0 billion, respectively.(4)
    Net assets are total assets excluding securities purchased
        under agreements to resell and securities borrowed.(5)
    Long-term borrowings and total capitalization (the sum
        of long-term borrowings, redeemable trust securities and stockholders'
        equity) exclude current maturities (one year or less) of long-term borrowings.(6)
    After payment of dividends on the Company's preferred
        stock.(7)
    For the purpose of calculating the ratio of earnings
        to combined fixed charges and the ratio of earnings to combined fixed
        charges and preferred stock dividends (i) earnings consist of income before
        the provision for income taxes and fixed charges and (ii) fixed charges
        consist of interest expense and one-third of rental expense which is deemed
        representative of an interest factor.
Management's Discussion and Analysis of 
  Financial Condition and Results of OperationsDonaldson, Lufkin & Jenrette, Inc.
Business Environment
The Company's principal business activities, investment and merchant
  banking, securities sales and trading and correspondent and online discount
  brokerage services are, by their nature, highly competitive and subject to general
  market conditions, volatile trading markets and fluctuations in the volume of
  market activity. Consequently, the Company's net income and revenues have been
  and are likely to continue to be, subject to wide fluctuations reflecting the
  impact of many factors beyond the Company's control, including securities market
  conditions, the level and volatility of interest rates, competitive conditions
  and the size and timing of transactions.
In 1999, global markets continued to rebound as evidenced by the
  Asian recovery from the financial crisis of 1998, while Europe experienced a
  doubling of merger volume and a strong demand for its securities. A recovery
  in the emerging markets also contributed to favorable market conditions.
The domestic investment climate was strong with all major market
  indices closing the year at record highs. Total capital raised through IPOs
  set a record, nearly doubling the 1998 total. However, rising interest rates,
  the fear of inflation and Y2K issues caused bond prices to slide to their lowest
  level since 1994. In addition, the issuance of new securities in the high-yield
  bond market has not recovered from the level that existed prior to the Russian
  debt crisis of 1998. The continued strong growth of the economy gave rise to
  fears of inflation. In order to slow the pace of economic growth and ease inflation
  worries, the Federal Reserve raised the Federal Funds rate three times in 1999,
  and most recently, in February 2000 to 5.75%.
Recent Developments
In February 2000, the Company filed a shelf registration with
  the Securities and Exchange Commission which enables the Company to issue $3.1
  billion of senior debt securities, subordinated debt securities, preferred stock
  and warrants.
Results of Operations  DLJ Inc.
Year Ended December 31, 1999 Compared to Year Ended December
  31, 1998
For 1999, total revenues increased $1.7 billion, or 31.5% to $7.1
  billion. During 1999, revenues increased primarily as a result of increases
  in commissions, underwritings, fees and trading, offset by decreases in interest
  income and investment gains. Changes in net revenues from external sources for
  each of the Company's industry segments were: Banking Group revenues increased
  $472.7 million primarily as a result of increased underwriting revenues and
  fee income related to merger and acquisition activity; Equities Group revenues
  increased $336.9 million primarily as a result of increased commissions, underwriting
  and trading revenues, both domestically and internationally; Fixed Income Group
  revenues increased $254.9 million, principally as a result of positive trading
  gains in the high-yield and mortgage-backed securities areas, offset by reduced
  underwriting revenues in these areas; Financial Services Group revenues increased
  $391.6 million primarily as a result of increased brokerage and correspondent
  clearance commission revenues and fee income in the Company's correspondent
  and online brokerage businesses.
Commission revenues increased $346.0 million or 40.5% to $1.2
  billion due to increased business in virtually all areas. Share volumes on the
  NYSE and NASDAQ exchanges averaged a combined record 1.8 billion shares per
  day for 1999 compared to approximately 1.4 billion shares per day for 1998.
  Commissions generated internationally, primarily in London and Hong Kong equities,
  increased 410.0% over 1998. The Company's correspondent and online brokerage
  businesses added over 1.0 million client accounts in 1999, and related customer
  assets increased by approximately $140.8 billion.
Underwriting revenues increased $202.9 million or 20.3% to $1.2
  billion, primarily as a result of increases in underwriting of domestic equities,
  offset by the decline in new issuances of high-yield and mortgage-backed securities.
Fee revenues increased $420.2 million or 35.6% to $1.6 billion.
  These results reflect primarily the Company's continuing market share growth
  in global merger and acquisitions advisory transactions. Fee income in the Company's
  correspondent and online brokerage businesses increased due to customer demand
  for a variety of portfolio advisory and technology services. In addition, fees
  related to asset management increased as funds under management increased from
  $17.6 billion to approximately $28.0 billion.
Interest, net of interest expense to finance U.S. government,
  agency and mortgage-backed securities, decreased $13.8 million or 0.6% to $2.2
  billion. The decrease resulted from the elimination of interest related to emerging
  markets proprietary trading. (The Company ceased proprietary trading in emerging
  markets in the third quarter of 1998). If the impact of the firm's proprietary
  trading activities in emerging markets during 1998 were excluded, net interest
  income would have increased 22.8%. In most other areas there were increases
  in balances of lending activity, which were offset by slight reductions in interest
  rates charged.
Principal transactions-net, trading revenues increased $777.2
  million to $718.6 million primarily as a result of gains in fixed-income and
  equities trading, and the elimination in 1999 of trading losses in the emerging
  markets, high-yield and mortgage-backed areas.
Principal transactions-net, investment revenues decreased $18.7
  million or 14.8% to $107.3 million primarily as a result of decreased realized
  gains on merchant banking investments sold, offset by increased gains of $68.8
  million in the Company's venture capital area.
Total costs and expenses for 1999 increased $1.4 billion or 29.2%
  to $6.2 billion primarily due to growth in the correspondent and online discount
  securities businesses as well as the Company's international expansion in Europe
  and Hong Kong.
Compensation and benefits increased $873.7 million or 39.2% to
  $3.1 billion. Incentive and production-related compensation increased by 45.6%
  in 1999. Base compensation, including benefits and payroll taxes, increased
  by 24.5% primarily due to the Company's significant international expansion.
  Full-time worldwide personnel increased 1,741 or 20.6% to 10,206 at year-end
  1999. International headcount increased 30.8% to 1,700 at year-end 1999.
Interest expense increased $134.3 million or 9.2% to $1.6 billion
  due to increased inventory positions in 1999, offset in part by reduced proprietary
  trading in emerging markets securities.
All other expenses increased $378.1 million or 33.7% to $1.5 billion,
  as noted below.
Communications and technology increased by $130.6 million due
  to expansion of the Company's international operations, implementation and development
  of new systems, consulting fees related to the Year 2000 Project and overhaul
  of the online customer trading and information system for the Company's correspondent
  brokerage network. Brokerage, clearing, exchange fees and other expenses increased
  $55.2 million due to increased trading volume and transaction fee payments.
  Occupancy and related costs increased $35.1 million primarily as a result of
  the Company's domestic growth and international expansion. All other operating
  expenses increased $157.2 million. Included therein are professional fees, travel
  and entertainment, advertising, and printing and stationery which increased
  $112.9 million due to an overall increase in the level of business activity,
  and advertising expense of approximately $38 million by DLJdirect for
  the development and implementation of a new advertising campaign.
The changes in income before income taxes for each industry segment
  were: Banking Group pre-tax income increased $111.1 million as a result of increased
  underwritings, and fees related to merger and acquisition activity; Equities
  Group pre-tax income increased $46.1 million due to increases in commissions,
  underwritings, fees and trading gains; Fixed Income Group pre-tax income increased
  $134.1 million as a result of increased trading gains offset by decreased underwriting
  revenues in the high-yield and real estate finance areas; Financial Services
  Group pre-tax income increased $109.6 million as a result of increased commissions
  and fees related to its correspondent and online brokerage businesses, offset
  by increased advertising and technology spending.
The Company's income tax provision for 1999 and 1998 was $352.8
  million and $229.7 million, a 37.0% and 38.3% effective tax rate, respectively.
Net income for 1999 increased $229.9 million, or 62.0% to $600.7
  million. Diluted earnings per common share were $4.18 for 1999 and $2.65 for
  1998.
Year Ended December 31, 1998 Compared to Year Ended December
  31, 1997
For 1998, total revenues of $5.4 billion increased $766.6 million,
  or 16.5%. During 1998, revenues increased primarily as a result of increases
  in commissions, fees, underwriting revenues and net interest income offset in
  part by decreases in trading and investment gains. Changes in net revenues from
  external sources for each of the Company's industry segments were: Banking Group
  revenues increased $271.4 million primarily as a result of increased underwriting
  and fees; Equities Group revenues increased $80.8 million principally as a result
  of increases in commissions and underwriting revenues in institutional equities;
  Fixed Income Group revenues decreased $52.6 million primarily as a result of
  trading losses in high-yield and mortgage-backed securities; Financial Services
  Group revenues increased $202.2 million primarily as a result of increased brokerage
  and correspondent clearance commissions and fees from asset management activities.
  Net revenues in 1998 include $5.0 million related to the Emerging Markets Group.
  This represents a decrease of $112.8 million from net revenues in 1997 as a
  result of losses incurred primarily from the collapse of the Russian economy.
  The Company ceased its proprietary trading in emerging markets in September
  1998 and eliminated the bulk of its trading positions during the fourth quarter
  of 1998.
Commission revenues increased $164.5 million or 23.8% to $854.7
  million due to increased levels of activity in virtually all business groups.
  This increase is consistent with the increased volume on major exchanges during
  the year.
Underwriting revenues increased $132.2 million or 15.2% to $1.0
  billion. During 1998, the Company experienced market share increases in equity,
  convertibles and high yield underwriting.
Fee revenues increased $424.4 million or 54.7% to $1.2 billion.
  These results primarily reflect the Company's continuing market share growth
  in merger and acquisition advisory services. During 1998, asset management and
  other advisory service activities also increased.
Interest, net of interest expense to finance U.S. government,
  agency and mortgage-backed securities, increased $537.0 million or 32.3% to
  $2.2 billion. The bulk of the increase occurred in the stock loan/borrowed business.
  In addition, increases in domestic and foreign margin balances and higher levels
  of foreign fixed income securities, primarily in the Emerging Markets area prior
  to the Company's withdrawal from that activity, resulted in increases in interest
  income.
Principal transactions-net, trading revenues decreased $416.1
  million or 116.1% to $(58.6) million primarily in the Emerging Markets and High
  Yield areas.
Principal transactions-net, investment revenues decreased $68.5
  million or 35.2% to $126.0 million. The decrease is primarily due to a lower
  amount of realized gains from securities sold coupled with a reduced increase
  in fair value of investments remaining in the portfolio, as a result of volatile
  market conditions throughout the year, but in particular during the second half
  of the year. In 1998, realized gains on sales of investments were $117.1 million,
  net unrealized carrying values increased $8.9 million, including $5.6 million
  to eliminate net unrealized depreciation on investments sold, and a $3.3 million
  increase in net unrealized appreciation on retained investments.
Other revenues decreased $7.0 million or 10.4% to $60.6 million.
  Other revenues consist primarily of dividends and miscellaneous transaction
  revenues.
Total costs and expenses for 1998 increased $827.1 million or
  20.8% to $4.8 billion. During 1998, the Company started a non-dollar international
  equities group, expanded its Banking Group in the United States and internationally,
  established a high-yield business in London and generally increased capacity
  in its processing oriented businesses to handle significantly increased levels
  of activity.
Compensation and benefits increased $323.5 million or 17.2% to
  $2.2 billion. Incentive and production-related compensation increased 9.0%.
  Base compensation, including benefits and all payroll taxes, increased by 40.0%
  due to the hiring of more senior-level executives by various business groups.
  Full-time worldwide personnel increased 1,412 or 20.0% to 8,465 at year-end
  1998.
Interest expense increased $302.7 million or 25.3% to $1.5 billion.
  Most of this increase was related to the financing of Pershing's domestic and
  foreign stock loan/borrowed business.
As noted below, all other expenses increased $201.0 million or
  22.4% to $1.1 billion.
Brokerage, clearing, exchange fees and other expenses increased
  $27.2 million due to increased share volume and transaction fee payments. Occupancy
  and related costs increased $35.4 million as a result of the Company's domestic
  and international expansion. Communications and technology increased $44.2 million
  due to expanded facilities and the overall growth in professional staff. All
  other operating expenses increased $94.2 million. These expenses include professional
  fees, travel and entertainment, and printing and stationery, which increased
  $76.2 million reflecting an overall increase in business activity and including
  the costs for the Year 2000 Project.
The changes in income before income taxes for each industry segment
  were: Banking Group pre-tax income increased by $33.8 million, as a result of
  increased profitability in the Company's investment and merchant banking activities;
  Equities Group pre-tax income decreased $49.7 million due to the investment
  spending related to the development of a non-dollar international equities business;
  Fixed Income Group pre-tax income decreased $34.2 million as a result of trading
  losses in high-yield and mortgage-backed securities; Financial Services Group
  pre-tax income increased $44.7 million as a result of increased commissions
  and fees from the Company's correspondent clearing and asset management businesses.
The Company's income tax provision for 1998 and 1997 was $229.7
  million and $252.9 million, a 38.3% and 38.2% effective tax rate, respectively.
Net income for 1998 decreased $37.5 million or 9.2% to $370.8
  million. Diluted earnings per common share were $2.65 for 1998 and $3.16 for
  1997.
Liquidity and Capital Resources
The Company's assets are highly liquid with the majority consisting
  of securities inventories and collateralized receivables, each of which fluctuate
  depending on the levels of proprietary trading and customer business. Such collateralized
  receivables consist primarily of resale agreements and securities borrowed,
  both of which are secured by U.S. government and agency securities, and marketable
  corporate debt and equity securities. In addition, the Company has significant
  receivables that turn over frequently from customers, brokers and dealers. To
  meet client needs as a securities dealer, the Company may carry significant
  levels of trading inventories. As such, because of changes relating to customer
  needs, economic and market conditions and proprietary trading strategies, the
  Company's total assets or the individual components of total assets vary significantly
  from period to period. At December 31, 1999 and 1998, the Company's total assets
  were $109.0 billion and $72.2 billion, respectively.
The majority of the Company's assets are financed through daily
  operations by repurchase agreements, financial instruments sold not yet purchased,
  securities loaned, bank loans, commercial paper and through payables to brokers
  and dealers. Short-term funding is generally obtained at rates related to Federal
  funds, LIBOR and money market rates. Depending upon prevailing market conditions,
  other borrowing costs are negotiated. The Company monitors overall liquidity
  by tracking the extent to which unencumbered marketable assets exceed short-term
  unsecured borrowings.
The Company maintains a $2.5 billion revolving credit facility
  with various banks, of which $1.9 billion may be unsecured. There were no borrowings
  outstanding under this agreement at December 31, 1999.
Certain of the Company's businesses are capital intensive. In
  addition to normal operating requirements, capital is required to cover financing
  and regulatory charges on securities inventories, merchant banking investments
  and investments in fixed assets. The Company's overall capital needs are continually
  reviewed to ensure that its capital base can appropriately support the anticipated
  needs of its business units as well as the regulatory capital requirements of
  subsidiaries. Based upon these analyses, management believes that the Company's
  debt and equity base is adequate for current operating levels.
On May 28, 1999, the Company issued in an initial public offering,
  18.4 million shares of DLJdirect Common Stock, which tracks the separate
  performance of the Company's online discount brokerage business. Net proceeds
  from the offering amounted to $346.6 million of which $233.9 million was allocated
  to DLJdirect.
In 1999, the Company was active in raising additional long-term
  financing. In connection therewith, $650.0 million of 5 7/8% Senior Notes
  and $1.3 billion of medium term notes with various rates and maturities were
  issued in 1999.
In addition, during the year ended December 31, 1999, commercial
  paper outstanding under the Company's $2.0 billion commercial paper program
  increased from $30.9 million to $1.2 billion.
The Company's current credit ratings of its long-term debt and
  commercial paper are as follows:
Long-Term Debt
    
    Commercial PaperDuff & Phelps
    
    A
    
    D-1Fitch IBCA
    
    A
    
    F-1Moody's
    
    A3
    
    P-2Standard & Poors
    
    A-
    
    A-2Thomson BankWatch
    
    A+
    
    TBW-1The Company's principal wholly owned subsidiary, Donaldson, Lufkin
  & Jenrette Securities Corporation ("DLJSC") is subject to the capital requirements
  of the Securities and Exchange Commission, the New York Stock Exchange, Inc.,
  the Commodities Futures Trading Commission and the Chicago Board of Trade, all
  of which regulate the general capital adequacy and liquidity of broker-dealers
  and/or futures commission merchants. DLJSC has consistently maintained capital
  substantially in excess of the minimum requirements of such capital rules. At
  December 31, 1999, DLJSC had aggregate regulatory "net capital," after adjustments
  required by Rule 15c3-1 under the Securities Exchange Act of 1934, of approximately
  $1.7 billion, which exceeded minimum net capital requirements by $1.5 billion
  and which exceeded the net capital required by DLJSC's most restrictive debt
  covenants by $966.3 million. The Company's London-based broker-dealer subsidiaries
  are subject to the requirements of the Securities and Futures Authority, a self-regulatory
  organization established pursuant to the United Kingdom Financial Services Act
  of 1986. Other U.S. and foreign broker-dealer subsidiaries of the Company are
  subject to net capital requirements of their respective regulatory agencies.
  At December 31,1999, the Company and its broker-dealer subsidiaries were in
  compliance with all applicable regulatory capital adequacy requirements.
From time to time, the Company has explored potential acquisition
  opportunities as a means of expanding its business. Such opportunities may involve
  acquisitions which are material in size and may require the raising of additional
  capital.
Cash Flows
The Company's consolidated statements of cash flows classify cash
  flow into three broad categories: cash flows from operating activities, investing
  activities and financing activities. The Company's net cash flows are principally
  associated with operating and financing activities, which support the Company's
  trading, customer and banking activities.
Years Ended December 31, 1999, 1998 and 1997
At December 31, 1999, 1998 and 1997, cash and cash equivalents
  totaled $2.0 billion, $1.0 billion and $273.2 million, respectively, an increase
  of $1.0 billion, $776.1 million and $114.3 million, respectively.
Cash used in operating activities totaled $11.7 billion, $2.4
  billion and $5.3 billion in 1999, 1998 and 1997, respectively. In 1999, there
  were increases in assets including financial instruments owned of $14.8 billion,
  securities borrowed of $6.4 billion and receivables from customers of $2.9 billion.
  These increases were partially offset by increases in liabilities including
  payables to customers of $1.6 billion, securities loaned of $4.2 billion and
  financial instruments sold not yet purchased of $4.0 billion. In 1998, there
  were increases in assets including securities borrowed of $3.4 billion, receivables
  from customers of $1.7 billion, and a decrease in financial instruments sold
  not yet purchased of $1.5 billion. An increase in payables to customers of $1.8
  billion and a decrease in financial instruments owned of $3.3 billion offset
  these changes. In 1997, securities borrowed increased $11.2 billion and receivables
  from customers increased $1.2 billion. These increases in assets were offset
  by increases in operating liabilities including securities loaned of $5.0 billion,
  payables to customers of $1.0 billion, and financial instruments sold not yet
  purchased of $1.0 billion.
In 1999 and 1998, net cash used in investing activities of $1.4
  billion and $334.0 million, respectively, consisted primarily of purchases to
  expand the Company's domestic and international offices and net purchases of
  long-term corporate development investments. In 1997, net cash used in investing
  activities of $216.0 million consisted primarily of purchases to move the Company's
  principal offices.
In 1999, 1998 and 1997, net cash provided by financing activities
  totaled $14.1 billion, $3.5 billion and $5.6 billion, respectively, of which
  $12.1 billion, $1.7 billion and $4.9 billion was provided by short-term financings
  (principally repurchase agreements). In the second quarter of 1999, the Company
  received net proceeds from the issuance of DLJdirect Common Stock of
  $346.6 million. Additionally, in 1999, $649.6 million was provided by issuing
  Senior Notes and $1.2 billion was provided by issuing medium-term notes. In
  1998, cash of $325.0 million was used to repay the subordinated revolving credit
  agreement while $893.6 million was provided by issuing senior notes, $349.3
  million was provided by issuing medium-term notes, $450.0 million was provided
  by issuing senior secured floating rate notes, $300 million was provided from
  the sale of Common Stock to its parent companies, AXA Financial and AXA, S.A.,
  and $175.0 million was provided by issuing Series B Preferred Stock. In 1997,
  $347.8 million was provided by issuing global floating-rate notes, $359.6 million
  was provided by issuing medium-term notes and $118.5 million was provided by
  a drawdown of the subordinated revolving credit agreement.
Derivative Financial Instruments
The Company enters into various transactions involving derivatives.
  In general, derivatives are contractual agreements that derive their values
  from the performance of underlying assets, interest or currency exchange rates,
  or a variety of indices. The Company enters into derivative transactions primarily
  for trading purposes, or to provide products for its clients. These transactions
  involve options, forwards, futures and swaps. The Company also enters into interest
  rate swaps to modify the characteristics of periodic interest payments associated
  with some of its long-term debt obligations.
Options
The majority of the Company's options are written options. The
  Company writes option contracts specifically designed to meet customers' needs.
  Most of the options do not expose the Company to credit risk since the Company,
  not its counterparty, is obligated to perform. At the beginning of the contract
  period, the Company receives a cash premium. During the contract period, the
  Company bears the risk of unfavorable changes in the value of the financial
  instruments underlying the options ("market risk"). To cover this market risk,
  the Company purchases or sells cash or derivative financial instruments on a
  proprietary basis. Such purchases and sales may include debt and equity securities,
  forward and futures contracts and options. The counterparties to these purchases
  and sales are reviewed to determine whether they are creditworthy. Future cash
  requirements for options written equal the fair value of the options.
The Company also purchases options for trading purposes. With
  purchased options, the Company gets the right, for a fee, to buy or sell the
  underlying instrument at a fixed price on or before a specified date. The underlying
  instruments for these options include mortgage-backed securities, equities,
  interest rate instruments and foreign currencies. All options are reported at
  fair value.
Forwards and Futures
The Company enters into forward purchases and sales contracts
  for mortgage-backed securities and foreign currencies. In addition, the Company
  enters into futures contracts on equity-based indices, foreign currencies and
  other financial instruments as well as options on futures contracts. Forward
  and futures contracts are treated as off-balance sheet items. Market risk is
  the price movement on the notional value of the contracts.
For forward contracts, cash is generally not required at inception;
  cash equal to the contract value is required at settlement. For futures contracts,
  the original margin is required in cash at inception; cash equal to the change
  in market value is required daily.
Since forward contracts are subject to the financial reliability
  of the counterparty, the Company is exposed to credit risk. To monitor this
  credit risk, the Company limits transactions with specific counterparties, reviews
  credit limits and adheres to internally established credit extension policies.
  For futures contracts and options on futures contracts, the change in the market
  value is settled with the exchanges in cash each day. As a result, the credit
  risk with futures exchanges is limited to the net positive change in the market
  value for a single day.
Swaps
The Company's swap agreements consist primarily of interest rate
  and equity swaps. Equity swaps are contractual agreements to receive the appreciation
  or depreciation in value based on a specific strike price on an equity instrument,
  in exchange for paying another rate, which is usually based on index or interest
  rate movements. Interest rate swaps are contractual agreements to exchange interest
  rate payments based on agreed notional amounts and maturity. Swaps are reported
  at fair value.
Quantitative Disclosures for Trading Derivatives
The notional or contract amounts indicate the extent of the Company's
  involvement in the derivative instruments noted above. They do not measure the
  Company's exposure to market or credit risk and do not represent the future
  cash requirements of such contracts. The notional (contract) amounts for derivatives
  outstanding at December 31, 1999 and 1998 are as follows:
1999
    
    1998(In billions)Options written
    
    $
    15.1
    
    $
    5.8Options purchased
    
    $
    7.4
    
    $
    3.1Forward contracts purchased
    
    $
    35.6
    
    $
    41.3Forward contracts sold
    
    $
    41.1
    
    $
    39.8Futures contracts purchased
    
    $
    2.9
    
    $
    1.2Futures contracts sold
    
    $
    4.3
    
    $
    1.6Swaps
    
    $
    24.5
    
    $
    8.4The fair values of derivatives outstanding at December 31, 1999
  and 1998 are as follows:
1999
    
    1998Assets
    
    Liabilities
    
    Assets
    
    Liabilities(In millions)Options
    
    $
    519.9
    
    $
    1,002.6
    
    $
    114.5
    
    $
    397.1Forward contracts
    
    $
    327.1
    
    $
    247.3
    
    $
    262.9
    
    $
    269.3Futures contracts
    
    $
    3.5
    
    $
    9.8
    
    $
    4.0
    
    $
    1.0Swaps
    
    $
    256.9
    
    $
    240.2
    
    $
    62.1
    
    $
    84.7The average fair values of derivatives for 1999 and 1998 are as
  follows:
1999
    
    1998Assets
    
    Liabilities
    
    Assets
    
    Liabilities(In millions)Options
    
    $
    169.5
    
    $
    444.8
    
    $
    86.6
    
    $
    309.9Forward contracts
    
    $
    329.0
    
    $
    312.6
    
    $
    135.6
    
    $
    139.2Futures contracts
    
    $
    10.3
    
    $
    7.4
    
    $
    3.7
    
    $
    19.4Swaps
    
    $
    253.3
    
    $
    94.3
    
    $
    28.1
    
    $
    26.7The majority of the Company's derivatives are short-term in duration.
  At December 31, 1999, the total notional value of derivatives was $130.9 billion,
  of which $103.6 billion expire in less than one year.
Disclosures for Non-trading Derivatives
The Company also enters into interest rate swaps to modify the
  characteristics of periodic interest payments associated with some of its long-term
  debt obligations. At December 31, 1999 and 1998, the notional amount of these
  interest rate swaps was $3.3 billion and $0.8 billion, respectively.
Merchant Banking and Bridge Lending Activities
The Company's merchant banking activities include direct investments
  and investments in various partnerships, for which subsidiaries of the Company
  act as general partner. At December 31, 1999, the Company had investments of
  $622.2 billion and has commitments to invest up to an additional $699.7 million.
AXA Financial has committed, subject to its approval on a transaction-by-transaction
  basis, to provide $750.0 million of subordinated debt financing to the DLJ Bridge
  Fund. The Bridge Fund provides short-term loans in connection with the Company's
  merchant banking and financial advisory businesses. The Company has agreed to
  pay AXA Financial the first $25.0 million of aggregate principal losses incurred
  by AXA Financial with respect to all bridge loans. To the extent such payments
  by the Company do not fully cover any such losses incurred by AXA Financial,
  AXA Financial is entitled to receive all other distributions otherwise payable
  to the Company with respect to DLJ Bridge Fund activities until such losses
  have been recovered. The Company has also agreed to pay AXA Financial the amount,
  if any, by which any principal loss on an individual loan exceeds $150.0 million.
  At December 31, 1999, the Company had extended $11.4 million as its portion
  of short-term financings made with AXA Financial.
The Company has made additional bridge loans of $608.3 million
  in connection with its merchant banking and financial advisory businesses.
High-Yield and Other Non-Investment-Grade Debt
The Company underwrites, trades, sells and holds high-yield and
  non-investment-grade securities. Non-investment-grade securities are securities
  or loans to companies rated BB+ or lower, as well as non-rated securities or
  loans. Due to credit considerations, liquidity of secondary trading markets
  and vulnerability to general economic conditions, these securities generally
  involve greater risk than investment-grade holdings.
The Company records high-yield securities at market value and
  records non-investment-grade holdings at market or fair value. Unrealized gains
  and losses are recognized currently in earnings. At December 31, 1999 and 1998,
  the Company had long positions with an aggregate market value of approximately
  $5.4 billion and $3.5 billion, respectively, and short positions with an aggregate
  market value of approximately $0.5 billion and $0.4 billion, respectively.
Risk Management and Value at Risk
Exposure to risk and the ways in which the Company manages the
  various types of risks on a day-to-day basis is critical to its survival and
  financial success. The Company believes that reporting and management of risk
  is the responsibility of all its employees, particularly those of the business
  groups in which the risks originate. The business groups have policies and procedures
  governing their risk-taking activities and independent operations and financial
  control staff to monitor and control the risks.
In addition, the Company has established several departments at
  the corporate level to monitor and control risk: Independent Risk Oversight,
  Credit Risk Management, Compliance, Treasury, and Corporate Accounting.
The Risk Oversight Department is responsible for ensuring that
  there are adequate risk monitoring and management capabilities throughout the
  firm and coordinating the risk management practices of the various business
  groups. This department reviews and approves trading limits and exceptions to
  limits, new products, and major underwriting commitments. All trading desks
  provide detailed daily position reports to Risk Oversight, which prepares reports
  describing exposures to major market indices, concentration reports, stress
  scenarios, and Value-at-Risk. To ensure that risks are properly communicated,
  this department maintains personnel in trading areas who are in constant contact
  with the risk takers.
The Credit Risk Management Department is charged with the responsibility
  of analyzing the credit worthiness of the Company's credit counterparties and
  granting credit limits to these counterparties. This department ensures that
  credit exposure is properly identified, calculated and monitored. In conjunction
  with the Legal Department, Credit sets standards for credit-related legal agreements
  with credit counterparties.
The Compliance program is designed to establish firm policies
  and procedures for compliance with the applicable securities laws, rules and
  regulations to which the Company is subject, educate employees with regard to
  such policies and procedures, monitor compliance through surveillance, and enforce
  compliance if necessary. The Company seeks not only to comply with applicable
  laws and rules governing its business but also to avoid even the appearance
  of impropriety. The Company has committed significant resources to monitoring
  compliance by its employees with its policies and procedures. Primary responsibility
  for ensuring compliance with the Company's policies and procedures rests with
  the immediate supervisor of each employee. However, the Compliance Department
  maintains an aggressive daily surveillance program that is supplemented by periodic
  surveillance conducted by the Internal Audit Department.
Treasury is responsible for ensuring that the Company maintains
  adequate capital and liquidity to finance its activities and to support the
  estimated risks of its businesses, thereby enabling it to operate under all
  market conditions. Treasury continuously reviews overall capital, liquidity
  and funding needs by employing various analytical tools and models. Treasury
  maintains access to funding through short and long-term public and private markets,
  including commercial banks. As part of its contingency planning efforts, Treasury
  maintains and manages relationships with its commercial banks, a number of which
  participate in the Company's committed revolving credit facility. Treasury is
  also responsible for establishing policies and procedures controlling the movement
  of cash, both within and outside the Company.
Corporate accounting reviews position and exposure reports prepared
  by operations staff in each of the business groups engaged in trading activities
  for traders, trading managers, department managers, division management and
  group management. The corporate accounting group prepares a consolidated summarized
  position report listing long and short exposure, and approved limits. The position
  report is distributed to various levels of management throughout the Company,
  including the Chief Executive Officer, and it enables senior management to control
  inventory levels and monitor results of the trading groups. The Company also
  reviews and monitors inventory aging, pricing, concentration and securities
  ratings.
In addition to position and exposure reports, the Company produces
  a daily revenue report that summarizes the trading, interest, commissions, fees,
  underwriting and other revenue items for each of the business groups. Daily
  revenue is reviewed for various risk factors and is independently verified by
  the corporate accounting group. The daily revenue report is distributed to various
  levels of management throughout the Company, including the Chief Executive Officer,
  and together with the position and exposure report, enables senior management
  to monitor and control overall activity of the trading groups.
To help senior management manage risk associated with investment
  banking and merchant banking transactions, the Company has established various
  committees. These committees review potential clients and engagements, use experience
  with similar clients and situations, analyze credit for certain commitments
  and analyze the Company's potential role as a principal investor. To control
  the risks associated with its banking activities, various committees review
  the details of all transactions before accepting an engagement. The Company
  has formed the following committees: the Fairness and Valuation Opinion Committee,
  the Private Placement Committee, the Restructuring Coordinating Committee, the
  Equity Commitment Committee, the High-Yield Underwriting Committee, the Bridge
  Commitment Committee, the Banking Review Committee, the Finance Committee and
  the Executive Committee.
From time to time, the Company invests in certain merchant banking
  transactions or other long-term corporate development investments. The Company's
  Merchant Banking Group has established several investment entities, each of
  which has formed its own investment committee. These committees decide on all
  investments and dispositions with respect to potential and existing portfolio
  companies. In addition, each quarter, senior officers of the Company meet to
  review merchant banking and long-term corporate development investments. After
  discussing the financial and operational aspects of the companies involved,
  the senior officers recommend carrying values for each investment to the Finance
  Committee. The Finance Committee then reviews such recommendations and determines
  fair value.
Market risk
Market risk represents the potential loss as a result of absolute
  and relative price movements in financial instruments due to changes in interest
  rates, foreign exchange rates, equity prices, market conditions, and other factors.
  The Company's exposure to market risk is directly related to its role as financial
  intermediary in customer-related transactions and to its proprietary trading
  activities. As of December 31, 1999, the Company's primary market risk exposures
  include interest rate risk, credit spread risk and equity price risk. Interest
  rate risk results from maintaining inventory positions and trading in interest
  rate sensitive financial instruments and arises from various sources including
  changes in the absolute and relative level of interest rates, interest rate
  volatility, mortgage prepayment rates and the shape of the yield curves in various
  markets. To cover its exposure to interest rate risk, the Company enters into
  transactions in U.S. government securities, options, swaps, and futures and
  forward contracts designed to reduce the Company's risk profile. The Company's
  investment grade and high-yield corporate bonds, mortgages, equities, derivatives
  and convertible debt activities, also expose it to the risk of loss related
  to changes in credit spreads. Credit spread risk arises from the potential changes
  in an issuer's credit rating that affect the value of financial instruments.
  Equity price risk results from maintaining inventory positions and making markets
  in equity securities and arises from changes in the level or volatility of equity
  prices, equity index exposure and equity index spreads, which affect the value
  of equity securities. To cover its exposure to equity price risk, the Company
  enters into transactions in options and futures designed to reduce the Company's
  risk profile.
Value at risk
The Company has developed a Company-wide Value-at-Risk (VAR) model
  which uses an historical simulation model based on two years of weekly historical
  data, a 95% confidence interval, and a one-day holding period. The VAR number
  is the statistically expected maximum loss on the fair value of the Company's
  market sensitive instruments for 19 of 20 trading days. In other words, on one
  of 20 trading days, the loss is expected to be statistically greater than the
  VAR number. However, the model does not indicate how much greater. VAR models
  are designed to assist in risk management and to provide senior management with
  one probabilistic indicator of risk at the firm level. VAR numbers should not
  be interpreted as a predictor of actual results. The VAR model has been specifically
  tailored for the Company's risk management needs and risk profile.
The VAR model includes the following limitations: (1) a daily
  VAR does not capture the risk inherent in trading positions that cannot be liquidated
  or hedged in one day, (2) VAR is based on historical market data and assumes
  that past trading patterns will predict the future, (3) all inherent market
  risks cannot be perfectly modeled, and (4) correlations between market movements
  can vary, particularly in times of market stress. Because a VAR model alone
  is not a sufficient tool to measure and monitor market risk, the Company will
  continue to use other risk management measures, such as stress testing, independent
  review of position and trading limits and daily revenue reports.
At December 31, 1999 and 1998, the Company-wide VAR for trading
  was approximately $17.0 million and $22.0 million, respectively. The Company-wide
  VAR for non-trading market risk sensitive instruments is not separately disclosed
  because the amount is not significant. Due to the benefit of diversification
  the Company-wide VAR is less than the sum of the individual components. At December
  31, 1999 and 1998, the three main components of market risk, expressed in terms
  of theoretical fair values, had the following VAR:
December 31,1999
    1998(In millions)Trading:Interest rate risk
    $10
    $16Equity risk
    $14
    $11Foreign currency exchange risk
    $
    $The histogram below shows daily trading revenue for fiscal 1999
  for substantially all of the Company's institutional trading activities:

[BAR GRAPH OMITTED]
[The following table was depicted as a bar graph
  in the printed material.]
1999 DAILY NET TRADING REVENUES 
        $ millions
    NUMBER OF DAYS4
    03
    22
    31
    70
    121
    242
    413
    504
    435
    296
    197
    98
    39
    110+
    9Credit risk
Credit risk is the potential for loss resulting from the default
  by a counterparty of its obligations. Exposure to credit risk is generated by
  securities and currency settlements, contracting derivative and forward transactions
  with customers and dealers, and the holding in inventory of bonds and/or loans.
The Company uses various means to manage its credit risk. The
  credit-worthiness of all counterparties is analyzed at the outset of a credit
  relationship with the Company. These counterparties are subsequently reviewed
  on a periodic basis. The Company sets a maximum exposure limit for each counterparty,
  as well as for groups or classes of counterparties. Furthermore, the Company
  enters into master netting agreements when feasible and demands collateral from
  certain counterparties or for certain types of credit transactions.
Year 2000
Following the implementation of the Company's Year 2000 Project
  initiatives, no significant Year 2000 problems were encountered that could have
  a material adverse effect on the business financial condition or results of
  operations of the Company. The total cost of the Year 2000 Project was approximately
  $90 million, which was funded by operations, and was not material to the Company's
  financial position.
Forward-Looking Statements
The Company has made in this report, and from time to time may
  otherwise make in its public filings, press releases and discussions with Company
  management, forward looking statements concerning the Company's operations,
  economic performance and financial condition, as well as its strategic objectives,
  including, without limitation, global expansion. Such forward looking statements
  are subject to various risks and uncertainties and the Company claims the protection
  afforded by the safe harbor for forward-looking statements contained in the
  Private Securities Litigation Reform Act of 1995. Actual results could differ
  materially from those currently anticipated due to a number of factors in addition
  to those discussed elsewhere herein and in the Company's other public filings,
  press releases and discussions with Company management, including (i) the volatile
  nature of the securities business, which is affected by, among other things,
  the availability of capital, the level and volatility of interest rates and
  the uncertainties of the global and U.S. economies, (ii) the competitive nature
  of the securities business, (iii) the effect of extensive federal, state and
  foreign regulation on the Company's business, (iv) market, credit and liquidity
  risks associated with the Company's underwriting, securities trading, market-making,
  online and traditional brokerage and arbitrage activities, (v) potential losses
  that could result from the Company's merchant banking activities as a result
  of its capital intensive nature, (vi) risks associated with the Company's use
  of derivative financial instruments, (vii) the availability of adequate financing
  to support the Company's business, (viii) potential restrictions on the business
  of, and withdrawal of capital from, certain subsidiaries of the Company due
  to net capital requirements, (ix) risks associated with potential systems limitations
  or systems failures in the business of DLJdirect, (x) risks associated
  with the international expansion of the Company's businesses, especially with
  respect to DLJdirect, (xi) potential liability under federal and state
  securities and other laws, (xii) the effect of any future acquisitions.
[LETTERHEAD OF KPMG]
Independent Auditors' Report
The Board of Directors and Stockholders 
  Donaldson, Lufkin & Jenrette, Inc.
We have audited the accompanying consolidated statements of financial
  condition of Donaldson, Lufkin & Jenrette, Inc. and subsidiaries as of December
  31, 1999 and 1998, and the related consolidated statements of income, changes
  in stockholders' equity, and cash flows for each of the years in the three-year
  period ended December 31, 1999, and the related financial statement schedule.
  These consolidated financial statements and related financial statement schedule
  are the responsibility of the Company's management. Our responsibility is to
  express an opinion on these consolidated financial statements and related financial
  statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
  auditing standards. Those standards require that we plan and perform the audits
  to obtain reasonable assurance about whether the consolidated financial statements
  are free of material misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the consolidated financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management, as well as evaluating the overall
  consolidated financial statement presentation. We believe that our audits provide
  a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Donaldson, Lufkin & Jenrette, Inc. and subsidiaries as of December 31, 1999
  and 1998, and the results of their operations and their cash flows for each
  of the years in the three-year period ended December 31, 1999, in conformity
  with generally accepted accounting principles. Also in our opinion, the related
  financial statement schedule, when considered in relation to the consolidated
  financial statements taken as a whole, presents fairly, in all material respects,
  the information set forth therein.
/s/ KPMG LLP
January 31, 2000

Donaldson, Lufkin & Jenrette, Inc. and SubsidiariesConsolidated Statements of Financial Condition
December 31,1999
    
    
    1998(In thousands, except share 
        and per share data)AssetsCash and cash equivalents
    
    $
    2,020,543
    
    $
    1,049,253Cash and securities segregated for regulatory purposes
        or 
            deposited with clearing organizations
    
    
    196,249
    
    
    1,043,225Collateralized short-term agreements:Securities purchased under agreements
        to resell
    
    
    29,538,141
    
    
    20,063,348Securities borrowed
    
    
    30,348,609
    
    
    23,967,639Receivables:Customers
    
    
    8,671,447
    
    
    5,818,005Brokers, dealers and other
    
    
    5,978,065
    
    
    4,478,814Financial instruments owned, at value:U.S. government and agencies
    
    
    14,543,947
    
    
    5,973,394Corporate debt
    
    
    5,379,440
    
    
    4,413,492Foreign sovereign debt
    
    
    3,018,175
    
    
    423,736Mortgage whole loans
    
    
    1,848,391
    
    
    722,284Equities and other
    
    
    3,192,467
    
    
    1,634,201Long-term corporate development
        investments
    
    
    1,432,669
    
    
    473,756Office facilities, at cost, (net of accumulated depreciation
        and 
            amortization of $364,006 and $297,959, respectively)
    
    
    573,878
    
    
    450,706Other assets and deferred amounts
    
    
    2,270,061
    
    
    1,713,883Total Assets
    
    $
    109,012,082
    
    $
    72,225,736See accompanying notes to consolidated financial statements.

Donaldson, Lufkin & Jenrette, Inc. and SubsidiariesConsolidated Statements of Financial Condition
December 31,1999
    
    1998(In thousands, except share
        and per share data)Liabilities and Stockholders' EquityCommercial paper and short-term borrowings
    
    $
    1,358,188
    
    $
    515,646Collateralized short-term financings:Securities sold under agreements
        to repurchase
    
    
    56,474,394
    
    
    35,775,580Securities loaned
    
    
    11,541,759
    
    
    7,322,186Payables:Customers
    
    
    7,792,857
    
    
    6,221,709Brokers, dealers and other
    
    
    4,929,275
    
    
    3,678,674Financial instruments sold not yet purchased, at value:U.S. government and agencies
    
    
    7,530,070
    
    
    5,935,629Corporate debt
    
    
    624,639
    
    
    523,909Equities and other
    
    
    4,788,819
    
    
    2,479,411Accounts payable and accrued expenses
    
    
    3,295,448
    
    
    2,225,913Other liabilities
    
    
    1,408,945
    
    
    937,377Long-term borrowings
    
    
    5,160,446
    
    
    3,482,003Company-obligated mandatorily redeemable trust 
            securities of subsidiary trust holding solely
        
            debentures of the Company
    
    
    200,000
    
    
    200,000Stockholders' Equity:Preferred stock, 50,000,000 shares
        authorized:Series A Preferred Stock, at $50.00 per share liquidation
        
             preference (4,000,000 shares issued and outstanding)
    
    
    200,000
    
    
    200,000Series B Preferred Stock, at $50.00 per share liquidation
        
             preference (3,500,000 shares issued and outstanding)
    
    
    175,000
    
    
    175,000Common Stock, 1,500,000,000 shares authorized:DLJ Common Stock ($0.10 par value; 500,000,000 
            shares authorized; 126,014,091 and 122,812,558
        
            shares issued and outstanding, respectively)
    
    
    12,601
    
    
    12,281DLJdirect Common Stock ($0.10 par value; 500,000,000
        
            shares authorized; 18,400,000 shares issued and
        
            outstanding; 84,250,000 notional shares in respect
        
             of DLJ's retained interest)
    
    
    1,840
    
    
    Restricted stock units (10,358,294 units authorized; 1,099,955
        
             and 2,082,236 units issued and outstanding, respectively)
    
    
    11,265
    
    
    21,333Paid-in capital
    
    
    1,298,674
    
    
    858,066Retained earnings
    
    
    2,205,818
    
    
    1,657,710Accumulated other comprehensive income
    
    
    2,044
    
    
    3,309Employee deferred compensation stock trust
    
    
    13,591
    
    
    12,329Common stock issued to employee deferred compensation
        trust
    
    
    (13,591
    )
    
    (12,329
    )Total
        stockholders' equity
    
    
    3,907,242
    
    
    2,927,699Total Liabilities and Stockholders' Equity
    
    $
    109,012,082
    
    $
    72,225,736See accompanying notes to consolidated financial statements.

Donaldson, Lufkin & Jenrette, Inc. and SubsidiariesConsolidated Statements of Income
Years Ended December 31,1999
    
    1998
    
    1997(In thousands, except per share data)Revenues:Commissions
    
    $
    1,200,695
    
    $
    854,679
    
    $
    690,156Underwritings
    
    
    1,246,442
    
    
    1,043,526
    
    
    911,270Fees
    
    
    1,611,935
    
    
    1,191,655
    
    
    767,259Interest, net of interest to finance
        U.S. government, 
                agency and mortgage-backed
        securities of 
                $3,249,565, $3,045,391
        and $2,859,042, respectively
    
    
    2,175,308
    
    
    2,189,108
    
    
    1,652,135Principal transactions-net:Trading
    
    
    718,589
    
    
    (58,596
    )
    
    357,527Investment
    
    
    107,321
    
    
    126,031
    
    
    194,527Other
    
    
    85,979
    
    
    60,639
    
    
    67,595Total revenues
    
    
    7,146,269
    
    
    5,407,042
    
    
    4,640,469Costs and Expenses:Compensation and benefits
    
    
    3,105,389
    
    
    2,231,655
    
    
    1,908,201Interest
    
    
    1,590,245
    
    
    1,455,851
    
    
    1,153,167Communications and technology
    
    
    445,218
    
    
    314,624
    
    
    270,451Brokerage, clearing, exchange
        fees and other
    
    
    313,785
    
    
    258,625
    
    
    231,402Occupancy and related costs
    
    
    178,933
    
    
    143,832
    
    
    108,396Other operating expenses
    
    
    559,199
    
    
    401,955
    
    
    307,752Total costs and expenses
    
    
    6,192,769
    
    
    4,806,542
    
    
    3,979,369Income before provision for income taxes
    
    
    953,500
    
    
    600,500
    
    
    661,100Provision for income taxes
    
    
    352,800
    
    
    229,700
    
    
    252,850Net income
    
    $
    600,700
    
    $
    370,800
    
    $
    408,250Dividends on preferred stock
    
    $
    21,180
    
    $
    21,310
    
    $
    12,144Earnings applicable to common shares
    
    $
    579,520
    
    $
    349,490
    
    $
    396,106Earnings (loss) applicable to common shares:DLJ
    
    $
    580,423
    
    $
    349,490
    
    $
    396,106DLJdirect
    
    $
    (903
    )Earnings (loss) per common share:DLJBasic
    
    $
    4.63
    
    $
    2.93
    
    $
    3.59Diluted
    
    $
    4.18
    
    $
    2.65
    
    $
    3.16DLJdirectBasic
    
    $
    (0.05
    )Diluted
    
    $
    (0.05
    )Weighted average common shares:DLJBasic
    
    
    125,433
    
    
    119,260
    
    
    110,318Diluted
    
    
    138,868
    
    
    131,980
    
    
    125,498DLJdirectBasic
    
    
    18,400Diluted
    
    
    18,400See accompanying notes to consolidated financial statements.

Donaldson, Lufkin & Jenrette, Inc. and SubsidiariesConsolidated Statements of Changes in 
  Stockholders' Equity
For the Years Ended December 31, 1999, 1998 and 1997
Preferred
        Stock
    
    DLJ
        Common
        Stock
    
    DLJdirect
        Common
        Stock
    
    Restricted
        Stock
        Units
    
    Paid-in
        Capital
    
    Retained
        Earnings
    
    Accumulated
        Other
        Comprehensive
        Income
    
    Total(In thousands, except per share data)Balances at December 31, 1996
    
    $
    200,000
    
    $
    10,659
    
    
    
    
    $
    104,167
    
    $
    360,660
    
    $
    969,856
    
    $
    1,897
    
    $
    1,647,239Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    408,250
    
    
    
    
    
    408,250Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,007
    
    
    2,007Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    410,257Dividends:DLJ Common stock ($0.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,742
    )
    
    
    
    
    (27,742
    )Preferred stock ($3.036 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,144
    )
    
    
    
    
    (12,144
    )Conversion of restricted stock units to common stock
    
    
    
    
    
    358
    
    
    
    
    
    (36,912
    )
    
    45,197
    
    
    
    
    
    
    
    
    8,643Conversion of debentures
    
    
    
    
    
    138
    
    
    
    
    
    
    
    
    28,641
    
    
    
    
    
    
    
    
    28,779Exercise of stock options
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    6,428
    
    
    
    
    
    
    
    
    6,458Balances at December 31, 1997
    
    
    200,000
    
    
    11,185
    
    
    
    
    
    67,255
    
    
    440,926
    
    
    1,338,220
    
    
    3,904
    
    
    2,061,490Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370,800
    
    
    
    
    
    370,800Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (595
    )
    
    (595
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370,205Dividends:DLJ Common stock ($0.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    (30,000
    )Preferred stock ($2.84 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,310
    )
    
    
    
    
    (21,310
    )Issuance of Series B Preferred Stock
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,000Sale of common stock to 
        AXA Financial and AXA, S.A.
    
    
    
    
    
    500
    
    
    
    
    
    
    
    
    299,500
    
    
    
    
    
    
    
    
    300,000Exercise of stock options
    
    
    
    
    
    148
    
    
    
    
    
    
    
    
    37,840
    
    
    
    
    
    
    
    
    37,988Conversion of restricted stock units
    
    
    
    
    
    448
    
    
    
    
    
    (45,922
    )
    
    70,902
    
    
    
    
    
    
    
    
    25,428Tax benefit on distribution stock trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,898
    
    
    
    
    
    
    
    
    8,898Balances at December 31, 1998
    
    
    375,000
    
    
    12,281
    
    
    
    
    
    21,333
    
    
    858,066
    
    
    1,657,710
    
    
    3,309
    
    
    2,927,699Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600,700
    
    
    
    
    
    600,700Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,265
    )
    
    (1,265
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    599,435Net proceeds from issuance ofDLJdirect Common Stock
    
    
    
    
    
    
    
    
    1,840
    
    
    
    
    
    344,751
    
    
    
    
    
    
    
    
    346,591Dividends:DLJ Common Stock ($0.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,412
    )
    
    
    
    
    (31,412
    )Preferred stock ($2.82 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,180
    )
    
    
    
    
    (21,180
    )Exercise of stock options
    
    
    
    
    
    222
    
    
    
    
    
    
    
    
    72,873
    
    
    
    
    
    
    
    
    73,095Conversion of restricted stock units
    
    
    
    
    
    98
    
    
    
    
    
    (10,068
    )
    
    22,984
    
    
    
    
    
    
    
    
    13,014Balances at December 31, 1999
    
    $
    375,000
    
    $
    12,601
    
    $
    1,840
    
    $
    11,265
    
    $
    1,298,674
    
    $
    2,205,818
    
    $
    2,044
    
    $
    3,907,242See accompanying notes to consolidated financial statements.

Donaldson, Lufkin & Jenrette, Inc. and SubsidiariesConsolidated Statements of Cash Flows
For the Years Ended December 31,1999
    
    1998
    
    1997(In thousands)Cash flows from operating activities:Net income
    
    $
    600,700
    
    $
    370,800
    
    $
    408,250Adjustments to reconcile net income to net cash used in
        
            operating activities:Depreciation and amortization
    
    
    105,897
    
    
    84,802
    
    
    61,428Deferred taxes
    
    
    (131,746
    )
    
    27,943
    
    
    (134,233
    )Increase in unrealized appreciation
        of long-term 
                corporate development
        investments
    
    
    (71,464
    )
    
    (8,939
    )
    
    (34,524
    )Foreign currency translation adjustment
    
    
    (1,265
    )
    
    (595
    )
    
    2,007(Increase) decrease in operating assets:Cash and securities segregated
        for regulatory 
                purposes or deposited
        with clearing organizations
    
    
    846,976
    
    
    (211,132
    )
    
    4,313Securities purchased under agreements
        to resell
    
    
    (17,947,110
    )
    
    5,463,657
    
    
    (4,622,196
    )Securities borrowed
    
    
    (6,380,970
    )
    
    (3,369,000
    )
    
    (11,243,155
    )Receivables from customers
    
    
    (2,853,442
    )
    
    (1,689,266
    )
    
    (1,226,993
    )Receivables from brokers, dealers
        and other
    
    
    (1,499,251
    )
    
    (1,046,915
    )
    
    919,629Financial instruments owned, at
        value
    
    
    (14,815,313
    )
    
    3,340,614
    
    
    (807,663
    )Other assets and deferred amounts
    
    
    (154,136
    )
    
    (359,115
    )
    
    (179,958
    )Increase (decrease) in operating liabilities:Securities sold under agreements
        to repurchase
    
    
    17,947,110
    
    
    (5,463,657
    )
    
    4,622,196Securities loaned
    
    
    4,219,573
    
    
    (365,230
    )
    
    4,962,643Payables to customers
    
    
    1,571,148
    
    
    1,806,838
    
    
    1,044,223Payables to brokers, dealers and
        other
    
    
    1,250,601
    
    
    109,674
    
    
    (817,232
    )Financial instruments sold not
        yet purchased, at value
    
    
    4,004,579
    
    
    (1,516,951
    )
    
    1,014,230Accounts payable and accrued expenses
    
    
    1,070,261
    
    
    163,282
    
    
    397,876Other liabilities
    
    
    522,233
    
    
    245,320
    
    
    310,230Net cash used in operating activities
    
    $
    (11,715,619
    )
    $
    (2,417,870
    )
    $
    (5,318,929
    )See accompanying notes to consolidated financial statements.

Donaldson, Lufkin & Jenrette, Inc. and SubsidiariesConsolidated Statements of Cash Flows
For the Years Ended December 31,1999
    
    1998
    
    1997(In thousands)Cash flows from investing activities:Net (payments for) proceeds from:Purchases of long-term corporate development investments
    
    $
    (987,993
    )
    $
    (347,033
    )
    $
    (194,777
    )Sales of long-term corporate development investments
    
    
    100,544
    
    
    197,990
    
    
    117,930Office facilities
    
    
    (226,817
    )
    
    (145,742
    )
    
    (162,568
    )Other assets
    
    
    (272,547
    )
    
    (39,217
    )
    
    23,375Net cash used in investing activities
    
    
    (1,386,813
    )
    
    (334,002
    )
    
    (216,040
    )Cash flows from financing activities:Net proceeds from (payments for):Short-term
        financings
    
    
    12,066,563
    
    
    1,728,652
    
    
    4,854,182Issuance of:DLJdirect
        Common Stock
    
    
    346,591
    
    
    
    
    
    Senior
        notes
    
    
    649,637
    
    
    893,552
    
    
    Senior
        secured floating rate notes
    
    
    (154,308
    )
    
    450,000
    
    
    Subordinated
        revolving credit agreement
    
    
    
    
    
    (325,000
    )
    
    118,500Global
        floating rate notes
    
    
    
    
    
    448
    
    
    347,760Convertible
        debentures
    
    
    
    
    
    
    
    
    18,779Medium-term
        notes
    
    
    1,183,212
    
    
    349,337
    
    
    359,646Other
        long-term debt
    
    
    (98
    )
    
    (14,493
    )
    
    (13,753
    )Dividends
    
    
    (52,592
    )
    
    (51,310
    )
    
    (39,886
    )Sale of common stock to AXA Financial
        
                 and AXA, S.A.
    
    
    
    
    
    300,000
    
    
    Issuance of Series B preferred
        stock
    
    
    
    
    
    175,000
    
    
    Exercise of stock options
    
    
    34,717
    
    
    21,775
    
    
    4,074Net cash provided by financing activities
    
    
    14,073,722
    
    
    3,527,961
    
    
    5,649,302Increase in cash and cash equivalents
    
    
    971,290
    
    
    776,089
    
    
    114,333Cash and cash equivalents at beginning of period
    
    
    1,049,253
    
    
    273,164
    
    
    158,831Cash and cash equivalents at end of period
    
    $
    2,020,543
    
    $
    1,049,253
    
    $
    273,164See accompanying notes to consolidated financial statements.

Donaldson, Lufkin & Jenrette, Inc. and SubsidiariesNotes to Consolidated Financial Statements
December 31, 1999
1. Summary of Significant Accounting Policies
The consolidated financial statements include Donaldson, Lufkin
  & Jenrette, Inc. and its subsidiaries (the "Company"). All significant intercompany
  balances and transactions have been eliminated. The Company is a majority-owned
  subsidiary of AXA Financial, Inc. ("AXA Financial") and its subsidiaries (formerly
  the Equitable Companies Incorporated). The Company's separate financial statements
  reflect AXA Financial's cost basis, established in 1985 when it acquired the
  Company.
The Company is a leading, integrated investment and merchant bank
  serving institutional, corporate, government and individual clients. The Company'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.
To prepare consolidated financial statements in conformity with
  generally accepted accounting principles ("GAAP"), management must estimate
  certain amounts that affect the reported assets and liabilities, disclosure
  of contingent assets and liabilities, and reported revenues and expenses. Actual
  results could differ from those estimates.
Substantially all of the Company's financial assets and liabilities,
  as well as financial instruments with off-balance sheet risk, are carried at
  market or fair values or are carried at amounts that approximate fair value
  because of their short-term nature. Fair value is estimated at a specific point
  in time, based on relevant market information or the value of the underlying
  financial instrument. These estimates do not generally reflect any premium or
  discount that could result from offering for sale at one time the Company's
  entire holdings of a particular financial instrument.
Cash equivalents include all demand deposits held in banks and
  certain highly liquid investments with maturities of 90 days or less, other
  than those held for sale in the ordinary course of business.
Securities sold under agreements to repurchase ("repurchase agreements")
  and securities purchased under agreements to resell ("resale agreements") are
  treated as financing arrangements and are carried at contract amounts that reflect
  the amounts at which the securities will be subsequently repurchased or resold.
  Interest on such contract amounts is accrued and is included in the accompanying
  consolidated statements of financial condition in receivables from and payables
  to brokers, dealers and other. Certain repurchase and resale agreements are
  considered operating activities for the purposes of the consolidated statements
  of cash flows. The Company takes possession of the assets purchased under resale
  agreements and obtains additional collateral when the market value falls below
  the contract value. Repurchase and resale agreements are presented net in the
  consolidated statements of financial condition, if they are with the same counterparty,
  have the same maturity date, settle through the Federal Reserve System, and
  are subject to master netting agreements.
Securities borrowed and securities loaned are financing arrangements
  that are recorded at the amount of cash collateral advanced or received. For
  securities borrowed, the Company deposits cash, letters of credit or other collateral
  with the lender. For securities loaned, the Company receives collateral in cash
  or other collateral that exceeds the market value of securities loaned. The
  Company monitors the market value of securities borrowed and loaned daily and
  obtains or refunds additional collateral, as necessary.
Receivables from and payables to customers include amounts due
  on cash and margin transactions. For receivables, securities owned by customers
  are held as collateral. Such collateral is not reflected in the consolidated
  financial statements.
U.S. government and agency securities, mortgage-backed securities,
  options, forward and futures transactions and certain other debt and equity
  securities are recorded in the consolidated financial statements on a trade
  date basis. All other securities are recorded on a settlement date basis and,
  if significant, adjustments are made to a trade date basis.
Other than long-term corporate development investments and certain
  non-investment grade holdings, which are recorded at estimated fair value, financial
  instruments owned are carried at market value. Changes in unrealized appreciation
  (depreciation) arising from fluctuations in market or fair value or upon realization
  of security positions are reflected in principal transactions-net, trading revenues,
  in the consolidated statements of income.
To the extent that the Company has surrendered control, transfers
  of financial assets are accounted for as sales.
Long-term corporate development investments represent the Company's
  involvement in private debt and equity investments. These investments generally
  have no readily available market or may be otherwise restricted as to resale
  under the Securities Act of 1933; therefore, these investments are carried at
  estimated fair value as determined by the Finance Committee of the Board of
  Directors. The cost of these investments was $1.4 billion at year-end 1999 and
  $472.3 million at year-end 1998. In 1999, net unrealized appreciation of long-term
  corporate development investments increased $71.5 million. In 1998 and 1997,
  the increase in net unrealized appreciation amounted to $8.9 million and $34.5
  million, respectively. Changes in net unrealized appreciation arising from changes
  in fair value or upon realization are reflected in principal transactions-net,
  investment revenues in the consolidated statements of income.
Office facilities are carried at cost and are depreciated on a
  straight-line basis over the estimated useful life of the related assets, ranging
  from three to eight years. Leasehold improvements are amortized over the lesser
  of the useful life of the improvement or term of the lease. Exchange memberships
  owned by the Company are included in other assets and are carried at cost.
Changes in unrealized gains and losses, as well as realized gains
  and losses on all derivative instruments (options, forward and futures contracts
  and swaps), are included in principal transactions-net, trading revenues, in
  the consolidated statements of income. Related offsetting amounts are included
  in receivables from or payables to brokers, dealers and other in the consolidated
  statements of financial condition. Fair value of certain written options includes
  any deferred unamortized premiums. Such premiums are recognized over the life
  of the option contracts on a straight-line basis or are recognized through the
  change in the fair value of the option in principal transactions-net, trading
  revenues in the consolidated statements of income. Swap transactions entered
  into for non-trading purposes to modify the interest rate exposure associated
  with certain long-term debt issued by the Company are accounted for on an accrual
  basis. Under the accrual basis, the net amount to be received or paid is accrued
  as part of interest expense in the consolidated statements of income. Cash flows
  from derivative instruments are included as operating activities in the consolidated
  statements of cash flows.
Assets and liabilities of foreign subsidiaries denominated in
  foreign currencies are translated at exchange rates prevailing at the date of
  the consolidated statements of financial condition. Revenues and expenses are
  translated at average exchange rates during the period. Gains and losses from
  translating foreign currency financial statements into U.S. dollars are included
  as a separate component of stockholders' equity. Gains and losses from foreign
  currency transactions are included in the consolidated statements of income.
Effective January 1, 1997, AXA Financial's ownership for tax purposes
  declined to less than 80%; therefore, the Company files its own U.S. consolidated
  Federal income tax return.
Liabilities related to postretirement and postemployment benefits
  have been provided for and the related costs are not significant.
The Company accounts for stock-based compensation related to stock
  options in accordance with APB Opinion No. 25, "Accounting for Stock Issued
  to Employees," and accordingly, does not recognize any compensation cost associated
  with such plans in the consolidated financial statements. In accordance with
  SFAS No. 123, "Accounting for Stock-Based Compensation," the Company provides
  pro forma net income and pro forma earnings per share disclosures for employee
  stock option grants as if the fair-value-based method had been applied.
Basic and diluted earnings per common share amounts for both classes
  of the Company's stock are calculated by dividing earnings applicable to common
  shares (net income less preferred dividends) by the weighted average common
  shares outstanding. Basic earnings per share excludes the dilutive effects of
  stock options, non-vested restricted stock units and convertible debt. Diluted
  earnings per share reflects all potentially dilutive securities.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
  Activities," requires all derivatives to be recognized in the consolidated statements
  of financial condition at fair value. SFAS No. 133 as amended, is effective
  for fiscal years beginning after June 15, 2000, and should be applied prospectively.
  Since most of the Company's derivatives are currently carried at fair value,
  the adoption of this statement is not expected to have a material effect on
  the Company's consolidated financial statements.
The Company has invested heavily in technology in order to provide
  quality products and services to clients and to expand its business. Historically,
  technology expenses were included in several income statement lines. To reflect
  the increased importance of technology spending, all non-compensation technology
  costs are included in the new line item, Communications and Technology. This
  change affects two other existing expense lines: Occupancy and Related Costs,
  formerly Occupancy and Equipment, and Other Operating Expenses. Communications
  and Technology will now include systems consulting fees, previously included
  in Other Operating Expenses, and communications equipment, previously included
  in Occupancy and Equipment. Prior periods have been restated to show the new
  classifications. Certain other reclassifications have been made to prior year
  consolidated financial statements to conform to the 1999 presentation.
2. Issuance of DLJdirect Common Stock
DLJdirect Common Stock tracks the separate performance
  of the Company's existing online discount brokerage and related investment services
  business. On May 28, 1999, (the "closing date"), the Company issued, in an initial
  public offering, 18.4 million shares of DLJdirect Common Stock (the "Tracking
  Stock"). Prior to issuing the Tracking Stock, the Company's existing common
  stock was designated as DLJ Common Stock to reflect the performance of the Company's
  primary businesses, i.e., Banking, Fixed Income, Equities and Financial Services,
  plus a retained interest in DLJdirect. All of the Company's businesses
  other than those included in DLJdirect, plus the Company's retained interest
  in DLJdirect are referred to as DLJ. Holders of the Tracking Stock are
  common stockholders of the Company but have no voting rights, except in certain
  limited circumstances and will be subject to all of the risks associated with
  an investment in the Company and all of its businesses, assets and liabilities.
Earnings applicable to common shares for DLJ include a 100% interest
  in DLJdirect for periods prior to the closing date and 82.1% for subsequent
  periods. Operating results reported by the Company prior to the closing date
  were not affected by the issuance of the Tracking Stock.
3. Common Stock Split
In February 1998, the Board of Directors declared a two-for-one
  stock split (the "stock split") of the Company's common stock, subject to stockholder
  approval to increase the number of authorized common shares. In April 1998,
  stockholders approved an amendment to the Company's Certificate of Incorporation,
  which increased the number of total authorized shares of common stock to 300
  million and the number of total authorized shares of preferred stock to 50 million.
  The stock split was effected in the form of a 100% stock dividend to stockholders
  of record on April 27, 1998, and was paid on May 11, 1998. The par value of
  the common stock remained at $0.10 per share. To preserve the value of the post-split
  shares, an adjustment was made from paid-in capital to common stock. In the
  accompanying consolidated financial statements all common share, per common
  share, restricted stock unit and option data have been restated for the effect
  of the stock split.
4. Related Party Transactions
In the normal course of business, the Company provides brokerage
  services including clearance, investment banking and related activities for
  AXA Financial and certain of its affiliates. The amounts related to such activities
  are not significant.
In connection with the Company's merchant banking and financial
  advisory businesses, the Company had extended $11.4 million as its portion of
  short-term financings made with AXA Financial. Such amounts are included in
  long-term corporate development investments in the consolidated statement of
  financial condition.
For the years ended December 31, 1999, 1998 and 1997, dividends
  on common stock paid or accrued to AXA Financial were $22.2 million, $21.7 million
  and $21.3 million, respectively.
5. Cash and Securities Segregated Under Federal and Other Regulations
Securities with a market value of $122.0 million and $883.0 million
  at December 31, 1999 and 1998, respectively, were segregated in special reserve
  bank accounts to benefit customers in accordance with regulations of the Securities
  and Exchange Commission and the Commodities Futures Trading Commission.
6. Borrowings
Short-term borrowings are generally demand obligations with interest
  approximating Federal fund rates. Such borrowings are generally used to facilitate
  the securities settlement process, to finance securities inventories, and to
  finance securities purchased by customers on margin. At December 31, 1999 and
  1998, there were no borrowings secured by Company-owned securities.
Short-term borrowings and repurchase agreements:
December 31,
    
    Weighted Average Interest RatesDecember 31,1999
    
    1998
    
    1999
    
    1998(In millions)Securities sold under repurchase agreements
    
    $
    56,474
    
    $
    35,776
    
    4.38%
    
    4.89%Bank loans
    
    $
    172
    
    $
    391
    
    6.44%
    
    5.79%Borrowings from other financial institutions
    
    $
    1,186
    
    $
    125
    
    6.21%
    
    5.72%The Company has established a $2.0 billion commercial paper program.
  Obligations issued under this program (the "Notes") are exempt from registration
  under the Securities Act of 1933, as amended under Section 4(2) (the "Securities
  Act"). At December 31, 1999, $1.2 billion of notes were outstanding under this
  program.
Long-term borrowings:
December 31,1999
    
    1998(In thousands)Senior notes 5.875% - 6.875%, due various dates through
      2008
    
    $
    2,040,673
    
    $
    1,391,036Medium-term notes 4.995% - 7.42%, due various dates through
      2016
    
    
    2,229,859
    
    
    1,046,647Senior secured floating rate notes, due 2005
    
    
    295,692
    
    
    450,000Global floating rate notes, due 2002
    
    
    348,805
    
    
    348,357Subordinated exchange notes 9.58%, due 2003
    
    
    225,000
    
    
    225,000Other
    
    
    20,417
    
    
    20,963Total long-term borrowings
    
    $
    5,160,446
    
    $
    3,482,003Current maturities
    
    $
    460,569
    
    $
    100,973For the years ended December 31, 1999, 1998 and 1997, interest
  paid on all borrowings and financing arrangements was $4.6 billion, $4.6 billion
  and $3.9 billion, respectively. Interest paid on repurchase agreements was $3.1
  billion, $3.0 billion and $2.5 billion, for the years ended December 31, 1999,
  1998 and 1997, respectively.
At December 31, 1999, the Company had entered into interest rate
  swaps on $3.3 billion of its senior and medium-term notes.
Scheduled maturities of long-term borrowings are as follows:
December 31,1999
    
    1998(In thousands)1999
    
    $
    
    
    $
    100,9732000
    
    
    460,569
    
    
    189,9872001
    
    
    1,033,239
    
    
    369,2652002
    
    
    1,216,591
    
    
    358,3482003
    
    
    374,531
    
    
    374,3972004
    
    
    129,589
    
    
    2005 - 2016
    
    
    1,945,927
    
    
    2,089,033Total
    
    $
    5,160,446
    
    $
    3,482,003In connection with its 1999 and 1998 financings, the Company:
1999
Established a $2.0 billion shelf of debt securities or preferred
  stock in March. Issued $650.0 million 5.875% Senior Notes due 2002 and $970.2
  million of Medium-Term Notes with interest rates ranging from 4.995% to 7.42%
  that mature at various dates through 2008 from this $2.0 billion shelf.
Issued $315.0 million of Medium-Term Notes with interest rates
  ranging from 5.0% to 7.07% that mature at various dates through 2004 from the
  $1.0 billion shelf established in 1997.
Purchased $159.0 million of its Senior Secured Floating Rate Notes.
During 1999, the Company amended its $2.8 billion revolving credit
  facility to reduce the aggregate commitment of banks thereunder to $2.5 billion,
  of which $1.9 billion may be unsecured. At December 31, 1999, no borrowings
  were outstanding under this facility.
1998
Issued an initial $175.0 million Fixed/Adjustable Rate Cumulative
  Preferred Stock, Series B, from the $300.0 million shelf established in 1997.
Issued $650.0 million of 6.5% Senior Notes that mature in 2008
  and $350.0 million Medium-Term Notes with interest ranging from 5.402% to 6.28%
  that mature at various dates through 2003.
Issued $250.0 million of 6% Senior Notes that mature in 2001 from
  the $1.0 billion shelf established in 1997.
Issued Senior Secured and Senior Subordinated Secured Floating
  Rate Notes for $200.0 million and $250.0 million, due March 15, 2005 and September
  15, 2005, respectively. These notes are collateralized by a portfolio of investments,
  primarily senior bank debt valued at $441.0 million. Senior bank debt consists
  of interests in senior corporate debt, including term loans, revolving loans
  and other corporate debt.
Amended the $2.0 billion revolving credit facility to increase
  the aggregate commitment of banks thereunder to $2.8 billion, of which $1.7
  billion may be unsecured. At year-end 1998, no borrowings were outstanding under
  this agreement.
Repaid the $325.0 million senior subordinated revolving credit
  agreement and terminated the related credit facility.
7. Income Taxes
Income taxes included in the consolidated statements of income
  include the following:
December 31,
        1999
    
    December 31,
        1998
    
    December 31,
        1997(In thousands)Current:U.S. Federal
    
    $
    398,501
    
    $
    128,980
    
    $
    299,091Foreign
    
    
    4,844
    
    
    45,701
    
    
    25,131State and local
    
    
    81,201
    
    
    27,076
    
    
    62,861Total current
    
    
    484,546
    
    
    201,757
    
    
    387,083Deferred:U.S. Federal
    
    
    (110,095
    )
    
    19,019
    
    
    (117,622
    )State and local
    
    
    (21,651
    )
    
    8,924
    
    
    (16,611
    )Total deferred
    
    
    (131,746
    )
    
    27,943
    
    
    (134,233
    )Total provision for income taxes
    
    $
    352,800
    
    $
    229,700
    
    $
    252,850The following summarizes the difference between the "expected"
  tax provision, which is computed by applying the statutory tax rate to income
  before provision for income taxes, and the effective provision for income taxes,
  which is computed by using the effective tax rate:
1999
    1998
    1997Amount
        (In thousands)
    
    Percent of
        Pre-Tax
        Income
    Amount
        (In thousands)
    
    Percent of
        Pre-Tax
        Income
    Amount
        (In thousands)
    
    Percent of
        Pre-Tax
        IncomeComputed "expected" tax provision
    
    $
    333,725
    
    35.0
    %
    $
    210,175
    
    35.0
    %
    $
    231,385
    
    35.0
    %Non-taxable income and expense items
    
    
    (19,633
    )
    (2.1
    )
    
    (3,875
    )
    (0.6
    )
    
    (8,598
    )
    (1.3
    )State and local taxes, net of related 
             Federal income tax benefit
    
    
    38,708
    
    4.1
    
    
    23,400
    
    3.9
    
    
    30,063
    
    4.5Provision for income taxes
    
    $
    352,800
    
    37.0
    %
    $
    229,700
    
    38.3
    %
    $
    252,850
    
    38.2
    %Deferred tax assets and deferred tax liabilities are generated
  by the following temporary differences:
1999
    
    1998(In thousands)Deferred tax assets:Inventory
    
    $
    2,429
    
    $
    1,633Investments
    
    
    26,740
    
    
    45,690Other liabilities
      and accrued expenses
    
    
    662,638
    
    
    523,476Office facilities
    
    
    6,384
    
    
    8,892Deferred tax liabilities:Investments
    
    
    (50,478
    )
    
    (45,858
    )Office facilities
    
    
    (26,313
    )
    
    (42,243
    )Other
    
    
    (11
    )
    
    (1,947
    )Net deferred tax asset
    
    $
    621,389
    
    $
    489,643Management has determined that taxable income from carryback years
  and anticipated future reversals of existing taxable temporary differences are
  sufficient to offset the tax benefit of deductible temporary differences. As
  a result, at year-end 1999 and 1998, valuation allowances have not been recorded
  against deferred tax assets. Although realization is not assured, management
  believes it is more likely than not that all of the deferred tax assets will
  be realized. However, if estimates of future taxable income during the carryforward
  period are reduced, the amount of the deferred tax assets considered realizable
  could also be reduced. In 1999, 1998 and 1997, respectively, the Company paid
  $273.8 million, $101.3 million and $293.8 million in Federal income taxes including
  $4.1 million in 1998 and $18.6 million in 1997 of Federal income tax equivalents
  paid to AXA Financial.
8. Net Capital
The Company's principal wholly owned subsidiary, DLJSC, is a registered
  broker-dealer, a registered futures commission merchant and member firm of The
  New York Stock Exchange, Inc. (the "NYSE"). Accordingly, DLJSC is subject to
  the minimum net capital requirements of the Securities and Exchange Commission,
  the NYSE and the Commodities Futures Trading Commission. As such, it is subject
  to the NYSE's net capital rule, which conforms to the Uniform Net Capital Rule
  under rule 15c3-1 of the Securities Exchange Act of 1934, as amended ("the Exchange
  Act"). Under the alternative method permitted by this rule, the required net
  capital may not be less than two percent of aggregate debit balances arising
  from customer transactions or four percent of segregated funds, whichever is
  greater. If a member firm's capital is less than four percent of aggregate debit
  balances, the NYSE may require the firm to reduce its business. If a member
  firm's net capital is less than five percent of aggregate debit balances, the
  NYSE may prevent the firm from expanding its business and declaring cash dividends.
  At December 31, 1999, DLJSC's net capital of approximately $1.7 billion was
  17.6 percent of aggregate debit balances and in excess of the minimum requirement
  by approximately $1.5 billion.
The Company's London-based broker-dealer subsidiaries are subject
  to the requirements of the Securities and Futures Authority, a self-regulatory
  organization established pursuant to the United Kingdom Financial Services Act
  of 1986. Other U.S. and foreign broker-dealer subsidiaries of the Company are
  subject to net capital requirements of their respective regulatory agencies.
  At December 31, 1999 and 1998, the Company and its broker-dealer subsidiaries
  complied with all applicable regulatory capital adequacy requirements.
9. Derivative Financial Instruments
The Company enters into various transactions involving derivatives.
  In general, derivatives are contractual agreements that derive their values
  from the performance of underlying assets, interest or currency exchange rates,
  or a variety of indices. The Company enters into derivative transactions primarily
  for trading purposes, or to provide products for its clients. These transactions
  involve options, forwards, futures and swaps. The Company also enters into interest
  rate swaps to modify the characteristics of periodic interest payments associated
  with some of its long-term debt obligations.
Options
The majority of the Company's options are written options. The
  Company writes option contracts specifically designed to meet customers' needs.
  Most of the options do not expose the Company to credit risk since the Company,
  not its counterparty, is obligated to perform. At the beginning of the contract
  period, the Company receives a cash premium. During the contract period, the
  Company bears the risk of unfavorable changes in the value of the financial
  instruments underlying the options ("market risk"). To cover this market risk,
  the Company purchases or sells cash or derivative financial instruments on a
  proprietary basis. Such purchases and sales may include debt and equity securities,
  forward and futures contracts and options. The counterparties to these purchases
  and sales are reviewed to determine whether they are creditworthy. Future cash
  requirements for options written equal the fair value of the options.
The Company also purchases options for trading purposes. With
  purchased options, the Company gets the right, for a fee, to buy or sell the
  underlying instrument at a fixed price on or before a specified date. The underlying
  instruments for these options include mortgage-backed securities, equities,
  interest rates and foreign currencies. All options are reported at fair value.
Forwards and Futures
The Company enters into forward purchases and sales contracts
  for mortgage-backed securities and foreign currencies. In addition, the Company
  enters into futures contracts on equity-based indices, foreign currencies and
  other financial instruments as well as options on futures contracts. Forward
  and futures contracts are treated as off-balance sheet items. Market risk is
  the price movement on the notional value of the contracts.
For forward contracts, cash is generally not required at inception;
  cash equal to the contract value is required at settlement. For futures contracts,
  the original margin is required in cash at inception; cash equal to the change
  in market value is required daily.
Since forward contracts are subject to the financial reliability
  of the counterparty, the Company is exposed to credit risk. To monitor this
  credit risk, the Company limits transactions with specific counterparties, reviews
  credit limits and adheres to internally established credit extension policies.
  For futures contracts and options on futures contracts, the change in the market
  value is settled with a clearing broker in cash each day. As a result, the credit
  risk with the clearing broker is limited to the net positive change in the market
  value for a single day.
Swaps
The Company's swap agreements consist primarily of interest rate
  and equity swaps. Equity swaps are contractual agreements to receive the appreciation
  or depreciation in value based on a specific strike price on an equity instrument
  in exchange for paying another rate, which is usually based on index or interest
  rate movements. Interest rate swaps are contractual agreements to exchange interest
  rate payments based on agreed notional amounts and maturity. Swaps are reported
  at fair value.
Quantitative Disclosures for All Trading Derivatives
The notional or contract amounts indicate the extent of the Company's
  involvement in the derivative instruments noted above. They do not measure the
  Company's exposure to market or credit risk and do not represent the future
  cash requirements of such contracts. The notional (contract) amounts for derivatives
  outstanding at December 31, 1999 and 1998 are as follows:
1999
    
    1998(In billions)Options written
    
    $
    15.1
    
    $
    5.8Options purchased
    
    $
    7.4
    
    $
    3.1Forward contracts purchased
    
    $
    35.6
    
    $
    41.3Forward contracts sold
    
    $
    41.1
    
    $
    39.8Futures contracts purchased
    
    $
    2.9
    
    $
    1.2Futures contracts sold
    
    $
    4.3
    
    $
    1.6Swaps
    
    $
    24.5
    
    $
    8.4The fair values of derivatives outstanding at December 31, 1999
  and 1998 are as follows:
1999
    
    1998Assets
    
    Liabilities
    
    Assets
    
    Liabilities(In millions)Options
    
    $
    519.9
    
    $
    1,002.6
    
    $
    114.5
    
    $
    397.1Forward contracts
    
    $
    327.1
    
    $
    247.3
    
    $
    262.9
    
    $
    269.3Futures contracts
    
    $
    3.5
    
    $
    9.8
    
    $
    4.0
    
    $
    1.0Swaps
    
    $
    256.9
    
    $
    240.2
    
    $
    62.1
    
    $
    84.7The average fair values of derivatives for 1999 and 1998 are as
  follows:
1999
    
    1998Assets
    
    Liabilities
    
    Assets
    
    Liabilities(In millions)Options
    
    $
    169.5
    
    $
    444.8
    
    $
    86.6
    
    $
    309.9Forward contracts
    
    $
    329.0
    
    $
    312.6
    
    $
    135.6
    
    $
    139.2Futures contracts
    
    $
    10.3
    
    $
    7.4
    
    $
    3.7
    
    $
    19.4Swaps
    
    $
    253.3
    
    $
    94.3
    
    $
    28.1
    
    $
    26.7The majority of the Company's derivatives are short-term in duration.
  At December 31, 1999, the notional or contract amounts of derivatives expiring
  in future years based on contractual expiration are as follows:
Less Than
        One Year
    
    One to Three
        Years
    
    Three to Five
        Years
    
    Greater Than
        Five Years
    
    Total(In millions)Options written
    
    $
    8.7
    
    $
    4.8
    
    $
    0.5
    
    $
    1.1
    
    $
    15.1Options purchased
    
    
    3.4
    
    
    2.8
    
    
    0.3
    
    
    0.9
    
    
    7.4Forward contracts purchased
    
    
    35.6
    
    
    
    
    
    
    
    
    
    
    
    35.6Forward contracts sold
    
    
    40.9
    
    
    
    
    
    0.2
    
    
    
    
    
    41.1Futures contracts purchased
    
    
    2.2
    
    
    0.7
    
    
    
    
    
    
    
    
    2.9Futures contracts sold
    
    
    3.8
    
    
    0.5
    
    
    
    
    
    
    
    
    4.3Swaps
    
    
    9.0
    
    
    4.5
    
    
    3.5
    
    
    7.5
    
    
    24.5Total
    
    $
    103.6
    
    $
    13.3
    
    $
    4.5
    
    $
    9.5
    
    $
    130.9Percent of total
    
    
    79.1
    %
    
    10.2
    %
    
    3.4
    %
    
    7.3
    %
    
    100.0
    %Disclosures for All Non-trading Derivatives
The Company also enters into interest rate swaps to modify the
  characteristics of periodic interest payments associated with some of its long-term
  debt obligations. At December 31, 1999 and 1998, the notional amount of these
  interest rate swaps was $3.3 billion and $0.8 billion, respectively.
10. Financial Instruments With Off-Balance Sheet Risk
In the normal course of business, the Company's customer, trading
  and correspondent clearance activities include executing, settling and financing
  various securities and financial instrument transactions. To execute these transactions,
  the Company purchases and sells (including "short sales") securities, writes
  options, and purchases and sells forward contracts for mortgage-backed securities
  and foreign currencies and financial futures contracts. If the customer or counterparty
  to the transaction is unable to fulfill its contractual obligations, and margin
  requirements are not sufficient to cover losses, the Company may be exposed
  to off-balance sheet risk. In these situations, the Company may be required
  to purchase or sell financial instruments at prevailing market prices, which
  may not fully cover the obligations of its customers or counterparties. This
  risk is limited by requiring customers and counterparties to maintain margin
  collateral that complies with regulatory and internal guidelines. Additionally,
  with respect to the Company's correspondent clearance activities, introducing
  correspondent brokers are required to guarantee the performance of their customers
  to meet contractual obligations.
As part of the Company's financing and securities settlement activities,
  the Company uses securities as collateral to support various secured financing
  sources. If the counterparty does not meet its contracted obligation to return
  securities used as collateral, the Company may be exposed to the risk of reacquiring
  the securities at prevailing market prices to satisfy its obligations. The Company
  controls this risk by monitoring the market value of securities pledged each
  day and by requiring collateral levels to be adjusted in the event of excess
  market exposure. As of December 31, 1999, cash of $4.6 billion and pledged securities
  with a market value of approximately $2.3 billion are used as collateral for
  securities borrowed with a market value of approximately $6.6 billion. In accordance
  with industry practice, these securities borrowed and pledged are not reflected
  in the consolidated statements of financial condition.
The Company enters into forward contracts under which securities
  are delivered or received in the future at a specified price or yield. If counterparties
  are unable to perform under the terms of the contracts or if the value of securities
  and interest rates changes, the Company is exposed to risk. Such risk is controlled
  by monitoring the market value of the securities contracted for each day and
  by reviewing the creditworthiness of the counterparties. The settlement of these
  transactions is not expected to have a material adverse effect on the Company's
  consolidated financial statements.
Risks associated with letters of credit, guarantees and underwriting
  commitments are not significant.
11. Concentrations of Credit Risk
As a securities broker and dealer, the Company is engaged in various
  securities trading and brokerage activities servicing a diverse group of domestic
  and foreign corporations, governments, and institutional and individual investors.
  A substantial portion of the Company's transactions is executed with and on
  behalf of institutional investors including other brokers and dealers, mortgage
  brokers, commercial banks, U.S. government agencies, mutual funds and other
  financial institutions. These transactions are generally collateralized.
Credit risk is the potential for loss resulting from the default
  by a counterparty of its obligations. Exposure to credit risk is generated by
  securities and currency settlements, contracting derivative and forward transactions
  with customers and dealers, and the holding in inventory of bonds and/or loans.
  The Company uses various means to manage its credit risk. The credit-worthiness
  of all counterparties is analyzed at the outset of a credit relationship with
  the Company. These counterparties are subsequently reviewed on a periodic basis.
  The Company sets a maximum exposure limit for each counterparty, as well as
  for groups or classes of counterparties. Furthermore, the Company enters into
  master netting agreements when feasible and demands collateral from certain
  counterparties or for certain types of credit transactions.
The Company's customer securities activities are transacted either
  in cash or on a margin basis, in which the Company extends credit to the customer.
  The Company seeks to control the risks associated with its customer activities
  by requiring customers to maintain margin collateral to comply with various
  regulatory and internal guidelines. Each day, the Company monitors required
  margin levels and requires customers to deposit additional collateral, or reduce
  positions, when necessary.
12. Trust Securities
In 1996, the Company and its wholly owned trust, DLJ Capital Trust
  I (the "Trust"), completed an offering of $200.0 million of the Trust's 8.42%
  mandatorily redeemable trust securities. The Trust exists for the sole purpose
  of issuing trust securities and common securities and investing the proceeds
  in an equivalent amount of Junior Subordinated Debentures of the Company. At
  December 31, 1999 and 1998, the only assets of the Trust were $200.0 million
  of 8.42% Junior Subordinated Debentures of the Company due 2046. The Junior
  Subordinated Debentures are redeemable by the Company, in whole or in part,
  on or after August 31, 2001. The Trust must also redeem its trust securities
  having an aggregate liquidation amount equal to the aggregate principal amount
  of Junior Subordinated Debentures being redeemed.
To the extent the Company has made principal and interest payments
  on the Junior Subordinated Debentures, the Company guarantees payment to the
  holders of the trust securities issued by the Trust. The Company has issued
  a full and unconditional guarantee of the Trust's obligations under the trust
  securities of the Trust.
13. Stockholders' Equity
On May 28, 1999, the Company issued, in an initial public offering,
  18.4 million shares of Tracking Stock. The shares of Tracking Stock have no
  voting rights, except in certain limited circumstances. Net proceeds from the
  offering amounted to $346.6 million.
On May 20, 1999 the Company amended its certificate of incorporation
  to authorize the issuance of $1.5 billion shares of common stock in multiple
  series.
In July 1998, the Emerging Issues Task Force ("EITF") reached
  a consensus on EITF Issue 97-14, "Accounting for Deferred Compensation Arrangements
  Where Amounts Earned are Held in a Rabbi Trust and Invested" ("EITF 97-14").
  Under EITF 97-14, assets of the trust should be consolidated with those of the
  employer and the value of the employer's stock held in the rabbi trust should
  be classified in stockholders' equity in a manner similar to Treasury Stock.
  The Company adopted EITF 97-14 as of September 30, 1998. In 1999 and 1998, respectively,
  approximately 1.0 million and 4.4 million restricted stock units ("RSU") vested
  and were converted into common stock from the Company's authorized and unissued
  shares. Approximately 2.1 million of these shares were deposited in the rabbi
  trust pursuant to the Executive Deferred Compensation Plan, which was effective
  January 1, 1997. In October 1998, approximately 1.8 million of such shares were
  distributed by the rabbi trust to employees. At December 31, 1999, approximately
  1.3 million shares of the Company's stock are included in the rabbi trust. The
  shares and the corresponding liability to employees are shown as components
  of stockholders' equity in the Company's consolidated statements of financial
  condition.
In July 1998, the Company sold an aggregate of five million shares
  of newly issued common stock to its parent companies, AXA Financial and AXA
  S.A., for $300.0 million in a transaction exempt from the registration requirements
  of the Securities Act.
In 1997, the Company exercised its option to redeem all of the
  outstanding convertible debentures issued in connection with the acquisition
  of a London-based financial advisory firm. As a result, the holders of such
  debentures elected to convert such debentures into an aggregate of 1,370,408
  shares of common stock of the Company.
The Company has issued 4.0 million shares of Fixed/Adjustable
  Rate Cumulative Preferred Stock, Series A, with a liquidation preference of
  $50.00 per share ($200.0 million aggregate liquidation value). Dividends on
  the preferred stock are cumulative and payable quarterly at 5.94% per annum
  through November 30, 2001. Thereafter, the dividend rate will be adjusted, based
  on various indices, to be at least 6.44% but less than 12.44%. The preferred
  stock is redeemable, in whole or in part, at the option of the Company, on or
  after November 30, 2001. At December 31, 1999 and 1998, 4.0 million shares of
  such preferred stock were authorized, issued and outstanding.
The Company has also issued 3.5 million shares of Fixed/Adjustable
  Rate Cumulative Preferred Stock, Series B, with a liquidation preference of
  $50.00 per share ($175.0 million aggregate liquidation value). Dividends on
  the preferred stock are cumulative and payable quarterly at 5.30% per annum
  through January 2003, subject to adjustment in later years. The preferred stock
  is redeemable, in whole or in part, at the option of the Company, on or after
  January 15, 2003.
14. Earnings Per Share
Earnings per common share 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, 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 and convertible debt calculated under the treasury stock and "if-converted"
  method, respectively. In 1999, approximately 1.0 million RSUs vested and were
  converted into the Company's common stock. This amount is included in the calculation
  of earnings per common share. All earnings per share have been restated for
  the stock split.
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 December 31, 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. DLJ's
  retained interest excludes the effect of the 10 million shares of common stock
  that have been reserved for issuance under the DLJdirect Incentive Compensation
  Plan. Earnings per share for DLJdirect for periods prior to the closing
  date are not presented as such amounts are not meaningful. For the period the
  Tracking Stock was outstanding, exercisable stock options were excluded from
  the computation of diluted earnings per share since the effect of including
  them was antidilutive.
The numerators and denominators of the basic and diluted earnings
  per common share computations include the following items:
DLJ Common StockDecember 31, 1999
    
    December 31, 1998
    
    December 31, 1997Income
    
    Shares
    
    Income
    
    Shares
    
    Income
    
    Shares(In thousands)Basic Earnings applicable toCommon Shares
    
    $
    580,423
    
    $
    125,433
    
    $
    349,490
    
    119,260
    
    $
    396,106
    
    110,318Effect of Dilutive Securities:Restricted stock units
    
    
    
    
    
    1,029
    
    
    
    
    2,348
    
    
    
    
    7,046Stock options
    
    
    
    
    
    12,406
    
    
    
    
    10,372
    
    
    
    
    7,660Convertible debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    308
    
    474Diluted Earnings applicable toCommon Shares
    
    $
    580,423
    
    $
    138,868
    
    $
    349,490
    
    131,980
    
    $
    396,414
    
    125,498DLJdirect Common StockEarnings (loss) applicable
             to Common SharesBasic and Diluted
    
    $
    (903
    )
    $
    18,40015. Employee Compensation and Benefit Plans
1996 Incentive Compensation Plan
Awards under the 1996 Incentive Compensation Plan (the "Incentive
  Plan") are determined by the Compensation and Management Committee of the Board
  of Directors (the "Compensation Committee"). The Incentive Plan creates short-term
  and long-term award pools for key employees of the Company. Short-term award
  pools are for a performance period up to two years and are based on 10% of pre-tax
  earnings, as defined. Long-term award pools are for a performance period of
  three to ten years and are based on a percentage of pre-tax earnings that varies
  with the Company's average return on common equity during the performance period.
  Participants may receive awards in cash, options, shares or RSUs; however, stock-based
  payments are limited to a total of 17.6 million shares. Under certain circumstances,
  participants may defer the receipt of part or all of any award. Each unit granted
  under the Plan is equal to a percentage interest in the long-term award pool.
  The units vest at the rate of 33 1/3% per year during the performance period.
  During 1997, the Compensation Committee authorized a long-term award pool for
  the performance period from January 1, 1997 to December 31, 1999. For the years
  ended December 31, 1999, 1998 and 1997, the amount charged to expense was $266.4
  million, $165.5 million and $185.5 million, respectively.
1995 Restricted Stock Unit Plan
In 1995, the Company adopted the 1995 Restricted Stock Unit Plan
  (the "Plan"). Each RSU granted under the Plan represents the right to receive
  a share of common stock under certain circumstances. These RSUs may be forfeited
  in certain circumstances and vest annually in specified proportions from February
  1997 through February 2000. RSUs that are forfeited will become available for
  subsequent grants. Under the Plan, 10,358,294 units were granted. As of December
  31, 1999, 214,165 RSUs were forfeited and 9,044,174 RSUs vested and were converted
  to common stock from the Company's authorized and unissued shares.
Stock Option Plans
In 1995, the Company adopted the 1995 and 1996 Stock Option Plans.
  Under the 1995 Stock Option Plan, options were granted to certain employees
  to purchase an aggregate of 18,337,356 shares of common stock (the maximum allowable
  under the 1995 Stock Option Plan) with an exercise price of $13.50. The options
  may be forfeited in certain circumstances, vested in equal installments in February
  1997 and February 1998, and are exercisable for up to ten years from the date
  of the grant. Options that are forfeited under the 1995 Stock Option Plan will
  become available for subsequent grant under the 1996 Stock Option Plan.
Under the 1996 Stock Option Plan (the "1996 Plan") options are
  available to purchase a maximum of 17,579,702 shares of common stock, exclusive
  of forfeitures from the 1995 Stock Option Plan. The options are exercisable
  for up to ten years from the date of grant, may be forfeited in certain circumstances,
  and vest in four equal annual installments starting one year after the date
  of grant. Options that are forfeited under the 1996 Plan become available for
  subsequent grant under that plan.
In 1996, the Company adopted the Non-Employee Directors Stock
  Plan (the "Stock Plan") to provide equity compensation to the Company's non-employee
  directors. Under the Stock Plan, stock options are granted at a price equal
  to the fair value of the stock at the date of grant. The options are exercisable
  for up to 10 years from the date of grant and vest in four equal annual installments
  starting one year from the date of grant. Under the Stock Plan, 200,000 shares
  are issuable. Any shares issued under the Stock Plan will reduce the number
  of shares issuable under the 1996 Plan.
In May 1999, with the issuance of the Tracking Stock, the Company
  adopted the 1999 DLJdirect Incentive Compensation Plan (the "DLJdirect
  Incentive Plan"). Awards under the DLJdirect Incentive Plan are determined
  by the Compensation Committee. Under this plan, stock options on DLJdirect
  stock are granted at a price equal to the fair value of the stock at the date
  of grant. The options are exercisable for up to 10 years from the date of grant
  and vest in four equal annual installments starting one year from the date of
  grant. Under the DLJdirect Incentive Plan, 10,000,000 shares are issuable.
The following summarizes the stock option activity for all plans:
Options
    
    Weighted Average
        Exercise PriceDLJ Common Stock:Outstanding at December 31, 1996
    22,260,664
    
    $14.03Granted
    6,431,668
    
    $30.54Forfeited
    (133,866
    )
    $16.01Exercised
    (296,370
    )
    $13.76Outstanding at December 31, 1997
    28,262,096
    
    $17.78Granted
    1,508,489
    
    $38.59Forfeited
    (60,000
    )
    $17.31Exercised
    (1,458,366
    )
    $14.91Outstanding at December 31, 1998
    28,252,219
    
    $19.04Granted
    4,788,175
    
    $45.23Forfeited
    (78,500
    )
    $34.61Exercised
    (2,196,153
    )
    $15.85Outstanding at December 31, 1999
    30,765,741
    
    $23.30DLJdirect Common Stock:Outstanding at December 31, 1998
    
    
    $     Granted
    6,300,050
    
    $19.76Forfeited
    (67,000
    )
    $20.00Exercised
    
    
    Outstanding at December 31, 1999
    6,233,050
    
    $19.76The following summarizes information related to stock options
  outstanding at December 31, 1999:
Exercise
        Prices
    
    Number
        Outstanding
    
    Weighted Average
        Exercise Price
    
    Weighted Average
        Remaining Life (Years)DLJ:$13.50 - 25.99
    
    
    20,238,481
    
    
    
    $14.61
    
    
    
    8.4$26.00 - 38.99
    
    
    4,920,746
    
    
    
    33.99
    
    
    
    7.8$39.00 - 52.99
    
    
    4,806,714
    
    
    
    43.28
    
    
    
    9.0$53.00 - 76.88
    
    
    799,800
    
    
    
    57.09
    
    
    
    9.7Total
    
    
    30,765,741
    
    
    
    $23.30
    
    
    
    8.4At December 31, 1999, 20,568,365 options on DLJ Common Stock were
  exercisable at prices ranging from $13.50 to $52.99. The weighted average exercise
  price of such options was $16.62. At December 31, 1998, there were 21,378,671
  options on DLJ Common Stock exercisable at exercise prices ranging from $13.50
  to $38.00. The weighted average exercise price of these options was $15.05.
Exercise
        Prices
    
    Number
        Outstanding
    
    Weighted Average
        Exercise Price
    
    Weighted Average
        Remaining Life (Years)DLJdirect:$13.56 - 14.13
    
    
    256,250
    
    
    
    $14.10
    
    
    
    9.8$14.14 - 20.00
    
    
    5,976,800
    
    
    
    20.00
    
    
    
    9.4Total
    
    
    6,233,050
    
    
    
    $19.76
    
    
    
    9.4At December 31, 1999, no options on DLJdirect Common Stock
  were exercisable.
The Company accounts for its stock option plans in accordance
  with APB Opinion No. 25 and, accordingly, does not recognize any compensation
  cost associated with such plans in the consolidated financial statements. If
  the Company had calculated compensation cost under SFAS No. 123 (based on the
  fair value of options at the grant date), the Company would have reported the
  following net earnings applicable to common shares and earnings per common share:
DLJ
    
    DLJdirect1999
    
    1998
    
    1997
    
    1999(In thousands, except per share data)Net earnings applicable to common sharesAs reported
    
    $
    580,423
    
    $
    349,490
    
    $
    396,106
    
    $
    (903
    )Pro forma
    
    $
    546,083
    
    $
    328,390
    
    $
    375,856
    
    $
    (6,345
    )Basic earnings per common shareAs reported
    
    $
    4.63
    
    $
    2.93
    
    $
    3.59
    
    $
    (0.05
    )Pro forma
    
    $
    4.35
    
    $
    2.75
    
    $
    3.41
    
    $
    (0.34
    )Diluted earnings per common shareAs reported
    
    $
    4.18
    
    $
    2.65
    
    $
    3.16
    
    $
    (0.05
    )Pro forma
    
    $
    3.93
    
    $
    2.49
    
    $
    3.00
    
    $
    (0.34
    )For the purpose of computing the pro forma amounts indicated above,
  the fair value of each option on the date of grant is estimated using the Black-Scholes
  option-pricing model. The weighted average assumptions used in the model are
  as follows:
DLJ
    
    DLJdirect1999
    
    
    1998
    
    
    1997
    
    
    1999Expected dividend yield
    
    
    0.56
    %
    
    0.69
    %
    
    0.86
    %
    
    0.0
    %Expected stock volatility
    
    
    36
    %
    
    40
    %
    
    33
    %
    
    45
    %Risk-free interest rates
    
    
    5.06
    %
    
    5.53
    %
    
    5.96
    %
    
    5.69
    %Expected life (in years)
    
    
    5
    
    
    5
    
    
    5
    
    
    5Fair value per share of options
    
    $
    17.19
    
    $
    16.27
    
    $
    10.81
    
    $
    9.30Other Plans
The Company has a defined contribution employee benefit plan covering
  the Company's domestic full-time and part-time employees. Company contributions
  to this plan are determined by the Board of Directors of the Company annually
  and were $10.4 million, $9.6 million and $9.6 million for 1999, 1998 and 1997,
  respectively.
Certain key employees of the Company also participate in the following
  deferred compensation arrangements: equity investments in selected merchant
  banking activities of the Company funded by deferred compensation and leverage
  provided by the Company; non-qualified deferred compensation plans that include
  managed investments; and other non-qualified plans that are funded by the Company
  with insurance contracts. The plans' investments, including the leverage factor,
  and the amounts accrued by the Company under the plans are both included in
  the consolidated statements of financial condition. These compensation-related
  assets amounted to $937.0 million and $703.6 million, respectively, at December
  31, 1999 and 1998. Related liabilities for deferred compensation amounted to
  $492.2 million and $434.1 million, respectively, at December 31, 1999 and 1998.
16. Leases, Commitments and Contingent Liabilities
The Company leases office space and equipment under cancelable
  and non-cancelable lease agreements that expire on various dates through 2021.
  Rent expense for office space and equipment, with lease terms in excess of one
  year was $157.7 million, $115.6 million and $89.9 million, for the years ended
  December 31, 1999, 1998 and 1997, respectively. Sublease revenue was $0.1 million
  for each of the years ended December 31, 1999, 1998 and 1997, respectively.
At December 31, 1999, non-cancelable leases in excess of one year,
  excluding sublease revenue, escalation and renewal options had the following
  minimum lease commitments:
Period
    
    (In thousands)2000
    
    $   133,6622001
    
    133,7782002
    
    127,8322003
    
    117,1932004
    
    113,7732005 - 2021
    
    1,508,547Total
    
    $2,134,785In the normal course of business, the Company enters into underwriting
  commitments. Management of the Company believes that transactions relating to
  such underwriting commitments that were open at December 31, 1999, will have
  no material effect on the consolidated financial statements. The Company has
  issued letters of credit for which it is contingently liable for $367.5 million
  and $657.5 million at December 31, 1999 and 1998, respectively.
The Company has outstanding commitments, expiring on March 16,
  2000, to finance $150.0 million to third parties to be secured by mortgage loans
  on real estate properties. At December 31, 1999, unfunded commitments outstanding
  under this facility amounted to $62.5 million. In addition, the Company enters
  into commitments to extend credit to non-investment grade borrowers in connection
  with the origination and syndication of senior bank debt. At December 31, 1999,
  unfunded senior bank loan commitments outstanding were $475.3 million.
At December 31, 1999, the Company has commitments of $699.7 million
  to invest on a side-by-side basis with merchant banking partnerships.
17. Industry Segment and Geographic Data
In 1998 and prior years the Company operated and managed its businesses
  and presented segment information through three principal operating segments:
  Banking, Capital Markets and Financial Services. Effective January 1, 1999,
  the Company changed its structure to operate and manage its businesses through
  four operating segments: Banking, Equities, Fixed Income and Financial Services.
Such segments are managed separately based on types of products
  and services offered and their related client bases. The Company evaluates the
  performance of its segments based primarily on income before income taxes.
The Banking Group raises and invests capital and provides financial
    advice to companies throughout the U.S. and abroad. Through this group, the
    Company manages and underwrites offerings of securities, arranges private
    placements, provides client advisory and other services, pursues direct investments
    in a variety of areas, and provides venture capital to institutional investors.
  The Equities Group trades, conducts research on, originates
    and distributes equity securities.
  The Fixed Income Group trades, conducts research on, originates
    and distributes fixed income securities and places private debt instruments.
  The Financial Services Group provides a broad array of services
    to individual and high-net-worth investors and the financial intermediaries
    that represent them. Such services include correspondent brokerage services,
    online investment services, research and trading services, cash management
    and investment advisory services.For internal management reporting, the Company may allocate certain
  revenues to its operating segments in excess of the amount realized on the related
  transactions. Such excess amounts are eliminated in consolidation. The Company
  also allocates to segments a pro rata share of amounts for leased facilities,
  equipment and certain general overhead expenses based upon specified amounts,
  usage criteria or agreed rates, and allocates interest expense based upon capital
  utilization at rates that approximate market. All other accounting policies
  of the segments are the same as those described in the summary of significant
  accounting policies.
The following is a summary of the Company's segment data:
Banking
        Group
    
    Fixed Income
        Group
    
    Equities
        Group
    
    Financial
        Services
        Group
    
    Elimination
        & Other
    
    Total(In millions)December 31, 1999:Net revenues from
             external sources
    
    $
    1,960.8
    
    $
    750.6
    
    $
    1,025.0
    
    $
    1,387.3
    
    $
    (152.7
    )
    $
    4,971.0Net intersegment
            revenues
    
    
    0.0
    
    
    0.0
    
    
    (8.8
    )
    
    121.9
    
    
    (113.1
    )
    
    0.0Depreciation and
            amortization
    
    
    18.5
    
    
    15.2
    
    
    16.7
    
    
    42.6
    
    
    15.1
    
    
    108.1Net interest revenue
    
    
    (0.6
    )
    
    161.7
    
    
    12.9
    
    
    284.3
    
    
    126.7
    
    
    585.0Income before income taxes
    
    $
    526.8
    
    $
    300.1
    
    $
    115.6
    
    $
    311.9
    
    $
    (300.9
    )
    $
    953.5Segment assets
    
    $
    2,273.2
    
    $
    74,884.7
    
    $
    5,325.5
    
    $
    30,586.4
    
    $
    (4,057.7
    )
    $
    109,012.1Expenditures for 
            long lived assets
    
    $
    23.8
    
    $
    15.6
    
    $
    39.8
    
    $
    113.5
    
    $
    59.0
    
    $
    251.7December 31, 1998:Net revenues from external sources
    
    $
    1,488.1
    
    $
    495.7
    
    $
    688.1
    
    $
    995.7
    
    $
    (449.6
    )
    $
    3,218.0Net intersegment 
            revenues
    
    
    0.0
    
    
    0.9
    
    
    (4.8
    )
    
    54.2
    
    
    (50.3
    )
    
    0.0Depreciation and 
            amortization
    
    
    16.3
    
    
    15.2
    
    
    12.1
    
    
    31.8
    
    
    12.7
    
    
    88.1Net interest revenue
    
    
    (1.2
    )
    
    120.5
    
    
    17.6
    
    
    215.2
    
    
    381.1
    
    
    733.2Income before
            income taxes
    
    $
    415.7
    
    $
    166.0
    
    $
    69.5
    
    $
    202.3
    
    $
    (253.0
    )
    $
    600.5Segment assets
    
    $
    1,132.0
    
    $
    45,683.7
    
    $
    2,694.9
    
    $
    19,925.0
    
    $
    2,790.1
    
    $
    72,225.7Expenditures for
            long lived assets
    
    $
    36.4
    
    $
    8.0
    
    $
    18.9
    
    $
    77.3
    
    $
    13.2
    
    $
    153.8December 31, 1997:Net revenues fromexternal sources
    
    $
    1,216.7
    
    $
    548.3
    
    $
    607.3
    
    $
    793.5
    
    $
    (177.5
    )
    $
    2,988.3Net intersegment
            revenues
    
    
    1.3
    
    
    3.4
    
    
    (2.7
    )
    
    46.1
    
    
    (48.1
    )
    
    0.0Depreciation and
            amortization
    
    
    11.5
    
    
    12.2
    
    
    8.9
    
    
    16.6
    
    
    10.9
    
    
    60.1Net interest revenue
    
    
    2.2
    
    
    112.0
    
    
    (6.2
    )
    
    169.3
    
    
    221.7
    
    
    499.0Income before
            income taxes
    
    $
    381.9
    
    $
    200.2
    
    $
    119.2
    
    $
    157.6
    
    $
    (197.8
    )
    $
    661.1Segment assets
    
    $
    753.2
    
    $
    49,459.9
    
    $
    1,993.7
    
    $
    18,124.3
    
    $
    118.2
    
    $
    70,449.3Expenditures for
            long lived assets
    
    $
    66.6
    
    $
    24.6
    
    $
    19.4
    
    $
    83.1
    
    $
    30.3
    
    $
    224.0The following is a reconciliation of the Company's reported segment
  revenues, income before provision for income taxes and segment assets to the
  Company's consolidated totals:
December 31,1999
    
    1998
    
    1997(In millions)Revenues:Total net revenues for reported segments
    
    $
    5,695.1
    
    $
    4,070.0
    
    $
    3,491.3All other revenues
    
    
    19.9
    
    
    105.3
    
    
    153.7Consolidation/elimination(1)
    
    
    (159.0
    )
    
    (224.1
    )
    
    (157.7
    )Total consolidated net revenues
    
    $
    5,556.0
    
    $
    3,951.2
    
    $
    3,487.3Income before provision for income taxes:Total income for reported segments
    
    $
    1,254.4
    
    $
    853.5
    
    $
    859.0All other income (losses)
    
    
    (25.4
    )
    
    0.5
    
    
    (24.6
    )Consolidation/elimination(1)
    
    
    (275.5
    )
    
    (253.5
    )
    
    (173.3
    )Total income before provision
        
                for income taxes
    
    $
    953.5
    
    $
    600.5
    
    $
    661.1Segment assets:Total assets for reported segments
    
    $
    113,069.8
    
    $
    69,435.6
    
    $
    70,331.1All other assets
    
    
    3.6
    
    
    1,264.9
    
    
    3,015.1Consolidation/elimination (1)
    
    
    (4,061.3
    )
    
    1,525.2
    
    
    (2,896.9
    )Total segment assets
    
    $
    109,012.1
    
    $
    72,225.7
    
    $
    70,449.3(1)
    Consolidation/elimination represents intercompany accounts/intersegment
      revenue-sharing arrangements that are eliminated in consolidation.The Company's principal operations are located in the United States.
  The Company maintains offices in Europe, Latin America and Asia, with the majority
  of foreign business done through the London offices. The following are net revenues
  by geographic region:
December 31,1999
    
    1998
    
    1997(In millions)United States
    
    $
    4,773.8
    
    $
    3,561.5
    
    $
    3,151.3Foreign
    
    
    782.2
    
    
    389.7
    
    
    336.0Total
    
    $
    5,556.0
    
    $
    3,951.2
    
    $
    3,487.3The following are long-lived assets by geographic region:
December 31,1999
    
    1998
    
    1997(In millions)United States
    
    $
    463.7
    
    $
    384.7
    
    $
    356.3Foreign
    
    
    170.3
    
    
    128.0
    
    
    98.9Total
    
    $
    634.0
    
    $
    512.7
    
    $
    455.218. Legal Proceedings
The Company has been named as a defendant in a number of actions
  relating to its various businesses including various civil actions and arbitrations
  arising out of its activities as a broker-dealer in securities, as an underwriter
  and as an employer, and arising out of alleged employee misconduct. From time
  to time, the Company is also involved in proceedings with, and investigations
  by, government agencies and self-regulatory organizations. Some of the actions
  have been brought on behalf of various classes of claimants and seek damages
  of material or indeterminate amounts. Although the ultimate outcome of litigation
  involving the Company cannot be predicted with certainty, after reviewing these
  actions with its counsel, management believes it has meritorious defenses to
  all such actions and intends to defend each of these vigorously.
Although there can be no assurance that such actions, proceedings,
  investigations and litigation will not have a material adverse effect on the
  results of operations of the Company in any future period, depending in part
  on the results for such period, in the opinion of management of the Company,
  based upon advice of counsel, the ultimate resolution of such actions, proceedings,
  investigations and litigation against the Company will not have a material adverse
  effect on the consolidated financial condition and/or results of operations
  of the Company; except that, for the matters described below, based upon information
  currently available to it, management cannot predict whether or not such litigation
  will have a material adverse effect on the Company's results of operations in
  any particular period.
In October 1995, DLJSC was named as a defendant in a purported
  class action filed in a Texas State Court on behalf of the holders of $550.0
  million principal amount of subordinated redeemable discount debentures of National
  Gypsum Corporation ("NGC") canceled in connection with a Chapter 11 plan of
  reorganization for NGC consummated in July 1993. The State Court named plaintiff
  also filed an adversary proceeding in the U.S. Bankruptcy Court for the Northern
  District of Texas seeking a declaratory judgment that the confirmed NGC plan
  of reorganization does not bar the class action claims. Subsequent to the consummation
  of NGC's plan of reorganization, NGC's shares traded for values substantially
  in excess of, and in 1995 NGC was acquired for a value substantially in excess
  of, the values upon which NGC's plan of reorganization was based. The two actions
  arise out of DLJSC's activities as financial advisor to NGC in the course of
  NGC's Chapter 11 reorganization proceedings. The class action complaint alleges
  that the plan of reorganization submitted by NGC was based upon projections
  by NGC and DLJSC which intentionally understated forecasts, and provided misleading
  and incorrect information to hide NGC's true value and that defendants breached
  their fiduciary duties by, among other things, providing false, misleading or
  incomplete information to deliberately understate the value of NGC. The class
  action complaint seeks compensatory and punitive damages purportedly sustained
  by the class. On October 10, 1997, DLJSC and others were named as defendants
  in a new adversary proceeding in the Bankruptcy Court brought by the NGC Settlement
  Trust, an entity created by the NGC plan of reorganization to deal with asbestos-related
  claims. The Trust's allegations are substantially similar to the claims in the
  State Court action. On January 21, 1998, the Bankruptcy Court ruled that the
  State Court plaintiff's claims were not barred by the NGC plan of reorganization
  insofar as they alleged nondisclosure of certain cost reductions announced by
  NGC in October 1993. DLJSC has appealed the Bankruptcy Court's ruling. On May
  7, 1998, DLJSC and others were named as defendants in a second action in a Texas
  State Court brought by the NGC Settlement Trust. The allegations of this second
  Texas State Court action are substantially similar to those of the earlier class
  action pending in State Court. In an amended order dated January 5, 1999, the
  State Court granted the class action plaintiff's motion for class certification.
  In an order dated March 1, 1999, the State Court granted motions for summary
  judgment filed by DLJSC and the other defendants in both State Court actions.
  The plaintiffs have appealed. DLJSC intends to defend itself vigorously against
  all of the allegations contained in the complaints.
On January 26, 1996, a purported purchaser of certain notes and
  warrants to purchase shares of common stock of Rickel Home Centers, Inc. ("Rickel")
  filed a class action complaint against DLJSC and certain other defendants for
  unspecified compensatory and punitive damages in the U. S. District Court for
  the Southern District of New York. The suit was brought on behalf of the purchasers
  of 126,457 units consisting of $126,457,000 aggregate principal amount of 13
  1/2% senior notes due 2001 and 126,457 warrants to purchase shares of common
  stock of Rickel (the "Units") issued by Rickel in October 1994. The complaint
  alleges violations of federal securities laws and common law fraud against DLJSC,
  as the underwriter of the Units and as an owner of 7.3% of the common stock
  of Rickel, Eos Partners, L.P. and General Electric Capital Corporation, each
  as owners of 44.2% of the common stock of Rickel, and members of the board of
  directors of Rickel, including a DLJSC managing director. The complaint seeks
  to hold DLJSC liable for alleged misstatements and omissions contained in the
  prospectus and registration statement filed in connection with the offering
  of the Units, alleging that the defendants knew of financial losses and a decline
  in value of Rickel in the months prior to the offering and did not disclose
  such information. The complaint also alleges that Rickel failed to pay its semi-annual
  interest payment due on the Units on December 15, 1995 and that Rickel filed
  a voluntary petition for reorganization pursuant to Chapter 11 of the Bankruptcy
  Code on January 10, 1996. On April 22, 1999, the complaint against DLJSC and
  the other defendants was dismissed. The plaintiffs have appealed. DLJSC intends
  to defend itself vigorously against all of the allegations contained in the
  complaint.
In November 1998, three purported class actions (Gillet v. Goldman,
  Sachs & Co. et al., Prager v. Goldman, Sachs & Co. et al., and Holzman v. Goldman,
  Sachs & Co. et al.) were filed in the U.S. District Court for the Southern District
  of New York against more than 25 underwriters of initial public offering securities,
  including DLJSC. The complaints allege that defendants conspired to fix the
  "fee" paid for underwriting initial public offering securities by setting the
  underwriters' discount or "spread" at 7%, in violation of the federal antitrust
  laws. The complaints seek treble damages in an unspecified amount and injunctive
  relief as well as attorney's fees and costs. On March 15, 1999, the plaintiffs
  filed a Consolidated Amended Complaint captioned In re Public Offering Fee Antitrust
  Litigation. A motion by all defendants to dismiss the complaints on several
  grounds is pending. Separately, the U.S. Department of Justice has issued a
  Civil Investigative Demand to several investment banking firms, including DLJSC,
  seeking documents and information relating to "alleged" price fixing with respect
  to underwriting spreads in initial public offerings. The government has not
  made any charges against DLJSC or the other investment banking firms. DLJSC
  is cooperating with the Justice Department in providing the requested information
  and believes that no violation of law by DLJSC has occurred.
19. Quarterly Data (Unaudited)
Total Revenues
    
    Income
        Before
        Provisions
        For Income
        Taxes
    
    Net
        Income
    
    DLJ Common Shares*
        Earnings Per Share
    
    DLJdirect Common Shares**
        Earnings Per ShareBasic
    
    Diluted
    Basic
    
    Diluted1999:First quarter
    
    $
    1,493,450
    
    $
    197,000
    
    $
    121,650
    
    $
    0.94
    
    $
    0.84
    
    $
    0.07
    
    $
    0.07Second quarter
    
    
    1,810,516
    
    
    259,000
    
    
    165,650
    
    
    1.28
    
    
    1.14
    
    
    0.05
    
    
    0.05Third quarter
    
    
    1,704,372
    
    
    194,000
    
    
    122,200
    
    
    0.93
    
    
    0.85
    
    
    (0.03
    )
    
    (0.03
    )Fourth quarter
    
    
    2,137,931
    
    
    303,500
    
    
    191,200
    
    
    1.48
    
    
    1.35
    
    
    (0.02
    )
    
    (0.02
    )Total year
    
    $
    7,146,269
    
    $
    953,500
    
    $
    600,700
    
    $
    4.63
    
    $
    4.18
    
    $
    0.07
    
    $
    0.071998:First quarter
    
    $
    1,493,421
    
    $
    217,250
    
    $
    134,150
    
    $
    1.12
    
    $
    1.00
    
    $
    (0.02
    )
    $
    (0.02
    )Second quarter
    
    
    1,556,745
    
    
    230,500
    
    
    142,300
    
    
    1.17
    
    
    1.05
    
    
    0.01
    
    
    0.01Third quarter
    
    
    1,069,827
    
    
    41,600
    
    
    25,700
    
    
    0.17
    
    
    0.15
    
    
    0.01
    
    
    0.01Fourth quarter
    
    
    1,287,049
    
    
    111,150
    
    
    68,650
    
    
    0.52
    
    
    0.47
    
    
    0.02
    
    
    0.02Total year
    
    $
    5,407,042
    
    $
    600,500
    
    $
    370,800
    
    $
    2.93
    
    $
    2.65
    
    $
    0.01
    
    $
    0.01*
    Due to the effect of averaging the number of shares of
        common stock and common stock equivalents throughout the year, the sum
        of the quarters' earnings per common share may not equal the total year
        amounts.**
    For the periods prior to the quarter ended September
        30, 1999, earnings per share amounts are pro forma as if the issuance
        of DLJdirect Tracking Stock occurred at the beginning of 1998.
SCHEDULE I
  Donaldson, Lufkin & Jenrette, Inc.(Parent Company)Condensed Statements of Financial Condition
December 31,1999
    
    1998(In thousands, except share and per share
        data)AssetsCash and cash equivalents
    $     947,640
    
    $   706,010Receivables from brokers, dealers and other
    79,142
    
    9,168Long-term corporate development investments
    65,987
    
    57,029Receivables from subsidiaries
    6,771,106
    
    4,110,750Investment in subsidiaries, at equity
    4,501,100
    
    2,790,692Other assets and deferred amounts
    1,184,445
    
    869,640Total Assets
    $13,549,420
    
    $8,543,289Liabilities and Stockholders' EquityShort-term borrowings
    $  1,331,607
    
    $   234,843Accounts payable and accrued expenses
    1,784,064
    
    1,204,671Other liabilities
    1,475,946
    
    958,8148.42% Junior subordinated debentures, held by a subsidiary
      trust
    206,224
    
    206,224Other long-term borrowings
    4,844,337
    
    3,011,038Stockholders' Equity:Preferred Stock, 50,000,000 shares authorized:Series A Preferred Stock, at $50.00
      per share liquidationpreference (4,000,000
      shares issued and outstanding)
    200,000
    
    200,000Series B Preferred Stock, at $50.00
      per share liquidationpreference (3,500,000
      shares issued and outstanding)
    175,000
    
    175,000Common stock, 1,500,000,000 shares authorized:DLJ Common Stock ($0.10 par value;
      500,000,000 sharesauthorized; 126,014,091
      and 122,812,558 shares issuedand outstanding, respectively)
    12,601
    
    12,281DLJdirect Common Stock ($0.10
      par value; 500,000,000 sharesauthorized; 18,400,000 shares issued
      and outstanding;84,250,000 notional
      shares in respect of DLJ's retained interest)
    1,840
    
    Restricted stock units (10,358,294 units authorized;
      1,099,955and 2,082,236 units issued and
      outstanding, respectively)
    11,265
    
    21,333Paid-in capital
    1,298,674
    
    858,066Retained earnings
    2,205,818
    
    1,657,710Accumulated other comprehensive income
    2,044
    
    3,309Employee deferred compensation stock trust
    13,591
    
    12,329Common stock issued to employee deferred compensation
      trust
    (13,591
    )
    (12,329
    )Total stockholders' equity
    3,907,242
    
    2,927,699Total Liabilities and Stockholders' Equity
    $13,549,420
    
    $8,543,289See accompanying notes to condensed financial statements.


Donaldson, Lufkin & Jenrette, Inc.(Parent
  Company)Condensed Statements of Income
Years Ended December 31,1999
    
    
    1998
    
    
    1997(In thousands, except per share data)Revenues:Dividends from affiliates
    $
    
    
    $
    205,090
    
    $
    136,000Interest from affiliates
    
    321,871
    
    
    229,785
    
    
    129,256Allocations from affiliates
    
    19,209
    
    
    19,021
    
    
    17,809Other
    
    66,275
    
    
    27,486
    
    
    19,958Total revenues
    
    407,355
    
    
    481,382
    
    
    303,023Costs and Expenses:Compensation and benefits
    
    271,592
    
    
    147,952
    
    
    155,224Interest and operating expenses
    
    328,150
    
    
    87,788
    
    
    60,141Total costs and expenses
    
    599,742
    
    
    235,740
    
    
    215,365Income (loss) before income tax benefit and
      equityin undistributed net income of
      subsidiaries
    
    (192,387
    )
    
    245,642
    
    
    87,658Income tax benefit
    
    208,636
    
    
    139,799
    
    
    72,870Income before equity in undistributednet income of subsidiaries
    
    16,249
    
    
    385,441
    
    
    160,528Equity in undistributed net income (loss) of
      subsidiaries
    
    584,451
    
    
    (14,641
    )
    
    247,722Net income
    $
    600,700
    
    $
    370,800
    
    $
    408,250Dividends on preferred stock
    $
    21,180
    
    $
    21,310
    
    $
    12,144Earnings applicable to common shares
    $
    579,520
    
    $
    349,490
    
    $
    396,106Earnings (loss) applicable to common shares:DLJ
    $
    580,423
    
    $
    349,490
    
    $
    396,106DLJdirect
    $
    (903
    )Earnings (loss) per common share:DLJBasic
    $
    4.63
    
    $
    2.93
    
    $
    3.59Diluted
    $
    4.18
    
    $
    2.65
    
    $
    3.16DLJdirectBasic
    $
    (0.05
    )Diluted
    $
    (0.05
    )Weighted average common shares outstanding:DLJBasic
    
    125,433
    
    
    119,260
    
    
    110,318Diluted
    
    138,868
    
    
    131,980
    
    
    125,498DLJdirectBasic
    
    18,400Diluted
    
    18,400See accompanying notes to condensed financial statements.


Donaldson, Lufkin & Jenrette, Inc. (Parent Company)Condensed Statements of Cash Flows
Years Ended December 31,1999
    
    
    1998
    
    
    1997(In thousands)Net cash provided by operating activities
    $
    784,864
    
    $
    544,785
    
    $
    153,693Cash flows from investing activities:Net proceeds from (payments for):Dividends from affiliates
    
    
    
    
    205,090
    
    
    136,000Investment in subsidiaries
    
    (892,012
    )
    
    (472,996
    )
    
    (222,083
    )Allocated equity to DLJdirect
    
    (233,945
    )
    
    
    
    
    Other assets
    
    (15,250
    )
    
    (51,474
    )
    
    (1,873
    )Net cash used in investing activities
    
    (1,141,207
    )
    
    (319,380
    )
    
    (87,956
    )Cash flows from financing activities:Net proceeds from (payments for):Short-term financings
    
    1,096,764
    
    
    (432,914
    )
    
    331,845Issuance of:DLJdirect Common Stock
    
    346,591
    
    
    
    
    
    Senior notes
    
    649,637
    
    
    893,552
    
    
    Medium-term notes
    
    1,183,212
    
    
    349,337
    
    
    359,646Global floating rate notes
    
    
    
    
    448
    
    
    347,760Other long-term debt
    
    
    
    
    
    
    
    26,345Series B preferred stock
    
    
    
    
    175,000
    
    
    Subordinated loan from subsidiaries
    
    47,950
    
    
    (623,176
    )
    
    (149,274
    )Dividends paid
    
    (52,592
    )
    
    (51,310
    )
    
    (39,886
    )Sale of common stock to AXA Financial and AXA, S.A.
    
    
    
    
    300,000
    
    
    Exercise of stock options
    
    34,717
    
    
    21,775
    
    
    4,074Receivables from subsidiaries
    
    (2,708,306
    )
    
    (152,115
    )
    
    (953,986
    )Net cash provided by (used in) financing activities
    
    597,973
    
    
    480,597
    
    
    (73,476
    )Increase (decrease) in cash and cash equivalents
    
    241,630
    
    
    706,002
    
    
    (7,739
    )Cash and cash equivalents at beginning of year
    
    706,010
    
    
    8
    
    
    7,747Cash and cash equivalents at end of year
    $
    947,640
    
    $
    706,010
    
    $
    8See accompanying notes to condensed financial statements.

Donaldson, Lufkin & Jenrette, Inc. (Parent Company)Notes to Condensed Financial Statements
December 31, 1999
1. Basis of Presentation
The condensed financial statements of Donaldson, Lufkin & Jenrette, Inc. ("Parent
  Company") should be read in conjunction with the consolidated financial statements
  of Donaldson, Lufkin & Jenrette, Inc. and subsidiaries (the "Company") and the
  notes thereto. Investments in subsidiaries are accounted for under the equity
  method.
2. Issuance of DLJdirect Common Stock
DLJdirect Common Stock tracks the separate performance of the Company's
  existing online discount brokerage and related investment services business.
  On May 28, 1999 (the "closing date"), the Company issued, in an initial public
  offering, 18.4 million shares of DLJdirect Common Stock (the "Tracking
  Stock"). Prior to issuing the Tracking Stock, the Company's existing common
  stock was designated as DLJ Common Stock to reflect the performance of the Company's
  primary businesses, i.e., Banking, Fixed Income, Equities and Financial Services,
  plus a retained interest in DLJdirect. These operations together are
  referred to as DLJ. Holders of the Tracking Stock are common stockholders of
  the Company but have no voting rights, except in certain limited circumstances,
  and will be subject to all of the risks associated with an investment in the
  Company and all of its businesses, assets and liabilities.
Earnings applicable to common shares for DLJ include a 100% interest in DLJdirect
  for periods prior to the closing date and 82.1% for subsequent periods. Operating
  results reported by the Company prior to the closing date were not affected
  by the issuance of the tracking stock.
3. Related Party Transactions
Receivables from subsidiaries include $774.5 million and $781.0 million loaned
  under master note agreements at December 31, 1999 and 1998, respectively. Substantially
  all receivables from subsidiaries provide for interest based on Federal funds
  rates.
There were no cash dividends paid to the Parent Company by its consolidated
  subsidiaries in 1999. The amount of cash dividends paid to the Parent Company
  by its consolidated subsidiaries amounted to $205.1 million and $136.0 million
  for the years ended December 31, 1998 and 1997, respectively. There are no restrictions
  on the payment of dividends, except for those stipulated in certain debt agreements
  and in those applicable to brokers and dealers which provide for certain minimum
  amounts of capital to be maintained to satisfy regulatory requirements in the
  Company's domestic and foreign broker-dealer subsidiaries. Under certain circumstances,
  the amount of excess capital that can be withdrawn is limited. The regulatory
  requirements are designed to measure the general financial integrity and liquidity
  of broker-dealers and provide minimum acceptable net capital levels to satisfy
  commitments to customers. Unless an adequate level of capital is maintained,
  regulated broker-dealer subsidiaries would be prohibited from paying dividends
  to the Parent Company.
4. Long-term Borrowings
The Parent Company finances certain of its activities through long-term borrowing
  arrangements. At December 31, 1999 there were current maturities of long-term
  borrowings of $459.8 million. Long-term borrowings consist of the following:
December 31,1999
    
    
    1998(In thousands)Senior notes, 5.875% - 6.875% due various dates through 2008
    $
    2,040,673
    
    $
    1,391,036Medium-term notes, 4.995% - 7.42% due various dates through 2016
    
    2,229,859
    
    
    1,046,645Subordinated exchange notes, 9.58% due 2003
    
    225,000
    
    
    225,000Global floating rate notes, due 2002
    
    348,805
    
    
    348,357Total long-term borrowings
    $
    4,844,337
    
    $
    3,011,038For a detailed description of the Parent Company's long-term borrowings, see
  Note 6 of the Notes to Consolidated Financial Statements of Donaldson, Lufkin
  & Jenrette, Inc. and subsidiaries.
Scheduled maturities of long-term borrowings are as follows:
December 31,1999
    
    
    1998(In thousands)1999
    $
    
    
    $
    99,8882000
    
    459,763
    
    
    189,9172001
    
    1,013,629
    
    
    349,4552002
    
    1,216,591
    
    
    358,3482003
    
    374,531
    
    
    374,3972004
    
    129,589
    
    
    2005 - 2016
    
    1,650,234
    
    
    1,639,033$
    4,844,337
    
    $
    3,011,038During 1999, the Company reduced its revolving credit facility from $2.8 billion
  to $2.5 billion, which allows the Parent Company to borrow up to $1.9 billion
  on an unsecured basis, subject to certain limitations. There were no borrowings
  outstanding under this agreement at December 31, 1999.
5. Income Taxes

Certain of the Parent Company's subsidiaries record income taxes as if each
  subsidiary files a separate income tax return. The tax rates used in the computation
  for such subsidiaries are generally higher than the Company's overall consolidated
  effective tax rate. The income tax benefit recorded by the Parent Company results
  from the Company's overall lower consolidated effective tax rate and the ability
  of the Parent Company to utilize tax attributes related to its subsidiaries
  and affiliates.
6. Contingent Liabilities

From time to time the Parent Company issues guarantees of the obligations of
  certain subsidiaries. The amounts of such items in the aggregate are not considered
  excessive in relation to the normal operating levels of the Company and management
  does not anticipate, as of December 31, 1999, losses as a result of these guarantees.
7. Earnings Per Share

Earnings per common share 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, 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 and convertible debt calculated under the treasury stock and "if-converted"
  method, respectively. In 1999, approximately 1.0 million RSUs vested and were
  converted into the Company's common stock. This amount is included in the calculation
  of earnings per common share. All earnings per share have been restated for
  the stock split.
Selected Combined Financial InformationDLJdirect
Years Ended December 31,1999
    
    
    1998
    
    
    1997
    
    
    1996
    
    
    1995(In thousands, except per share data)Revenues:Commissions
    $
    142,805
    
    $
    78,717
    
    $
    50,948
    
    $
    54,166
    
    $
    40,358Underwritings
    
    8,987
    
    
    
    
    
    
    
    
    
    
    
    Fees
    
    47,811
    
    
    25,484
    
    
    12,109
    
    
    6,426
    
    
    5,067Interest
    
    38,468
    
    
    13,723
    
    
    4,160
    
    
    2,569
    
    
    1,846Total revenues
    
    238,071
    
    
    117,924
    
    
    67,217
    
    
    63,161
    
    
    47,271Costs and expenses:Compensation and benefits
    
    60,991
    
    
    28,260
    
    
    17,174
    
    
    11,202
    
    
    7,362Brokerage, clearing, exchange and other fees
    
    39,206
    
    
    28,423
    
    
    20,909
    
    
    15,422
    
    
    11,709Advertising
    
    62,913
    
    
    25,146
    
    
    13,137
    
    
    9,093
    
    
    4,183Occupancy and equipment
    
    9,768
    
    
    5,045
    
    
    3,352
    
    
    1,923
    
    
    1,437Communications
    
    11,896
    
    
    5,564
    
    
    2,844
    
    
    1,468
    
    
    1,025Technology costs
    
    3,288
    
    
    4,084
    
    
    5,082
    
    
    5,205
    
    
    5,431Other operating expenses
    
    31,969
    
    
    18,934
    
    
    10,844
    
    
    5,567
    
    
    4,507Total costs and expenses
    
    220,031
    
    
    115,456
    
    
    73,342
    
    
    49,880
    
    
    35,654Income (loss) before income tax
        provision (benefit) and equity in
        net loss of joint venture
    
    18,040
    
    
    2,468
    
    
    (6,125
    )
    
    13,281
    
    
    11,617Income tax provision (benefit)
    
    7,893
    
    
    1,008
    
    
    (2,502
    )
    
    5,425
    
    
    4,746Equity in net loss of joint venture
    
    (3,215
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    $
    6,932
    
    $
    1,460
    
    $
    (3,623
    )
    $
    7,856
    
    $
    6,871Earnings (loss) per share(2):Basic
    $
    0.07
    
    $
    0.01
    
    $
    (0.04
    )
    $
    0.08
    
    $
    0.07Diluted
    $
    0.07
    
    $
    0.01
    
    $
    (0.04
    )
    $
    0.08
    
    $
    0.07Weighted average notional and outstanding shares:Basic
    
    102,650
    
    
    102,650
    
    
    102,650
    
    
    102,650
    
    
    102,650Diluted
    
    102,660
    
    
    102,650
    
    
    102,650
    
    
    102,650
    
    
    102,650Earnings (loss) attributable to:DLJ Retained Interest
    $
    7,835
    
    $
    1,460
    
    $
    (3,623
    )
    $
    7,856
    
    $
    6,871DLJdirect Tracking Stock(1)
    $
    (903
    )
    
    
    
    
    
    
    
    
    
    
    Tracking Stock earnings (loss) per share(2):Basic
    $
    (0.05
    )Diluted
    $
    (0.05
    )Tracking Stock weighted average common shares:Basic
    
    18,400Diluted
    
    18,400
As of December 31,1999
    
    
    1998(In thousands)Statement of Financial Condition Data:Cash and cash equivalents
    $
    237,020
    
    $
    26,654Total assets
    
    278,442
    
    
    29,751Long-term liabilities
    
    
    
    
    Total allocated equity
    
    231,792
    
    
    21,924As of and for the Years Ended December
        31,1999
    
    
    1998
    
    
    1997
    
    
    1996
    
    
    1995(Dollars in thousands)Other Data:Total trades
    
    5,667,000
    
    
    2,875,000
    
    
    1,535,000
    
    
    929,000
    
    
    660,000Average trades per day
    
    22,700
    
    
    11,400
    
    
    6,100
    
    
    3,700
    
    
    2,600Total customer assets
    $
    20,400,000
    
    $
    8,900,000
    
    $
    4,600,000
    
    $
    2,500,000
    
    $
    1,900,000Total accounts
    
    766,000
    
    
    529,000
    
    
    390,000
    
    
    280,000
    
    
    207,000Total active accounts(3)
    
    333,000
    
    
    210,000
    
    
    144,000
    
    
    113,000
    
    
    N/ATotal employees
    
    865
    
    
    374
    
    
    283
    
    
    174
    
    
    139Total technology employees
    
    215
    
    
    119
    
    
    82
    
    
    34
    
    
    14Other Data
        Unconsolidated Joint Venture(4):Total trades
    
    147,000Average trades per day(5)
    
    1,100Total customer assets
    $
    1,300,000Total accounts
    
    29,000Total active accounts(3)
    
    14,000Total employees
    
    46Total technology employees
    
    4(1) DLJdirect Common Stock tracks the separate performance of DLJ
  Inc.'s existing online discount brokerage and related investment services business
  for periods subsequent to May 28, 1999 ("the closing date"), whereby DLJ Inc.
  issued in an initial public offering, 18.4 million shares of DLJdirect
  Common Stock ("Tracking Stock"). The shares of Tracking Stock have no voting
  rights, except in certain limited circumstances. Prior to the offering, DLJ
  Inc. designated its existing common stock as DLJ Common Stock, which represents
  the performance of DLJ Inc.'s primary businesses plus a retained interest in
  DLJdirect. All of DLJ Inc.'s businesses other than those included in
  DLJdirect, plus DLJ Inc.'s retained interest in DLJdirect are
  referred to as DLJ. As a result of the offering, DLJ has a retained interest
  of 82.1% in DLJdirect represented by 84.3 million notional shares. The
  18.4 million shares of Tracking Stock reflect the 17.9% owned by the public.
  Prior to the offering, DLJ had a 100% interest in the earnings of DLJdirect.
(2) Earnings (loss) per share amounts have been calculated by dividing net
  income (loss) by the weighted average notional and outstanding shares of Tracking
  Stock. Earnings per share amounts for the years prior to the year ended December
  31, 1999 are calculated based on pro forma amounts as if the Tracking Stock
  was issued for all periods presented. The notional shares represent DLJ's 82.1%
  retained interest in DLJdirect. Prior to the offering, DLJ had a 100%
  interest in the earnings of DLJdirect. These pro forma amounts are presented
  for comparative purposes only.
Tracking Stock earnings per common share amounts have been calculated by
  dividing earnings applicable to common shares by the weighted average actual
  common shares outstanding for the period the Tracking Stock was outstanding,
  May 28, 1999 to December 31, 1999. Tracking Stock earnings per share for periods
  prior to the closing date are not presented as such amounts are not meaningful.
(3) Active accounts consist of those accounts at the end of the related
  period with at least one trade in the last twelve months or with a balance at
  period end.
(4) Represents 100% of the activities of DLJdirect SFG Securities
  Inc., DLJdirect's unconsolidated joint venture in Japan, which began
  trading in June 1999.
(5) Average trades per day are based upon actual trade days from commencement
  of operations.
Management's Discussion and Analysis
  of 
  Financial Condition and Results of OperationsDLJdirect
DLJdirect Common Stock tracks the separate performance
  of DLJ Inc.'s existing online discount brokerage and related investment services
  business for periods subsequent to May 28, 1999, whereby DLJ Inc. issued in
  an initial public offering 18.4 million shares of DLJdirect Common Stock
  ("Tracking Stock"). The shares of Tracking Stock have no voting rights, except
  in certain limited circumstances. Net proceeds from the offering amounted to
  $346.6 million of which $233.9 million was attributed to DLJdirect as
  allocated equity. Prior to the offering, DLJ Inc. designated its existing common
  stock as DLJ Common Stock, which represents the performance of DLJ Inc.'s primary
  businesses plus a retained interest in DLJdirect. All of DLJ Inc.'s businesses
  other than those included in DLJdirect, plus DLJ Inc.'s retained interest
  in DLJdirect are referred to as DLJ. As a result of the offering, DLJ
  has a retained interest of 82.1% in DLJdirect represented by 84.3 million
  notional shares. The 18.4 million shares of Tracking Stock reflects the 17.9%
  owned by the public and employees. Prior to the offering, DLJ had a 100% interest
  in the earnings of DLJdirect.
The following analysis of the results of operations and financial
  condition of DLJdirect should be read in conjunction with the Combined
  Financial Statements and the related Notes thereto, and with the Consolidated
  Financial Statements and related Notes of DLJ Inc. included elsewhere herein.
Overview  DLJdirect
The online discount brokerage industry is experiencing substantial
  competition from established financial services firms as well as new entrants
  who are trying to quickly establish their presence in the market. As a result
  of intense competitive pressures, the industry has experienced a significant
  increase in brand development costs, a lowering of commission pricing and an
  increase in content development costs. DLJdirect expects to spend significant
  amounts in the future to develop much greater brand recognition within its targeted
  market, to stay competitively priced and to develop new state-of-the-art products
  and services. In particular, DLJdirect expects to spend significant amounts
  for advertising. Additionally, DLJdirect expects to spend significant
  amounts in the future in order to expand its international presence.
Recent Developments  DLJdirect
DLJdirect formed a strategic alliance with Scudder Investments, Inc.,
  Scudder Kemper Investments' direct mutual fund business, to provide broker-dealer
  services to Scudder's customers. DLJdirect will assume responsibility
  for Scudder Investments' current brokerage clients, which includes accounts
  with approximately $1.5 billion in assets. Effective February 5, 2000, Scudder's
  customers will be converted and serviced by DLJdirect under the co-branded
  name "DLJdirect for Scudder Investments."
In February 2000, DLJdirect formed a joint venture to
  offer online brokerage services in 14 countries throughout the Middle East and
  North Africa. The joint venture, DLJdirect-eUnion will offer investors
  in the region online access to U.S. securities markets. DLJdirect-eUnion
  intends to expand its coverage to include other international and regional markets
  in the future..
In addition, DLJdirect recently announced a joint venture
  with Hutchison Whampoa Ltd. in Hong Kong. The joint venture will offer online
  brokerage services in Hong Kong, mainland China, Thailand, Singapore, Malaysia,
  the Philippines, Taiwan and Indonesia as part of DLJdirect's international
  expansion strategy.
Results of Operations  DLJdirect
Year Ended December 31, 1999 Compared to Year Ended December
  31, 1998
DLJdirect experienced strong operating results for the
  year ended December 31, 1999 compared to the year ended December 31, 1998, reflecting
  primarily an increase in active accounts of 58.6% and customer trading volume
  of 97.1%. Total revenues increased $120.2 million or 102.0% to $238.1 million
  for the year ended December 31, 1999 from $117.9 million for the year ended
  December 31, 1998. Net income increased $5.4 million to $6.9 million for the
  year ended December 31, 1999 from $1.5 million for the year ended December 31,
  1998.
Commissions increased $64.1 million or 81.4% to $142.8 million.
  Commissions represented 60.0% of total revenues for the year ended December
  31, 1999 and 66.8% of total revenues for the year ended December 31, 1998. The
  increase in commissions was due primarily to significant increases in customer
  trading volume. Average trades per day increased 99.1% to 22,700 for the year
  ended December 31, 1999 from 11,400 for the year ended December 31, 1998.
Underwritings revenues earned in connection with public offerings
  for the year ended December 31, 1999 were $9.0 million compared with a negligible
  amount for the year ended December 31, 1998. Underwritings represented 3.8%
  of total revenues for the year ended December 31, 1999.
Fees increased $22.3 million or 87.5% to $47.8 million. Fees
  represented 20.1% of total revenues for the year ended December 31, 1999 and
  21.6% of total revenues for the year ended December 31, 1998. Payments for routing
  orders increased $5.3 million or 59.6% to $14.2 million. The increase in payments
  for routing orders was due primarily to significant increases in customer trading
  volume, offset in part by a decline in the amount of revenue per trade that
  DLJdirect receives for routing orders. Fees for technology development
  increased $10.5 million or 78.4% to $23.9 million primarily due to increased
  demand for Internet-based technology applications. Revenue from money market
  fund distribution fees increased $2.9 million or 90.6% to $6.1 million. This
  growth was due to an increase in customer money market fund balances of $610.3
  million or 79.6% to $1.4 billion. The remaining fees for the years ended December
  31, 1999 and 1998 include subscription and account related fees.
Interest income increased $24.8 million or 181.0% to $38.5 million.
  Interest represented 16.2% of total revenues for the year ended December 31,
  1999 and 11.6% of total revenues for the year ended December 31, 1998. The increase
  was due primarily to interest earned on the net proceeds allocated to DLJdirect
  from the issuance of Tracking Stock and to increases in margin debits, free
  credits and short sale balances. Margin debits increased $790.2 million or 168.2%
  to $1.26 billion. Free credits increased $317.3 million or 80.0% to $714.1 million
  and short sale balances increased $65.9 million or 175.7% to $103.4 million.
Compensation and benefits increased $32.7 million or 115.5%
  to $61.0 million. The increase in compensation and benefits was due primarily
  to growth in the number of employees from 374 to 865. These additional employees
  were added primarily in DLJdirect's investor services area to accommodate
  increased customer activity, in DLJdirect's technology group to develop
  new products, including MarketSpeedTM, in the UK operations, as well
  as in executive management.
Brokerage, clearing, exchange and other fees increased $10.8
  million or 38.0% to $39.2 million. The increase in brokerage, clearing, exchange
  and other fees was primarily due to significant increases in customer trading
  volume, offset in part by lower clearing fees per trade resulting from reduced
  clearing rates.
Advertising increased $37.8 million or 150.6% to $62.9 million.
  The increase in advertising was due primarily to the development and implementation
  of a new branding and advertising campaign.
Occupancy and equipment costs increased $4.8 million or 96.0%
  to $9.8 million. Occupancy and equipment expense includes rent and operating
  expenses for facilities, expenditures for repairs and maintenance, and the operating
  lease expense for furniture, fixtures, leasehold improvements as well as business
  and computer equipment. The increase in occupancy cost was due to the opening
  of the Charlotte, North Carolina investor services facilities and to the relocation
  of DLJdirect's headquarters. The increase in equipment costs was due
  primarily to additional investment in technology systems infrastructure and
  equipment expenditures for the increased staff.
Communications costs increased $6.3 million or 112.5% to $11.9
  million. Communications expense includes quotation expenses, expenses related
  to customer toll-free phone calls and regular telephone services. Quotation
  expenses and expenses related to customer toll-free phone calls both increased
  due to the increased volume of transactions.
Technology costs decreased $800,000 or 19.5% to $3.3 million.
  Fees related to systems infrastructure, for systems maintenance and support,
  increased moderately. However, overall technology costs decreased due to the
  substantial reduction of network access fees paid to online service providers.
Other operating expenses increased $13.1 million or 69.3% to
  $32.0 million. Operating expenses are comprised of professional fees, printing
  and stationery, economic and investment research, allocated corporate overhead
  and miscellaneous expenses. For the year ended December 31, 1998, other operating
  expenses also included license fees of $5.2 million paid to DLJ Long Term Investment
  Corporation for licensing trademarks and similar intellectual property. Commencing
  January 1, 1999, the license fees are included in brokerage, clearing, exchange
  and other fees because such license fees are included in amounts paid by DLJdirect
  to Pershing under its clearing agreement. Professional fees primarily include
  payments made to technology and marketing consultants and recruiters, and for
  legal services. Professional fees increased $9.3 million or 216.3% to $13.6
  million primarily due to the development of advertising strategies, increased
  use of technology consultants, the start-up operations in the UK and Japan,
  the relocation of the home office, and to the continuing expansion in Charlotte,
  North Carolina. Miscellaneous expenses increased $5.3 million or 155.9% to $8.7
  million. Miscellaneous expenses consisted primarily of accruals for bad debt
  expense, travel and entertainment, information services, customer service related
  expenses, employee registration fees and expenses for new account credit checks.
Income before income tax provision (benefit) and equity in net
  loss of joint venture increased $15.5 million to $18.0 million for the year
  ended December 31, 1999 from $2.5 million for the year ended December 31, 1998.
  The provision (benefit) for income taxes for the years ended December 31, 1999
  and 1998 was $7.9 million, representing a 43.8% effective tax rate, and $1.0
  million, representing a 40.9% effective tax rate, respectively.
Income before advertising costs, income tax provision (benefit)
  and equity in net loss of joint venture amounted to $81.0 million and $27.6
  million for the years ended December 31, 1999 and 1998, respectively.
DLJdirect has a 50% interest in a foreign-based joint
  venture with a Japanese bank. This joint venture began trading in June 1999.
  For the year ended December 31, 1999, DLJdirect's share of the equity
  in the net loss of this joint venture was $3.2 million.
As a result of the foregoing factors, net income increased to
  $6.9 million for the year ended December 31, 1999 from $1.5 million for the
  year ended December 31, 1998. For the period the Tracking Stock was outstanding
  (May 28, 1999 to December 31, 1999), net loss applicable to the shareholders
  of Tracking Stock was $903,000 or $0.05 per share.
Year Ended December 31, 1998 Compared to Year Ended December
  31, 1997
DLJdirect experienced strong operating results in 1998
  compared to 1997, reflecting primarily an increase in active accounts of 45.8%.
  For 1998, total revenues of $117.9 million increased $50.7 million or 75.4%.
  Net income of $1.5 million increased $5.1 million from a net loss of $3.6 million,
  primarily resulting from strong revenue growth.
Commissions increased $27.8 million or 54.6% to $78.7 million.
  Commissions represented 66.8% of total revenues in 1998 and 75.8% of total revenues
  in 1997. The increase in commissions was due primarily to significant increases
  in customer trading volume attributable in part to a full year of activity at
  the reduced $20 commission rate. Average trades per day increased 86.9% to 11,400
  in 1998 from 6,100 in 1997.
Fees increased $13.4 million or 110.7% to $25.5 million. Fees
  represented 21.6% of total revenues in 1998 and 18.0% of total revenues in 1997.
  Payments for order flow increased $3.4 million or 61.8% to $8.9 million. The
  increase in payments for order flow was due primarily to significant increases
  in customer trading volume. Increases in payments for order flow were offset
  in part by a decline in the amount of revenue per trade that DLJdirect
  receives for order flow. Fees for technology development increased $8.6 million
  or 179.2% to $13.4 million. The increase in fees for technology development
  reflects 1998 being the first full year that such fees were collected. Revenue
  from money market fund distribution fees increased $1.6 million or 100.0% to
  $3.2 million. This growth was due to an increase in customer money market fund
  balances of $345.8 million or 84.7% to $754.3 million. The remaining fees for
  the years ended December 31, 1998 and 1997 include subscription and account
  related fees.
Interest income increased $9.5 million or 226.2% to $13.7 million.
  Interest represented 11.6% of total revenues in 1998 and 6.2% of total revenues
  in 1997. The increase was due primarily to increases in margin debits, free
  credits and short sale balances. Margin debits increased $143.1 million or 43.8%
  to $469.8 million. Free credits increased $201.5 million or 103.2% to $396.8
  million and short sale balances increased $19.4 million or 107.2% to $37.5 million.
Compensation and benefits increased $11.1 million or 64.5% to
  $28.3 million. The increase in compensation and benefits was due primarily to
  growth in the number of employees from 283 to 374. These additional employees
  were added in DLJdirect's investor services area to accommodate increased
  customer activity, as well as in DLJdirect's technology group to develop
  new products such as MarketSpeedTM.
Brokerage, clearing, exchange and other fees increased $7.5
  million or 35.9% to $28.4 million. The increase in brokerage, clearing, exchange
  and other fees was primarily due to significant increases in customer trading
  volume, offset in part by lower clearing fees per trade resulting from reduced
  clearing rates.
Advertising increased $12.0 million or 91.6% to $25.1 million.
  The increase in advertising was due to increased expenditures on advertising
  placement and creative development. DLJdirect increased its advertising
  expenditures to continue developing the DLJdirect brand name, which was
  launched in September 1997, and to continue acquiring new accounts. Advertising
  expenditures were targeted at investors through a broad range of media including
  television, radio, and print as well as significant online service providers
  and popular Web sites such as America Online, the Microsoft Network and Yahoo!
Occupancy and equipment costs increased $1.6 million or 47.1%
  to $5.0 million. Occupancy and equipment expense includes rent and operating
  expenses for facilities, expenditures for repairs and maintenance, and the expense
  for furniture, fixtures, leasehold improvements, as well as business and computer
  equipment. The increase in equipment costs was due primarily to additional investment
  in technology systems infrastructure and equipment expenditures for the increased
  staff.
Communications costs increased $2.8 million or 100.0% to $5.6
  million. Communications expense includes quotation expenses, expenses related
  to customer toll-free phone calls and regular telephone services. Quotation
  expenses and expenses related to customer toll-free phone calls both increased
  due to the volume of transactions.
Technology costs decreased $1.0 million or 19.6% to $4.1 million. Fees related
  to systems infrastructure, for systems maintenance and support, increased moderately.
  However, overall technology costs decreased due to the substantial reduction
  of network access fees paid to online service providers.
Other operating expenses increased $8.1 million or 75.0% to
  $18.9 million and are comprised primarily of a license fee, professional fees,
  printing and stationery, economic and investment research, allocated corporate
  overhead, and miscellaneous expenses. The license fee expense increased $4.0
  million or 333.3% to $5.2 million. The license fee is paid to DLJ Long Term
  Investment Corporation for licensing trademarks and similar intellectual property.
  License fee payments were initiated in September 1997. Commencing January 1,
  1999, amounts paid by DLJdirect to Pershing include the license fee for
  the use of certain of DLJ Long Term Investment Corporation's trademarks that
  are licensed to DLJdirect in the United States and in certain other jurisdictions.
  Professional fees primarily include payments made to technology and marketing
  consultants, and employee recruiting expenses. Professional fees increased $883,000
  or 25.8% to $4.3 million due to increased advertising and headcount. Printing
  and stationery decreased $158,000 or 7.7% to $1.9 million. In 1997 printing
  and stationery expenses were increased in conjunction with the renaming of the
  service from PC Financial Network to DLJdirect, which necessitated the
  redesign and reprinting of all marketing materials and customer correspondence
  stock. Economic and investment research increased $1.0 million or 333.3% to
  $1.3 million reflecting the fact that DLJdirect first began paying for
  this research in the fourth quarter of 1997. Allocated corporate overhead increased
  $841,000 or 45.2% to $2.7 million due primarily to expenses related to the increased
  headcount. Miscellaneous expenses increased $1.4 million or 70.0% to $3.4 million.
  Miscellaneous expenses consisted primarily of accruals for bad debt expense,
  employee registration fees and expenses for new account credit checks.
Income before income tax provision (benefit) and equity in net
  loss of joint venture increased $8.6 million to income of $2.5 million in 1998
  from a loss of $6.1 million in 1997. The provision (benefit) for income taxes
  for the years ended December 31, 1998 and 1997 was $1.0 million and $(2.5) million,
  respectively, which represented a 40.9% effective tax rate for each period.
Income before advertising costs, income tax provision (benefit)
  and equity in net loss of joint venture amounted to $27.6 million and $7.0 million
  for the years ended December 31, 1998 and 1997, respectively.
As a result of the foregoing factors, net income increased to
  $1.5 million in 1998 from a net loss of $3.6 million in 1997.
Liquidity and Capital Resources  DLJdirectThe principal sources of liquidity for DLJdirect's operations
  are allocated capital and leases of fixed assets through an affiliate. DLJdirect
  was allocated net proceeds of $233.9 million as a result of the initial public
  offering by DLJ Inc. of 18.4 million shares of Tracking Stock. The value of
  equipment acquired through leases of fixed assets through an affiliate totaled
  $44.2 million for the year ended December 31, 1999 and $5.0 million for the
  year ended December 31, 1998. These fixed assets were comprised primarily of
  computers and related systems, furniture and leasehold improvements. DLJdirect
  generally leases its fixed assets and therefore does not incur significant capital
  expenditures.
Although DLJdirect maintains substantial money market
  accounts, bank accounts and investment accounts consistent with regulatory requirements,
  DLJdirect continues to be substantially dependent on DLJ Inc. for almost
  all of its daily financial, administrative and operational services and related
  support functions including cash management, the receipt of payments from third
  parties and the distribution of payments to third parties. DLJdirect
  continues to invest its excess cash. At December 31, 1999, DLJdirect
  had approximately $244.9 million invested in money market accounts and short-term
  investments. DLJ Inc. intends to fund DLJdirect's liquidity needs in
  the ordinary course of business. However, significant expenditures will be funded
  on a case by case basis as determined by the Board of Directors of DLJ Inc.
  The Board of Directors of DLJ Inc. will determine, in its sole discretion, whether
  to provide any particular funds to either DLJ Inc. or DLJdirect and will
  not be obligated to do so. In this connection, intercompany receivables/payables
  are settled periodically through cash transfers to and from DLJdirect's
  accounts. There are no specific criteria to determine when DLJ Inc. will account
  for a cash transfer as a long-term loan, a capital contribution or a return
  of capital rather than an inter-group revolving credit advance. The Board of
  Directors of DLJ Inc. will make such a determination in the exercise of its
  business judgment at the time of such transfer, or the first of such type of
  transfer, based upon all relevant circumstances.
Applicable law and regulations require minimum levels of capital
  to be maintained by DLJdirect, Inc., the broker-dealer subsidiary of
  DLJdirect Holdings Inc. Consequently, the cash balances of DLJdirect,
  Inc. may not be available as a source of liquidity to support other aspects
  of the business of DLJdirect. The SEC's Net Capital Rules are the primary
  regulatory restrictions. DLJdirect continually reviews the capital in
  its broker-dealer subsidiary to ensure that it meets these regulatory requirements
  and can appropriately support the anticipated capital needs of the business.
  DLJdirect's right to participate in the assets of any subsidiary is also
  subject to prior claims of the subsidiary's customers and other creditors.
Cash provided by (used in) operating activities totaled $28.8
  million, $2.0 million and $(599,000) for the years ended December 31, 1999,
  1998 and 1997, respectively. The increases were primarily due to increases in
  transaction volume related to growth in the online brokerage operations. In
  the year ended December 31, 1999, there were increased assets including receivables
  from brokers, dealers and others of $17.1 million. These increases were offset
  by increases in payables to parent and affiliates, net of $9.4 million and accounts
  payable and accrued expenses of $31.5 million. In the year ended December 31,
  1998, receivables from brokers, dealers and others increased $1.2 million. This
  increase in assets was offset by increases in operating liabilities including
  payables to parent and affiliates, net of $2.2 million. In the year ended December
  31, 1997, there were increased assets including receivables from brokers, dealers
  and others of $1.9 million. These increases were offset by increases of payables
  to parent and affiliates, net of $2.0 million and accounts payable and accrued
  expenses of $2.6 million.
Cash provided by (used in) investing activities totaled $(20.3)
  million, $1.2 million and $(107,000) for the years ended December 31, 1999,
  1998 and 1997, respectively. For the year ended December 31, 1999, DLJdirect
  invested $7.8 million in short-term investments and $12.4 million in exchange
  for a 50% interest in a joint venture with a Japanese bank. Net proceeds from
  the sale of office facilities amounted to $1.2 million for the year ended December
  31, 1998. In 1997, net cash used in investing activities consisted primarily
  of purchases of office facilities.
For the years ended December 31, 1999, 1998 and 1997, net cash
  provided by financing activities totaled $201.8 million, $14.5 million and $9.6
  million, respectively. In the years ended December 31, 1999, 1998 and 1997,
  respectively, $1.0 million, $14.5 million and $10.5 million was provided by
  capital contributions from DLJ Inc. DLJdirect received net proceeds of
  $233.9 million from DLJ Inc.'s issuance of Tracking Stock. Prior to the offering,
  DLJdirect paid $33.1 million as a dividend to an affiliate. The net proceeds,
  together with its current cash, cash equivalents and cash generated from operations
  will be sufficient to meet its anticipated cash needs for working capital and
  capital expenditures through at least the end of 2000.
Quantitative and Qualitative Disclosures About Market Risk
   DLJdirectDLJdirect's primary financial instruments are cash and
  cash equivalents. This includes cash in banks and highly rated liquid money
  market investments. DLJdirect believes that such instruments are not
  subject to material potential near-term losses in future earnings from reasonably
  possible near-term changes in market rates or prices.

[LETTERHEAD OF KPMG ]
Independent Auditors' Report
The Board of Directors and Stockholders
  Donaldson, Lufkin & Jenrette, Inc.
We have audited the accompanying combined statements of financial
  condition of DLJdirect (a combination of certain assets and liabilities
  of Donaldson, Lufkin & Jenrette, Inc., as described in note 1) as of December
  31, 1999 and 1998, and the related combined statements of operations, changes
  in allocated equity, and cash flows for each of the years in the three-year
  period ended December 31, 1999. These combined financial statements are the
  responsibility of Donaldson, Lufkin & Jenrette, Inc.'s management. Our responsibility
  is to express an opinion on these combined financial statements based on our
  audits.
We conducted our audits in accordance with generally accepted
  auditing standards. Those standards require that we plan and perform the audits
  to obtain reasonable assurance about whether the combined financial statements
  are free of material misstatement. An audit includes, examining, on a test basis,
  evidence supporting the amounts and disclosures in the combined financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation. We believe that our audits provide a reasonable basis for our
  opinion.
We have audited the consolidated financial statements of Donaldson,
  Lufkin & Jenrette, Inc. and subsidiaries as of December 31, 1999 and 1998, and
  for each of the years in the three-year period ended December 31, 1999 and have
  issued our report dated January 31, 2000. The combined financial statements
  of DLJdirect should be read in conjunction with the consolidated financial
  statements of Donaldson, Lufkin & Jenrette, Inc. and subsidiaries.
In our opinion, the combined financial statements referred to
  above present fairly, in all material respects, the financial position of DLJdirect
  as of December 31, 1999 and 1998, and the results of their operations and their
  cash flows for each of the years in the three-year period ended December 31,
  1999, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
January 31, 2000

DLJdirect(a combination of certain assets and liabilities as described
  in note 1)Combined Statements of Financial Condition
December 31,1999
    
    
    1998(In thousands)AssetsCash and cash equivalents
    $
    237,020
    
    $
    26,654Short-term investments
    
    7,848
    
    
    Deposit with affiliated clearing broker
    
    329
    
    
    250Receivables from brokers, dealers and others, net
    
    19,015
    
    
    1,887Financial instruments owned, at market value
    
    1,010
    
    
    42Office facilities, at cost (net of accumulated depreciationand amortization of $470 and $284, respectively)
    
    92
    
    
    278Investment in joint venture
    
    11,009
    
    
    Prepaid expenses and other assets
    
    2,119
    
    
    640Total Assets
    $
    278,442
    
    $
    29,751Liabilities and Allocated EquityLiabilities:Payables to parent and affiliates, net
    $
    12,550
    
    $
    5,211Financial instruments sold not yet purchased, at market value
    
    26
    
    
    24Accounts payable and accrued expenses
    
    34,074
    
    
    2,592Total liabilities
    
    46,650
    
    
    7,827Commitments and contingenciesAllocated equity
    
    230,662
    
    
    21,924Accumulated other comprehensive income
    
    1,130
    
    
    Total allocated equity
    
    231,792
    
    
    21,924Total Liabilities and Allocated Equity
    $
    278,442
    
    $
    29,751See accompanying notes to combined financial statements.

DLJdirect(a combination of certain assets and liabilities as described in
  note 1)Combined Statements of Operations
Years Ended December 31,1999
    
    
    1998
    
    
    1997(In thousands, except per share data)Revenues:Commissions
    $
    142,805
    
    $
    78,717
    
    $
    50,948Underwritings
    
    8,987
    
    
    
    
    
    Fees
    
    47,811
    
    
    25,484
    
    
    12,109Interest
    
    38,468
    
    
    13,723
    
    
    4,160Total revenues
    
    238,071
    
    
    117,924
    
    
    67,217Costs and expenses:Compensation and benefits
    
    60,991
    
    
    28,260
    
    
    17,174Brokerage, clearing, exchange and other fees
    
    39,206
    
    
    28,423
    
    
    20,909Advertising
    
    62,913
    
    
    25,146
    
    
    13,137Occupancy and equipment
    
    9,768
    
    
    5,045
    
    
    3,352Communications
    
    11,896
    
    
    5,564
    
    
    2,844Technology costs
    
    3,288
    
    
    4,084
    
    
    5,082Other operating expenses
    
    31,969
    
    
    18,934
    
    
    10,844Total costs and expenses
    
    220,031
    
    
    115,456
    
    
    73,342Income (loss) before income tax provision (benefit)
         and equity in net loss of joint venture
    
    18,040
    
    
    2,468
    
    
    (6,125
    )Income tax provision (benefit)
    
    7,893
    
    
    1,008
    
    
    (2,502
    )Equity in net loss of joint venture
    
    (3,215
    )
    
    
    
    
    Net income (loss)
    $
    6,932
    
    $
    1,460
    
    $
    (3,623
    )Earnings (loss) per share:Basic
    $
    0.07
    
    $
    0.01
    
    $
    (0.04
    )Diluted
    $
    0.07
    
    $
    0.01
    
    $
    (0.04
    )Weighted average notional and outstanding shares:Basic
    
    102,650
    
    
    102,650
    
    
    102,650Diluted
    
    102,660
    
    
    102,650
    
    
    102,650Earnings (loss) attributable to:DLJ Retained Interest
    $
    7,835
    
    $
    1,460
    
    $
    (3,623
    )DLJdirect Tracking Stock
    $
    (903
    )
    
    
    
    
    Tracking Stock earnings (loss) per share:Basic
    $
    (0.05
    )Diluted
    $
    (0.05
    )Tracking Stock weighted average common shares:Basic
    
    18,400Diluted
    
    18,400See accompanying notes to combined financial statements.

DLJdirect(a combination of certain assets and liabilities as described
  in note 1)Combined Statements of Changes In Allocated Equity
For the Years Ended December 31, 1999,
        1998 and 1997Divisional
        Equity
    
    Allocated
        Equity
    
    Accumulated
        Other
        Comprehensive
        Income
    
    Total
        Allocated
        Equity(In thousands)Balances at December 31, 1996
    $
    
    
    $
    
    
    $
    
    
    $
    Divisional net income fromJanuary 1, 1997 to May 31, 1997
    
    915
    
    
    
    
    
    
    
    
    915Net (loss) from June 1, 1997 toDecember 31, 1997
    
    
    
    
    (4,538
    )
    
    
    
    
    (4,538
    )Capital contributions from DLJ Inc.
    
    
    
    
    10,502
    
    
    
    
    
    10,502Return of divisional equity to DLJ Inc.
    
    (915
    )
    
    
    
    
    
    
    
    (915
    )Balances at December 31, 1997
    
    
    
    
    5,964
    
    
    
    
    
    5,964Net income
    
    
    
    
    1,460
    
    
    
    
    
    1,460Capital contributions from DLJ Inc.
    
    
    
    
    14,500
    
    
    
    
    
    14,500Balances at December 31, 1998
    
    
    
    
    21,924
    
    
    
    
    
    21,924Net income
    
    
    
    
    6,932
    
    
    
    
    
    6,932Translation adjustment  net of taxes
    
    
    
    
    
    
    
    1,130
    
    
    1,130Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    8,062Capital contribution from DLJ Inc.
    
    
    
    
    1,000
    
    
    
    
    
    1,000Allocated equity from issuance ofTracking Stock
    
    
    
    
    233,945
    
    
    
    
    
    233,945Dividend paid to DLJ Inc.
    
    
    
    
    (33,139
    )
    
    
    
    
    (33,139
    )Balances at December 31, 1999
    $
    
    
    $
    230,662
    
    $
    1,130
    
    $
    231,792See accompanying notes to combined financial statements.


DLJdirect(a combination of certain assets
  and liabilities as described in note 1)Combined Statements of Cash Flows
For the Years Ended December 31,1999
    
    1998
    
    1997(In thousands)Cash flows from operating activities:Net income (loss)
    $
    6,932
    
    $
    1,460
    
    $
    (3,623
    )Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities:Depreciation and amortization
    
    186
    
    
    299
    
    
    652Deferred taxes
    
    (2,721
    )
    
    (275
    )
    
    160Equity in net loss of joint venture
    
    3,215
    
    
    
    
    
    (Increase) decrease in operating assets:Deposit with affiliated clearing broker
    
    (79
    )
    
    
    
    
    (250
    )Receivables from brokers, dealers and other, net
    
    (17,128
    )
    
    (1,162
    )
    
    (1,923
    )Financial instruments owned, at market value
    
    (968)
    
    
    
    
    
    Prepaid expenses and other assets
    
    (1,479
    )
    
    (475
    )
    
    (207
    )Increase (decrease) in operating liabilities:Payables to parent and affiliates, net
    
    9,397
    
    
    2,220
    
    
    1,951Financial instruments sold, not yet purchased, at market
        value
    
    2
    
    
    
    
    
    Accounts payable and accrued expenses
    
    31,482
    
    
    (25
    )
    
    2,641Net cash provided by (used in) operating activities
    
    28,839
    
    
    2,042
    
    
    (599
    )Cash flows from investing activities:Net proceeds from (payments for):Purchase of office facilities
    
    
    
    
    
    
    
    (107
    )Sale of office facilities
    
    
    
    
    1,231
    
    
    Investment in joint venture
    
    (12,431
    )
    
    
    
    
    Short-term investments
    
    (7,848
    )
    
    
    
    
    Net cash provided by (used in) investing activities
    
    (20,279
    )
    
    1,231
    
    
    (107
    )Cash flows from financing activities:Net proceeds from (payments for):Capital contributions from DLJ Inc.
    
    1,000
    
    
    14,500
    
    
    10,502Allocated equity from issuance of Tracking Stock
    
    233,945
    
    
    
    
    
    Dividend paid to DLJ Inc.
    
    (33,139
    )
    
    
    
    
    Return of divisional equity to DLJ Inc.
    
    
    
    
    
    
    
    (915
    )Net cash provided by financing activities
    
    201,806
    
    
    14,500
    
    
    9,587Increase in cash and cash equivalents
    
    210,366
    
    
    17,773
    
    
    8,881Cash and cash equivalents at beginning of period
    
    26,654
    
    
    8,881
    
    
    Cash and cash equivalents at end of period
    $
    237,020
    
    $
    26,654
    
    $
    8,881See accompanying notes to combined financial statements. DLJdirect(a combination of certain assets and liabilities as described in
  note 1)Notes to Combined Financial Statements
December 31, 1999
1. Basis of Presentation

DLJdirect Common Stock tracks the separate performance of Donaldson,
  Lufkin & Jenrette, Inc.'s ("DLJ Inc.") existing online discount brokerage and
  related investment services business for periods subsequent to May 28, 1999
  ("the closing date"), whereby DLJ Inc. issued in an initial public offering
  18.4 million shares of DLJdirect Common Stock ("Tracking Stock"). The
  shares of Tracking Stock have no voting rights, except in certain limited circumstances.
  Prior to the offering, DLJ Inc. designated its existing common stock as DLJ
  Common Stock, which represents the performance of DLJ Inc.'s primary businesses
  plus a retained interest in DLJdirect. All of DLJ Inc.'s businesses other
  than those included in DLJdirect, plus DLJ Inc.'s retained interest in
  DLJdirect are referred to as DLJ. As a result of the offering, DLJ has
  a retained interest of 82.1% in DLJdirect represented by 84.3 million
  notional shares. The 18.4 million shares of Tracking Stock reflect the 17.9%
  owned by the public. Prior to the offering, DLJ had a 100% interest in the earnings
  of DLJdirect.
The Tracking Stock initially consisted principally of the assets, liabilities,
  revenues and expenses of DLJ Inc.'s ultimate 100% equity interest in DLJdirect
  Holdings Inc. (subsequent to June 1, 1997) and DLJ Inc.'s online discount brokerage
  division (prior to June 2, 1997). DLJdirect may also include such other
  related assets and liabilities of DLJ Inc. as the Board of Directors of DLJ
  Inc. may deem appropriate in the future.
Even though DLJ Inc. has allocated certain assets, liabilities, revenues, expenses
  and cash flows to DLJdirect, that allocation will not change the legal
  title to any assets or responsibility for any liabilities and will not affect
  the rights of creditors. Holders of Tracking Stock are common stockholders of
  DLJ Inc. and are subject to all the risks associated with an investment in DLJ
  Inc. and all of its businesses, assets and liabilities. Material financial events,
  which may occur at DLJ Inc., may affect DLJdirect's results of operations
  or financial position. Accordingly, financial information for DLJdirect
  should be read in conjunction with financial information of DLJ Inc. included
  herein. DLJ Inc. has the right to issue DLJ Common Stock in exchange for outstanding
  Tracking Stock at a premium at any time. The premium was 25% for exchanges occurring
  in the first 90 days after issuance and will decline ratably each quarter thereafter
  over a period of three years to 15%. However, the premium will be 10% in the
  event that certain legislative or administrative proposals are enacted. Notwithstanding
  the foregoing, DLJ Inc. has the right, at any time, to exchange stock of a subsidiary
  of DLJ Inc. for Tracking Stock if all of the assets and liabilities of DLJdirect
  are transferred to the subsidiary.
2. Summary of Significant Accounting Policies

To prepare combined financial statements in conformity with generally accepted
  accounting principles, management must estimate certain amounts that affect
  the reported assets and liabilities, disclosure of contingent assets and liabilities,
  and reported revenues and expenses. Actual results could differ from those estimates.
  Certain reclassifications have been made to prior year financial statements
  to conform to the 1999 presentation.
Substantially all of DLJdirect's financial assets and liabilities, including
  short-term investments, are carried at market or fair value or are carried at
  amounts, which approximate fair value because of their short-term nature. Fair
  value is estimated at a specific point in time, based on relevant market information.
Cash equivalents include all demand deposits held in banks and certain highly
  liquid investments with maturities of 90 days or less.
Securities transactions are recorded on a settlement date basis and, if significant,
  adjustments are made to a trade date basis. Commission revenue and brokerage,
  clearing, exchange and other fees are reported on a trade date basis.
Office facilities are carried at cost and are depreciated on a straight-line
  basis over the estimated useful life of the related assets, ranging from three
  to eight years. Leasehold improvements are amortized over the lesser of the
  useful life of the improvement or the term of the lease.
Advertising costs are expensed as incurred.
Investment in joint venture is accounted for by the equity method.
Assets and liabilities of foreign joint ventures denominated in foreign currencies
  are translated at exchange rates prevailing at the date of the combined statements
  of financial condition. Revenues and expenses are translated at average exchange
  rates during the period. Gains and losses from translating foreign currency
  financial statements into U.S. dollars (net of taxes) are included as a separate
  component of allocated equity.
DLJ Inc. allocates certain general administrative and facilities expenses to
  DLJdirect using a proportional cost methodology based on the relative
  number of employees and square foot usage of DLJdirect or on actual costs
  incurred.
DLJdirect accounts for stock-based compensation related to stock options
  in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees,"
  and accordingly, does not recognize any compensation cost associated with such
  plans in the combined financial statements. In accordance with SFAS No. 123,
  "Accounting for Stock-Based Compensation," DLJdirect provides pro forma
  net income and pro forma earnings per share disclosures for employee stock option
  grants as if the fair-value-based method had been applied.
Basic and diluted earnings per common share amounts are calculated by dividing
  earnings applicable to common shares by the weighted average common shares outstanding.
  Basic earnings per share excludes the dilutive effects of stock options. Diluted
  earnings per share reflects all potentially dilutive securities.
Pursuant to SFAS No. 131, "Disclosures about Segments of an Enterprise and
  Related Information," DLJdirect operates in one reportable segment as
  a provider of online discount brokerage services. DLJdirect's involvement
  in foreign operations is not significant.
3. Investment in Foreign Joint Venture

In March 1999, DLJdirect entered into a 10-year joint venture agreement
  with Sumitomo Bank in Japan. Pursuant to the agreement, DLJdirect SFG
  Securities Inc. was formed. Operations commenced on April 1, 1999 and the corporation's
  Internet site was launched on June 11, 1999. DLJdirect accounts for this
  investment on the equity method.
Summarized financial information for DLJdirect SFG Securities Inc. as
  of December 31, 1999 is as follows:
(In thousands)Total assets
    $
    318,874Total liabilities
    $
    304,064Loss before income tax benefit
    $
    (9,849
    )Net loss
    $
    (6,430
    )4. Related Party Transactions DLJdirect transacts business with a group of companies affiliated through
  common majority ownership with DLJ Inc. ("affiliates"), and has various transactions
  and relationships with members of the group. Due to these relationships, it
  is possible that the terms of these transactions are not the same as those that
  would result from transactions among unrelated parties.
Pursuant to clearing agreements between DLJdirect and affiliates all
  securities transactions of DLJdirect are cleared on a fully disclosed
  basis through an affiliate which amounts are included in brokerage, clearing,
  exchange and other fees in the accompanying combined statements of operations.
  In connection with such transactions, DLJdirect had $329,000 and $250,000
  on deposit with DLJ Inc. at December 31, 1999 and 1998, respectively.
The following summarizes the income/expense components generated from transactions
  with affiliates for the years ended December 31, 1999, 1998 and 1997.
December 31,1999
    
    1998
    
    1997(In millions)Fee Income
    $
    38.1
    
    $
    22.3
    
    $
    10.3Interest Income
    
    30.7
    
    
    12.6
    
    
    3.8Brokerage, clearing, exchange and other fees
    
    39.2
    
    
    28.4
    
    
    20.9Fee income includes amounts received from affiliates for order flow and technology
  development. Interest income includes amounts received by DLJdirect from
  affiliates for interest earned on DLJdirect's customers' balances.
For the years ended December 31, 1998 and 1997, other operating expenses included
  $5.2 million and $1.2 million, respectively, for a license agreement with an
  affiliate. The affiliate has licensed certain trademarks, service marks, trade
  names and other proprietary rights to various words, slogans, symbols and logos
  to DLJdirect for use in its provision of financial services and sale
  or other distribution of related financial goods. In March 1999, DLJdirect
  entered into a new license agreement and an amended clearing agreement. The
  amounts paid by DLJdirect under the clearing agreement include payments
  in respect of the license fee for the use of DLJ Inc.'s trademarks. If such
  agreements were entered into in prior years under these conditions, management
  believes that there would have been no material effect upon the total costs
  and expenses of DLJdirect.
Employees of DLJdirect participate in DLJ Inc.'s defined contribution
  employee benefit plans. Certain key employees of DLJdirect participate
  in stock options, long-term incentive compensation and restricted stock unit
  employee benefit plans and various deferred compensation arrangements, as well
  as other non-qualified plans which are funded by insurance contracts. Expenses
  associated with these compensation arrangements are reflected in DLJdirect's
  combined statements of operations.
5. Income Taxes

DLJdirect is part of a group that files consolidated Federal income
  tax returns. DLJdirect records the settlement of all current and deferred
  income taxes in the intercompany account with DLJ Inc. under a tax sharing arrangement.
  Taxes are provided as if DLJdirect filed a separate return. Income tax
  provision (benefit) included in the combined statements of operations is as
  follows:
December 31,1999
    1998
    1997(In thousands)Current:U.S. Federal
    $
    7,083
    
    $
    1,022
    
    $
    (2,088
    )State and local
    
    2,868
    
    
    261
    
    
    (574
    )Total current
    
    9,951
    
    
    1,283
    
    
    (2,662
    )Deferred:U.S. Federal
    
    (1,602
    )
    
    (236
    )
    
    137State and local
    
    (456
    )
    
    (39
    )
    
    23Total deferred
    
    (2,058
    )
    
    (275
    )
    
    160Total income tax provision (benefit)
    $
    7,893
    
    $
    1,008
    
    $
    (2,502
    )The following summarizes the difference between the "expected" tax provision,
  which is computed by applying the statutory tax rate to income before income
  tax provision (benefit), and the effective income tax provision, which is computed
  by using the effective tax rate.
1999
    
    1998
    
    1997Amount
        (In thousands)
    
    Percent of
        Pre-tax
        Income
    
    Amount
        (In thousands)
    
    Percent of
        Pre-tax
        Income
    
    Amount
        (In thousands)
    
    Percent of
        Pre-tax
        IncomeComputed "expected" tax provision   (benefit)
    $
    6,314
    
    
    35.0
    %
    $
    864
    
    
    35.0
    %
    $
    (2,144
    )
    
    35.0
    %State and local taxes, net of relatedFederal income tax benefit
    
    1,568
    
    
    8.7
    
    
    144
    
    
    5.9
    
    
    (358
    )
    
    5.9Non-taxable expense items
    
    11
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Income tax provision (benefit)
    $
    7,893
    
    
    43.8
    %
    $
    1,008
    
    
    40.9
    %
    $
    (2,502
    )
    
    40.9
    %Deferred tax assets and deferred tax liabilities are generated by the following
  temporary differences:
1999
    
    1998(In thousands)Net deferred tax assets:Deferred compensation and other
    $
    2,837
    
    $779Management has determined that taxable income from carryback years and anticipated
  future taxable income are sufficient to offset the tax benefit of deductible
  temporary differences. As a result, at year-end 1999 and 1998, valuation allowances
  have not been recorded against the net deferred tax assets. Although realization
  is not assured, management believes it is more likely than not that all of the
  net deferred tax assets will be realized. However, if estimates of future taxable
  income during the carryforward period are reduced, the amount of the net deferred
  tax assets considered realizable could also be reduced.
6. Net Capital

DLJdirect includes DLJdirect, Inc., a registered broker-dealer
  and a member of the National Association of Securities Dealers Inc. ("NASD").
  DLJdirect, Inc. is subject to the minimum net capital requirements of
  the Securities and Exchange Commission and the NASD. As such, it is subject
  to the NASD's net capital rule, which conforms to the Uniform Net Capital Rule
  pursuant to rule 15c3-1 of the Securities Exchange Act of 1934. As a broker-dealer
  who does not carry customer accounts, under the alternative method permitted
  by this rule, the required net capital, as defined, shall not be less than $250,000.
  At December 31, 1999, DLJdirect, Inc.'s net capital of $24.2 million
  was in excess of the minimum requirement by $24.0 million.
DLJdirect's London-based broker-dealer affiliate, DLJdirect Ltd.,
  is subject to the requirements of the Securities and Futures Authority, a self-regulatory
  organization established pursuant to the United Kingdom Financial Services Act
  of 1986. At December 31, 1999, DLJdirect complied with all applicable
  regulatory capital adequacy requirements.
7. Concentrations of Credit Risk

In the normal course of business, DLJdirect executes securities transactions
  on behalf of customers through its affiliated clearing broker. In connection
  with these activities, a customer's unsettled trades may expose DLJdirect
  to off-balance-sheet credit risk in the event the customer is unable to fulfill
  its contractual obligations. DLJdirect seeks to control the risk associated
  with its customer activities by making credit inquiries when establishing customer
  relationships and by monitoring customer trading activity.
Credit risk is the amount of accounting loss DLJdirect would incur if
  a customer failed to perform its obligations under contractual terms. Substantially
  all of the clearing and depository operations for DLJdirect are performed
  by its affiliated clearing broker pursuant to a clearance agreement. The affiliated
  clearing broker reviews as considered necessary, the creditworthiness of the
  customers with which DLJdirect conducts business. DLJdirect's
  exposure to credit risk associated with the nonperformance by customers in fulfilling
  their contractual obligations pursuant to securities transactions can be directly
  affected by volatile securities markets, credit markets and regulatory changes.
8. Earnings Per Share

Earnings (loss) per share amounts have been calculated by dividing net income
  (loss) by the weighted average notional and outstanding shares of Tracking Stock.
  Earnings per share amounts for the years ended December 31, 1999, 1998, and
  1997 are calculated based on pro forma amounts as if the issuance of Tracking
  Stock occurred at the beginning of 1997. The notional shares represent DLJ's
  82.1% retained interest in DLJdirect. Prior to the offering, DLJ had
  a 100% interest in the earnings of DLJdirect. These pro forma amounts
  are presented for comparative purposes only.
Tracking Stock earnings per common share amounts have been calculated by dividing
  earnings applicable to common shares by the weighted average actual common shares
  outstanding for the period the Tracking Stock was outstanding, May 28, 1999
  to December 31, 1999. Tracking Stock earnings per share for periods prior to
  the closing date are not presented as such amounts are not meaningful.
The numerators and denominators of the basic and diluted earnings per common
  share computations include the following items:
Year Ended
        December 31, 1999
        (Pro forma)
    
    Tracking Stock
        Period May 28 to
        December 31, 1999Income
    
    
    Shares
    
    (Loss)
    
    Shares(In thousands)
    
    (In thousands)Basic EPS:Earnings (loss) applicable to common shares
    $
    6,932
    
    
    102,650
    
    $
    (903
    )
    18,400Effect of dilutive securities:Stock options
    $
    
    
    
    10
    
    $
    
    
     *Diluted EPS
    $
    6,932
    
    
    102,660
    
    $
    (903
    )
    18,400*Exercisable stock options are excluded from the computation of diluted earnings
  per share since the effect of including them was antidilutive.9. Employee Compensation and Benefit Plans
1999 Incentive Compensation Plan  DLJdirect Common Stock

Awards under the 1999 Incentive Compensation Plan (the "Plan") are determined
  by the Compensation and Management Committee of the Board of Directors of DLJ
  Inc. Under the Plan, stock options on DLJdirect stock are granted at
  a price equal to the fair value of the stock at the date of grant. The options
  are exercisable for up to 10 years from the date of grant and vest in four equal
  annual installments starting one year from the date of grant. Under the Plan,
  10,000,000 shares are issuable.
The following summarizes the stock option activity:
Options
    
    Weighted
        Average
        Exercise
        PriceOutstanding at December 31, 1998
    
    
    $
    Granted
    6,300,050
    
    $
    19.76Forfeited
    (67,000
    )
    $
    20.00Exercised
    
    
    
    Outstanding at December 31, 1999
    6,233,050
    
    $
    19.76The following summarizes information related to stock options outstanding at
  December 31, 1999:
Exercise Prices
    Number Outstanding
    Weighted Average
        Exercise Price
    Weighted Average
        Remaining Life (Years)$13.56  $14.13
    256,250
    
    $
    14.10
    
    9.8$14.14  $20.00
    5,976,800
    
    $
    20.00
    
    9.4Total
    6,233,050
    
    $
    19.76
    
    9.4At December 31, 1999, there were no options exercisable.
DLJdirect accounts for its stock option plans in accordance with APB
  Opinion No. 25 and, accordingly, does not recognize any compensation cost associated
  with such plans in the combined financial statements. If DLJdirect had
  calculated compensation cost under SFAS No. 123 (based on the fair value of
  options at the grant date), DLJdirect would have reported the following
  net loss and loss per common share for the period the Tracking Stock was outstanding:
1999Net loss (in thousands)
    As reported
    $
    (903
    )Pro forma
    $
    (6,345
    )Basic loss per common share
    As reported
    $
    (0.05
    )Pro forma
    $
    (0.34
    )Diluted loss per common share
    As reported
    $
    (0.05
    )Pro forma
    $
    (0.34
    )The fair value of each option is estimated on the date of grant using the Black-Scholes
  option-pricing model. For options granted during 1999 DLJdirect used
  the following weighted average assumptions: expected volatility of 45%, risk-free
  interest rates of 5.69% and an expected life of five years for all grants. The
  weighted average fair value per share of options granted during 1999 was $9.30.
10. Leases, Commitments

DLJdirect primarily obtains its office space and equipment under cancelable
  and non-cancelable operating lease agreements through an affiliate. Such operating
  leases expire on various dates through 2019. Expenses related to leased premises,
  equipment and technology for the years ended December 31, 1999, 1998 and 1997
  was $4.9 million, $3.0 million and $1.7 million, respectively.
At December 31, 1999, non-cancelable operating leases in excess of one year,
  excluding escalation and renewal options, had the following minimum lease commitments:
Period
    (In thousands)2000
    $
    17,5022001
    
    19,2112002
    
    17,5042003
    
    15,0882004
    
    13,3902005-2019
    
    46,890Total
    $
    129,58511. Legal Proceedings

DLJdirect has been named a defendant in actions relating to its businesses.
  While the ultimate outcome of litigation involving DLJdirect cannot be
  predicted with certainty, management, having reviewed these actions with its
  counsel, believes it has meritorious defenses to all such actions and intends
  to defend each of these vigorously. In the opinion of management of DLJdirect,
  the ultimate resolution of all litigation, regulatory and investigative matters
  affecting DLJdirect will not have a material adverse effect on the financial
  condition or results of operations of DLJdirect.
12. Quarterly Data (Unaudited)
Total
        Revenues
    
    Income (Loss)
        Before Income Tax
        Provision
        And Equity
        In Net Loss Of
        Joint Venture
    
    Net Income
        (Loss)
    
    Basic
        Earnings
        (Loss)
        Per Common
        Share*
    
    Diluted
        Earnings
        (Loss)
        Per Common
        Share*(In thousands)1999:First quarter
    $
    47,202
    
    $
    11,261
    
    $
    7,173
    
    $
    0.07
    
    $
    0.07Second quarter
    
    59,674
    
    
    11,241
    
    
    5,076
    
    
    0.05
    
    
    0.05Third quarter
    
    54,881
    
    
    (3,728
    )
    
    (3,330
    )
    
    (0.03
    )
    
    (0.03
    )Fourth quarter
    
    76,314
    
    
    (734
    )
    
    (1,987
    )
    
    (0.02
    )
    
    (0.02
    )Total year
    $
    238,071
    
    $
    18,040
    
    $
    6,932
    
    $
    0.07
    
    $
    0.071998:First quarter
    $
    24,057
    
    $
    (3,816
    )
    $
    (2,257
    )
    $
    (0.02
    )
    $
    (0.02
    )Second quarter
    
    28,278
    
    
    1,954
    
    
    1,156
    
    
    0.01
    
    
    0.01Third quarter
    
    30,182
    
    
    1,314
    
    
    776
    
    
    0.01
    
    
    0.01Fourth quarter
    
    35,407
    
    
    3,016
    
    
    1,785
    
    
    0.02
    
    
    0.02Total year
    $
    117,924
    
    $
    2,468
    
    $
    1,460
    
    $
    0.01
    
    $
    0.01For the periods prior to the quarter ended September 30, 1999, earnings per
  share amounts are pro forma as if the issuance of DLJdirect Tracking
  Stock occurred at the beginning of 1998.
* Due to the effect of averaging the number of shares of common stock and common
  stock equivalents throughout the year, the sum of the quarters' earnings per
  common share may not equal the total year amounts.


Part III
ITEM 10.Directors and Executive Officers of the Registrant
The information required to be furnished pursuant to this item is set forth
  under the caption "Election of Directors" of the Proxy Statement, and is incorporated
  herein by reference.
The information required to be furnished pursuant to this item with regard
  to executive officers of the Registrant that has not been included in the Registrant's
  Proxy Statement is as follows:
Michael A. Boyd was appointed Senior Vice President and General Counsel in
  1975. Mr. Boyd joined the Company in 1971 as an Associate General Counsel of
  the Company and General Counsel of its then subsidiary Alliance Capital Management
  Corporation.
Edward J. Resch was appointed Chief Accounting Officer in 1999. Mr. Resch joined
  the Company in 1995 as Director of Internal Audit. Prior to 1999, Mr. Resch
  was Chief Financial Officer of the Company's Capital Markets Group.
Gates H. Hawn was appointed Chairman of the Financial Services Group in 1999.
  Mr. Hawn joined the Company in 1981 and has been responsible for the Pershing
  Division of the Company since 1983.
ITEM 11.Executive Compensation
The information required to be furnished pursuant to this item is set forth
  under the caption "Executive Compensation" of the Proxy Statement, and is incorporated
  herein by reference.
ITEM 12.Security Ownership of Certain Beneficial Owners 
  and Management
The information required to be furnished pursuant to this item is set forth
  under the captions "Voting Securities" and "Security Ownership Management" of
  the Proxy Statement, and is incorporated herein by reference.
ITEM 13.Certain Relationships and Related Transactions
The information required to be furnished pursuant to this item is set forth
  under the caption "Certain Relationships and Related Party Transactions" of
  the Proxy Statement, and is incorporated herein by reference.
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
  Act of 1934, the Registrant has duly caused this report to be signed on its
  behalf by the undersigned, hereunto duly authorized, on the 30th day of March
  2000.
Donaldson, Lufkin & Jenrette,
      Inc.
      (Registrant)By: /s/ Joe L.
      RobyJoe L. Roby
      President and Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report
  has to be signed below by the following persons on behalf of the registrant
  and in the capacities indicated on the 30th day of March 2000.
Name
    Title/s/ John S. Chalsty
      John S. Chalsty
    Chairman of the Board; Director/s/ Joe L. Roby
      Joe L. Roby
    President and Chief Executive Officer; Director/s/ Anthony F. Daddino
      Anthony F. Daddino
    Executive Vice President and Chief Financial Officer; Director/s/ Hamilton E. James
      Hamilton E. James
    Managing Director; Director/s/ David F. DeLucia
      David F. DeLucia
    Managing Director; Director/s/ Stuart M. Robbins
      Stuart M. Robbins
    Managing Director; Director/s/ Gates H. Hawn
      Gates H. Hawn
    Chairman, Financial Services Group/s/ Edward J. Resch
      Edward J. Resch
    Senior Vice President and Chief Accounting Officer/s/ Michael A. Boyd
      Michael A. Boyd
    Senior Vice President and General Counsel/s/ Henri de Castries
      Henri de Castries
    Director/s/ Denis Duverne
      Denis Duverne
    Director/s/ Louis Harris
      Louis Harris
    Director/s/ Henri G. Hottinguer
      Henri G. Hottinguer
    Director/s/ W. Edwin Jarmain
      W. Edwin Jarmain
    Director/s/ Francis Jungers
      Francis Jungers
    Director/s/ Edward Miller
      Edward Miller
    Director/s/ W. J. Sanders III
      W.J. Sanders III
    Director/s/ Stanley Tulin
      Stanley Tulin
    Director/s/ John C. West
      John C. West
    Director/s/ Michael Hegarty
      Michael Hegarty
    Director/s/ Jane Mack Gould
      Jane Mack Gould
    DirectorDonaldson, Lufkin & Jenrette, Inc.Form 10-K
  Index to Financial Statements and Financial Statement Schedule for the Year
  Eended December 31, 1999
Table of Contents
Part IV
    Exhibits, Financial Statement Schedules and Reports on Form 8-KITEM 14
    Financial Statements  DLJ Inc.(a)(1)
    Independent Auditors' ReportConsolidated Statements of Financial Condition at December 31, 1999 and
        1998Consolidated Statements of Income for the years ended December 31, 1999,
        1998 and 1997Consolidated Statements of Changes in Stockholders' Equity for the years
        ended December 31, 1999, 1998 and 1997Consolidated Statements of Cash Flows for years ended December 31, 1999,
        1998 and 1997Notes to Consolidated Financial StatementsFinancial Statements DLJdirectIndependent Auditors' ReportCombined Statements of Financial Condition at December 31, 1999 and 1998Combined Statements of Operations for the years ended December 31, 1999,
        1998 and 1997Combined Statements of Changes in Allocated Equity for the years ended
        December 31, 1999, 1998 and 1997Combined Statements of Cash Flows for the years ended December 31, 1999,
        1998 and 1997Notes to Combined Financial StatementsITEM 14
    Financial Statement Schedule(a)(2)
    Schedule I Condensed Financial Information of RegistrantITEM 14(a)(3)
    ExhibitsExhibit No.
    Description3.1
    Restated Certificate of Incorporation of Registrant3.2
    By-laws of the Registrant4.1
    Registration Rights and Indemnification Agreement4.2
    Specimen Stock Certificate of the Registrant4.7
    Certificate of Designation of the Registrant's
      Fixed/Adjustable Rate Cumulative Preferred Stock, Series A4.8
    Certificate of Designation of 3,500,000 shares of Fixed/Adjustable Rate
        Cumulative Preferred Stock, Series B10.6
    Donaldson, Lufkin & Jenrette, Inc. 1995 Restricted Stock Unit Plan10.7
    Donaldson, Lufkin & Jenrette, Inc. 1995 Stock Option Plan10.8
    Donaldson, Lufkin & Jenrette, Inc. 1996 Stock Option Plan10.10
    Deferred Compensation Agreement, dated December 30, 1983, between Michael
        A. Boyd and the Registrant10.11
    Deferred Compensation Agreement, dated December 30, 1983, between John
        S. Chalsty and the Registrant10.12
    Deferred Compensation Agreement, dated December 30, 1983, between Anthony
        F. Daddino and the Registrant10.17
    Deferred Compensation Agreement, dated December 30, 1983, between Joe
        L. Roby and the Registrant10.19
    Letter agreement between the Registrant and ACMC, Inc., dated as of August
        25, 1995, regarding certain state and local tax sharing arrangements10.20
    Insurance Agreement, dated August 27, 1992, by and between the Registrant
        and Thomas E. Siegler, as Trustee and Owner of the 1992 Chalsty Insurance
        Trust, dated August 25, 199510.21
    Amendment, dated August 28, 1992, to the Insurance Agreement, dated August
        27, 1992, by and between the Registrant and Michael Cappiccille, as Trustee
        and Owner10.22
    Federal tax sharing agreement10.23
    Agreement of lease between 99 Bishopsgate Limited, Landlord, and DLJ
        International Limited, Tenant and the Registrant, Tenant's Guarantor,
        99 Bishopsgate London, EC2, dated as of October 24, 1996.10.24
    Agreement of sublease between SBC Warburg, Inc. and the Registrant's
        tenant, 277 Park Avenue, New York, New York, dated June 13, 1997.10.30
    Agreement of Lease between Stanley Stahl D/B/A Stahl Park Avenue Co.,
        Landlord, and the Registrant, Tenant, 277 Park Avenue, New York, New York,
        dated as of October 26, 199410.31
    First Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant, dated as of March 30, 199510.32
    Amended and Restated Equitable Credit Agreement, dated March 1, 1994,
        among the Registrant, The Equitable Life Assurance Society of the United
        States, Equitable Variable Life Insurance Company, DLJ Bridge Finance,
        Inc., DLJ Capital Corporation and DLJ Investment Inc.10.33
    Preferred Stock purchase agreement between the Registrant and The Equitable
        Life Assurance Society of the United States10.36
    First Amendment to the Amended and Restated Equitable Credit Agreement
        dated March 1, 1994, among the Registrant, The Equitable Life Assurance
        Society of the United States, Equitable Variable Life Insurance Company,
        DLJ Bridge Finance, Inc., DLJ Capital Corporation and DLJ Investment Inc.10.37
    Agreement of lease between Broadpine Realty Holding Company, Inc. and
        the Registrant, Tenant, 120 Broadway, New York, New York, dated as of
        November 10, 199510.38
    Donaldson, Lufkin & Jenrette, Inc. 1996 Incentive Compensation Plan10.80
    Insurance Agreement dated October 31, 1995, by and between the Registrant
        and Winthrop Trust Company, as Trustee and Owner of the Anthony F. Daddino
        Insurance Trust, dated August 25, 199510.84
    Insurance Agreement dated January 4, 1996 by and between the Registrant
        and Dan Curtis Roby as Trustee and Owner of the Roby 1995 Insurance Trust
        dated November 27, 1995.10.85
    Second Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant, dated August 24, 1995.10.86
    Third Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant dated October 6, 1995.10.87
    Fourth Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant dated April 29, 1996.10.88
    1996 Non-Employee Directors Stock Plan.10.91
    Purchase and Sale Agreement, dated July 16, 1998 among the Company, AXA
        Financial Inc. and AXA Holdings (Belgium).10.92
    First Amended and Restated Credit Agreement, dated May 29, 1998 among
        the Company, a syndicate of banks, Chase Securities, Inc. the Chase Manhattan
        Bank, the Bank of New York and The First National Bank of Chicago10.93
    Agreement of Lease between USF Nominees Limited, Landlord, DLJ UK Properties
        Limited, Tenant, 111 Old Broad Street, London and the Company, Surety,
        dated as of June 3, 1998.10.94
    Sublease Agreement between Furman Selz, LLC, Sublandlord and the Company,
        Subtenant, 280 Park Avenue, New York, New York, dated as of June 16, 1998.10.95
    Second Amended and Restated Credit, dated as
      of May 28, 1999 among the Company, a syndicate of banks, Chase Securities,
      Inc., the Chase Manhattan Bank, the Bank of New York and the First National
      Bank of Chicago.11.1
    Statement re: computation of basic earnings per share.11.2
    Statement re: computation of diluted earnings per share.12.1
    Computation of ratio of earnings to fixed charges and ratio of earnings
        to combined fixed charges and preferred stock dividends.21.1
    Subsidiaries of the Registrant23.1
    Consent of KPMG LLP27
    Financial Data ScheduleThe Company agrees to furnish copies to the Commission of all instruments
        with respect to long-term debt of the Company and its subsidiaries.ITEM 14(b)
    Reports on Form 8-KForm 8-K dated January 12, 1999; Items 5 and 7Form 8-K dated January 25, 1999; Item 5Form 8-K dated March 16, 1999; Items 5 and 7Form 8-K dated March 18, 1999; Item 5Form 8-K dated April 22, 1999; Item 5Form 8-K dated April 23, 1999; Items 5 and 7Form 8-K dated July 23, 1999; Item 5Form 8-K dated October 14, 1999; Item 5
Exhibit IndexExhibit No.
    Description3.1
    Restated Certificate of Incorporation of Registrant (Incorporated by
        reference to the corresponding exhibit to the Registrant's Registration
        Statement on Form S-1, Registration No. 33-96276).3.2
    By-laws of the Registrant (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).4.1
    Registration Rights and Indemnification Agreement (Incorporated by reference
        to the corresponding exhibit to the Registrant's annual report on Form
        10-K for the fiscal year ended December 31, 1995).4.2
    Specimen Stock Certificate of the Registrant (Incorporated by reference
        to the corresponding exhibit to the Registrant's Registration Statement
        on Form S-1, Registration No. 33-96276).4.7
    Certificate of Designation of the Registrant's Fixed/Adjustable Rate
        Cumulative Preferred Stock, Series A (Incorporated by reference to Exhibit
        4.3 to the Registrant's Registration Statement on Form S-3, File No. 33-80771.4.8
    Certificate of Designation of 3,500,000 shares of Fixed/Adjustable Rate
        Cumulative Preferred Stock, Series B. (Incorporated herein by reference
        to Exhibit 99.1 to the Company's Form 8-K, dated January 8, 1998; Item
        5).10.6
    Donaldson, Lufkin & Jenrette, Inc. 1995 Restricted Stock Unit Plan
        (Incorporated by reference to the corresponding exhibit to the Registrant's
        annual report on Form 10-K for the fiscal year ended December 31, 1995).10.7
    Donaldson, Lufkin & Jenrette, Inc. 1995 Stock Option Plan (Incorporated
        by reference to the corresponding exhibit to the Registrant's annual report
        on Form 10-K for the fiscal year ended December 31, 1995).10.8
    Donaldson, Lufkin & Jenrette, Inc. 1996 Stock Option Plan (Incorporated
        by reference to Annex A of the Registrant's Proxy Statement on Schedule
        14Afiled on March 22, 1996 and furnished to shareholders in connection
        with the solicitation of proxies for the Registrant's annual meeting of
        shareholders to be held on April 30, 1996.10.10
    Deferred Compensation Agreement, dated December 30, 1983, between Michael
        A. Boyd and the Registrant (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).10.11
    Deferred Compensation Agreement, dated December 30, 1983, between John
        S. Chalsty and the Registrant (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).10.12
    Deferred Compensation Agreement, dated December 30, 1983, between Anthony
        F. Daddino and the Registrant (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).10.17
    Deferred Compensation Agreement, dated December 30, 1983, between Joe
        L. Roby and the Registrant (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).10.19
    Letter agreement between the Registrant and ACMC, Inc., dated as of August
        25, 1995, regarding certain state and local tax sharing arrangements (Incorporated
        by reference to the corresponding exhibit to the Registrant's Registration
        Statement on Form S-1, Registration No. 33-96276).10.20
    Insurance Agreement, dated August 27, 1992, by and between the Registrant
        and Thomas E. Siegler, as Trustee and Owner of the 1992 Chalsty Insurance
        Trust, dated August 25, 1995 (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).10.21
    Amendment, dated August 28, 1992, to the Insurance Agreement, dated August
        27, 1992, by and between the Registrant and Michael Cappiccille, as Trustee
        and Owner (Incorporated by reference to the corresponding exhibit to the
        Registrant's Registration Statement on Form S-1, Registration No. 33-96276).10.22
    Federal tax sharing agreement (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).10.23
    Agreement of lease between 99 Bishopsgate Limited, Landlord, and DLJ
        International Limited, Tenant and the Registrant, Tenant's Guarantor,
        99 Bishopsgate London, EC2, dated as of October 24, 1996. (Incorporated
        by reference to the corresponding exhibit to the Registrant's annual report
        on Form 10-K for the fiscal year ended December 31, 1996).10.24
    Agreement of sublease between SBC Warburg, Inc. and the Registrant's
        tenant, 277 Park Avenue, New York, New York, dated June 13, 1997. (Incorporated
        by reference to the corresponding exhibit on Form 10Q for the period ended
        June 30, 1997).10.30
    Agreement of Lease between Stanley Stahl D/B/A Stahl Park Avenue Co.,
        Landlord, and the Registrant, Tenant, 277 Park Avenue, New York, New York,
        dated as of October 26, 1994 (Incorporated by reference to the corresponding
        exhibit to the Registrant's Registration Statement on Form S-1, Registration
        No. 33-96276).10.31
    First Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant, dated as of March 30, 1995 (Incorporated
        by reference to the corresponding exhibit to the Registrant's Registration
        Statement on Form S-1, Registration No. 33-96276).10.32
    Amended and Restated Equitable Credit Agreement, dated March 1, 1994,
        among the Registrant, The Equitable Life Assurance Society of the United
        States, Equitable Variable Life Insurance Company, DLJ Bridge Finance,
        Inc., DLJ Capital Corporation and DLJ Investment Inc. (Incorporated by
        reference to the corresponding exhibit to the Registrant's Registration
        Statement on Form S-1, Registration No. 33-96276).10.33
    Preferred Stock purchase agreement between the Registrant and The Equitable
        Life Assurance Society of the United States (Incorporated by reference
        to the corresponding exhibit to the Registrant's Registration Statement
        on Form S-1, Registration No. 33-96276).10.36
    First Amendment to the Amended and Restated Equitable Credit Agreement
        dated March 1, 1994, among the Registrant, The Equitable Life Assurance
        Society of the United States, Equitable Variable Life Insurance Company,
        DLJ Bridge Finance, Inc., DLJ Capital Corporation and DLJ Investment Inc.
        (Incorporated by reference to the corresponding exhibit to the Registrant's
        annual report on Form 10-K for the fiscal year ended December 31, 1995).10.37
    Agreement of lease between Broadpine Realty Holding Company, Inc. and
        the Registrant, Tenant, 120 Broadway, New York, New York, dated as of
        November 10, 1995 (Incorporated by reference to the corresponding exhibit
        to the Registrant's annual report on Form 10-K for the fiscal year ended
        December 31, 1995).10.38
    Donaldson, Lufkin & Jenrette, Inc. 1996 Incentive Compensation Plan
        (Incorporated by reference to Annex B of the Registrant's Proxy Statement
        on Schedule 14A filed on March 22, 1996 and furnished to shareholders
        in connection with the solicitation of proxies for the Registrant's annual
        meeting of shareholders to be held on April 30, 1996).10.80
    Insurance Agreement dated October 31, 1995, by and between the Registrant
        and Winthrop Trust Company, as Trustee and Owner of the Anthony F. Daddino
        Insurance Trust, dated August 25, 1995 (Incorporated by reference to the
        corresponding exhibit to the Registrant's annual report on Form 10-K for
        the fiscal year ended December 31, 1995).10.84
    Insurance Agreement dated January 4, 1996 by and between the Registrant
        and Dan Curtis Roby as Trustee and Owner of the Roby 1995 Insurance Trust
        dated November 27, 1995. (Incorporated herein by reference to the corresponding
        exhibit to the Registrant's quarterly report on Form 10-Q for the period
        ended June 30, 1996).10.85
    Second Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant, dated August 24, 1995. (Incorporated herein
        by reference to the corresponding exhibit to the Registrant's quarterly
        report on Form 10-Q for the period ended June 30, 1996).10.86
    Third Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant, dated October 6, 1995. (Incorporated herein
        by reference to the corresponding exhibit to the Registrant's quarterly
        report on Form 10-Q for the period ended June 30, 1996).10.87
    Fourth Amendment of Lease by and between Stanley Stahl D/B/A Stahl Park
        Avenue Co. and the Registrant, dated April 29, 1996. (Incorporated herein
        by reference to the corresponding exhibit to the Registrant's quarterly
        report on Form 10-Q for the period ended June 30, 1996).10.88
    1996 Non-Employee Directors Stock Plan (Incorporated by reference to
        Annex A of the Registrant's Proxy Statement on Schedule 14A filed on March
        11, 1997 and furnished to shareholders in connection with solicitation
        of proxies for the Registrant's annual meeting of shareholders to be held
        on April 16, 1997).10.91
    Purchase and Sale Agreement, dated July 16, 1998 among the Company, The
        Equitable Companies Incorporated and AXA Holdings (Belgium). (Incorporated
        herein by reference to Exhibit 10.85 of the Registrant's quarterly report
        on Form 10-Q for the period ended June 30, 1998).10.92
    First Amended and Restated Credit Agreement, dated May 29, 1998 among
        the Company, a syndicate of banks, Chase Securities, Inc. the Chase Manhattan
        Bank, the Bank of New York and The First National Bank of Chicago (Incorporated
        herein by reference to Exhibit 10.91 of the Registrant's quarterly report
        on Form 10-Q for the period ended June 30, 1998).10.93
    Agreement of Lease between USF Nominees Limited, Landlord, DLJ UK Properties
        Limited, Tenant, 111 Old Broad Street, London and the Company, Surety,
        dated as of June 3, 1998 (Incorporated herein by reference to Exhibit
        10.92 of the Registrant's quarterly report on Form 10-Q for the period
        ended June 30, 1998).10.94
    Sublease Agreement between Furman Selz, LLC, Sublandlord and the Company,
        Subtenant, 280 Park Avenue, New York, New York, dated as of June 16, 1998
        (Incorporated herein by reference to Exhibit 10.93 of the Registrant's
        quarterly report on Form 10-Q for the period ended June 30, 1998).10.95
    Second Amended and Restated Credit, dated as
      of May 28, 1999 among the Company, a syndicate of banks, Chase Securities,
      Inc., the Chase Manhattan Bank, the Bank of New York and the First National
      Bank of Chicago.11.1
    Statement re: computation of basic earnings per share.11.2
    Statement re: computation of diluted earnings per share.12.1
    Computation of ratio of earnings to fixed charges and ratio of earnings
        to combined fixed charges and preferred stock dividends.21.1
    Subsidiaries of the Registrant.23.1
    Consent of KPMG LLP.27
    Financial Data Schedule.