THE BEAR STEARNS COMPANIES INC.
-------------------------------
SEGMENT DATA
------------
(UNAUDITED)
-----------
Three Months Ended % Change From Nine Months Ended % Change
----------------------------------------- -------------------- -------------------------- --------
August 31, August 31, May 31, August 31, May 31, August 31, August 31,
2002 2001 2002 2001 2002 2002 2001
----------- ----------- ----------- --------- --------- ----------- -----------
(In thousands) (In thousands)
NET REVENUES
Capital Markets
Institutional Equities $ 297,992 $ 244,741 $ 319,793 21.8% (6.8%) $ 865,703 $ 934,262 (7.3%)
Fixed Income 427,601 416,128 532,298 2.8% (19.7%) 1,508,093 1,270,803 18.7%
Investment Banking 133,932 213,458 450,850 (37.3%) (70.3%) 726,100 489,782 48.2%
----------- ----------- ----------- ----------- -----------
Total Capital Markets 859,525 874,327 1,302,941 (1.7%) (34.0%) 3,099,896 2,694,847 15.0%
Global Clearing Services 186,576 192,021 186,148 (2.8%) 0.2% 560,104 623,304 (10.1%)
Wealth Management 124,037 128,027 126,701 (3.1%) (2.1%) 373,949 406,532 (8.0%)
Other (a) (15,754) 10,383 (8,124) (251.7%) (93.9%) (32,721) 62,520 (152.3%)
----------- ----------- ----------- ----------- -----------
Total net revenues $ 1,154,384 $ 1,204,758 $ 1,607,666 (4.2%) (28.2%) $ 4,001,228 $ 3,787,203 5.7%
=========== =========== =========== =========== ===========
PRE-TAX INCOME
Capital Markets $ 257,716 $ 196,028 $ 561,143 31.5% (54.1%) $ 1,092,452 $ 660,701 65.3%
Global Clearing Services 72,226 43,251 60,726 67.0% 18.9% 201,925 188,243 7.3%
Wealth Management (3,202) 9,750 8,681 (132.8%) (136.9%) 7,259 30,163 (75.9%)
Other (a) (81,536) (44,343) (111,098) (83.9%) 26.6% (263,453) (154,628) (70.4%)
----------- ----------- ----------- ----------- -----------
Total pre-tax income $ 245,204 $ 204,686 $ 519,452 19.8% (52.8%) $ 1,038,183 $ 724,479 43.3%
=========== =========== =========== =========== ===========
(a)Other is comprised of consolidation/elimination entries, unallocated revenues
(predominantly interest) and certain corporate administrative functions,
including certain legal costs and costs related to the Capital Accumulation Plan
(the "CAP Plan") for Senior Managing Directors.
-10-
THE BEAR STEARNS COMPANIES INC.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Three Months Ended % Change From
--------------------------------------- --------------------
August 31, August 31, May 31, August 31, May 31,
2002 2001 2002 2001 2002
------------ ------------ ------------ ---------- --------
(In thousands, except share and per share data)
REVENUES
Commissions $ 297,191 $ 266,958 $ 273,078 11.3% 8.8%
Principal transactions 556,892 551,156 705,791 1.0% (21.1%)
Investment banking 136,532 212,015 463,818 (35.6%) (70.6%)
Interest and dividends 543,653 1,233,861 584,522 (55.9%) (7.0%)
Other income 47,129 37,815 43,195 24.6% 9.1%
------------ ------------ ------------
Total revenues 1,581,397 2,301,805 2,070,404 (31.3%) (23.6%)
Interest expense 427,013 1,097,047 462,738 (61.1%) (7.7%)
------------ ------------ ------------
Revenues, net of interest expense 1,154,384 1,204,758 1,607,666 (4.2%) (28.2%)
------------ ------------ ------------
NON-INTEREST EXPENSES
Employee compensation and benefits 595,616 635,034 713,569 (6.2%) (16.5%)
Floor brokerage, exchange and clearance fees 56,644 41,773 48,438 35.6% 16.9%
Communications and technology 90,736 112,806 93,419 (19.6%) (2.9%)
Occupancy 35,476 40,483 37,229 (12.4%) (4.7%)
Advertising and market development 26,628 33,442 30,199 (20.4%) (11.8%)
Professional fees 29,878 47,446 31,771 (37.0%) (6.0%)
Other expenses 74,202 89,088 133,589 (16.7%) (44.5%)
------------ ------------ ------------
Total non-interest expenses 909,180 1,000,072 1,088,214 (9.1%) (16.5%)
------------ ------------ ------------
Income before provision for income taxes 245,204 204,686 519,452 19.8% (52.8%)
Provision for income taxes 80,786 70,114 176,600 15.2% (54.3%)
------------ ------------ ------------
Net income $ 164,418 $ 134,572 $ 342,852 22.2% (52.0%)
============ ============ ============
Net income applicable to common shares $ 156,094 $ 124,794 $ 333,538 25.1% (53.2%)
============ ============ ============
Adjusted net income used for diluted earnings per share (1) $ 178,994 $ 141,866 $ 381,533 26.2% (53.1%)
============ ============ ============
Basic earnings per share $ 1.32 $ 1.00 $ 2.80 32.0% (52.9%)
============ ============ ============
Diluted earnings per share $ 1.23 $ 0.95 $ 2.59 29.5% (52.5%)
============ ============ ============
Weighted average common and common equivalent shares
outstanding:
Basic 132,436,184 140,331,572 133,772,110
============ ============ ============
Diluted 145,895,494 149,056,301 147,592,256
============ ============ ============
Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.15
============ ============ ============
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the CAP Plan and a gain on the redemption of preferred
stock. For earnings per share, the costs related to the CAP Plan (net of tax)
are added back as the shares related to the CAP Plan are included in weighted
average shares outstanding.
-11-
THE BEAR STEARNS COMPANIES INC.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Nine Months Ended % Change
----------------------------- --------
August 31, August 31,
2002 2001
------------ -------------
(In thousands, except share and per share data)
REVENUES
Commissions $ 834,926 $ 840,126 (0.6%)
Principal transactions 1,923,433 1,863,296 3.2%
Investment banking 752,244 531,729 41.5%
Interest and dividends 1,726,808 3,536,204 (51.2%)
Other income 132,534 116,008 14.2%
------------ -------------
Total revenues 5,369,945 6,887,363 (22.0%)
Interest expense 1,368,717 3,100,160 (55.9%)
------------ -------------
Revenues, net of interest expense 4,001,228 3,787,203 5.7%
------------ -------------
NON-INTEREST EXPENSES
Employee compensation and benefits 1,942,827 2,005,800 (3.1%)
Floor brokerage, exchange and clearance fees 144,831 118,438 22.3%
Communications and technology 288,828 341,344 (15.4%)
Occupancy 116,911 109,033 7.2%
Advertising and market development 80,351 100,979 (20.4%)
Professional fees 95,473 132,727 (28.1%)
Other expenses 293,824 254,403 15.5%
------------ -------------
Total non-interest expenses 2,963,045 3,062,724 (3.3%)
------------ -------------
Income before provision for income taxes and cumulative
effect of change in accounting principle 1,038,183 724,479 43.3%
Provision for income taxes 350,387 254,460 37.7%
------------ -------------
Income before cumulative effect of change in accounting principle 687,796 470,019 46.3%
Cumulative effect of change in accounting principle, net of tax -- (6,273) --
------------ -------------
Net income $ 687,796 $ 463,746 48.3%
============ =============
Net income applicable to common shares $ 660,380 $ 434,411 52.0%
============ =============
Adjusted net income used for diluted earnings per share (1) $ 751,266 $ 492,455 52.6%
============ =============
Basic earnings per share $ 5.51 $ 3.34 (2) 65.0%
============ =============
Diluted earnings per share $ 5.10 $ 3.20 (2) 59.4%
============ =============
Weighted average common and common equivalent shares outstanding:
Basic 133,661,864 144,767,767
============ =============
Diluted 147,448,398 154,121,483
============ =============
Cash dividends declared per common share $ 0.45 $ 0.45
============ =============
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the CAP Plan and a gain on the redemption of preferred
stock. For earnings per share, the costs related to the CAP Plan (net of tax)
are added back as the shares related to the CAP Plan are included in weighted
average shares outstanding.
(2) Amount reflects earnings per share after the cumulative effect of a change
in accounting principle. Basic earnings per share and diluted earnings per share
before the cumulative effect of a change in accounting principle were $3.39 and
$3.24, respectively.
-12-
THE BEAR STEARNS COMPANIES INC.
-------------------------------
SELECTED FINANCIAL INFORMATION
------------------------------
(UNAUDITED)
-----------
Three Months Ended
-----------------------------------------------------------
August 31, May 31, February 28, November 30,
2002 2002 2002 2001
-----------------------------------------------------------
(In thousands, except per share amounts and Other Data)
Income Statement
- ----------------
Revenues, net of interest expense $ 1,154,384 $ 1,607,666 $ 1,239,178 $ 1,119,832
Net income $ 164,418 $ 342,852 $ 180,526 $ 154,946
Net income applicable to common shares $ 156,094 $ 333,538 $ 170,748 $ 145,168
Adjusted net income used for diluted earnings per share (1) $ 178,994 $ 381,533 $ 190,739 $ 157,118
Earnings per common share:
Basic $ 1.32 $ 2.80 $ 1.39 $ 1.14
Diluted $ 1.23 $ 2.59 $ 1.29 $ 1.08
Financial Ratios
- ----------------
Return on average common equity (annualized) 13.3% 29.5% 15.2% 13.9%
Adjusted pre-tax profit margin (3) 24.0% 36.3% 24.9% 20.6%
Pre-tax profit margin (4) 21.2% 32.3% 22.1% 18.7%
After-tax profit margin (5) 14.2% 21.3% 14.6% 13.8%
Compensation & benefits / Revenues, net of interest expense 51.6% 44.4% 51.1% 46.7%
Balance Sheet
- -------------
Stockholders' equity, at period end $ 5,954,431 $ 5,963,258 $ 5,760,905 $ 5,628,527
Total stockholders' equity and trust issued preferred securities,
at period end $ 6,516,931 $ 6,525,758 $ 6,323,405 $ 6,391,027
Total capital, at period end $ 29,567,725 $ 31,038,949 $ 31,063,625 $ 29,820,080
Book value per common share, at period end $ 38.10 $ 37.16 $ 34.95 $ 33.84
Other Data (in millions, except share and employee data)
- --------------------------------------------------------
Margin debt balances, at period end $ 32,500 $ 36,700 $ 34,600 $ 34,300
Margin debt balances, average for period $ 33,700 $ 35,900 $ 35,100 $ 32,500
Customer short balances, at period end $ 52,600 $ 55,800 $ 54,500 $ 55,000
Customer short balances, average for period $ 52,100 $ 56,900 $ 55,900 $ 51,400
Stock borrowed, at period end $ 37,800 $ 40,400 $ 37,300 $ 38,700
Stock borrowed, average for period $ 41,900 $ 45,400 $ 45,600 $ 43,500
Free credit balances, at period end $ 18,300 $ 16,600 $ 17,900 $ 18,100
Free credit balances, average for period $ 19,400 $ 18,500 $ 19,600 $ 21,400
Assets under management, at period end $ 23,200 $ 24,800 $ 25,800 $ 24,200
Employees, at period end 10,493 10,426 10,341 10,452
Common shares and common share equivalents outstanding,
at period end (6) 146,478,611 146,873,990 147,040,102 146,465,210
Weighted average common and common equivalent shares outstanding:
Basic 132,436,184 133,772,110 134,793,949 136,671,817
Diluted 145,895,494 147,592,256 148,115,050 145,040,061
Three Months Ended
--------------------------------------------
August 31, May 25, February 23,
2001 2001 2001
--------------------------------------------
(In thousands, except per share amounts and Other Data)
Income Statement
- ----------------
Revenues, net of interest expense $ 1,204,758 $ 1,368,658 $ 1,213,787
Net income $ 134,572 $ 169,493 $ 159,681
Net income applicable to common shares $ 124,794 $ 159,715 $ 149,903
Adjusted net income used for diluted earnings per share (1) $ 141,866 $ 183,046 $ 167,544
Earnings per common share:
Basic $ 1.00 $ 1.23 $ 1.11 (2)
Diluted $ 0.95 $ 1.18 $ 1.06 (2)
Financial Ratios
- ----------------
Return on average common equity (annualized) 12.2% 15.0% 13.6%
Adjusted pre-tax profit margin (3) 19.5% 22.5% 23.4%
Pre-tax profit margin (4) 17.0% 19.5% 20.8%
After-tax profit margin (5) 11.2% 12.4% 13.2%
Compensation & benefits / Revenues, net of interest expense 52.7% 53.7% 52.3%
Balance Sheet
- -------------
Stockholders' equity, at period end $ 5,148,394 $ 5,534,723 $ 5,621,405
Total stockholders' equity and trust issued preferred securities,
at period end $ 5,910,894 $ 6,297,223 $ 6,121,405
Total capital, at period end $ 28,655,969 $ 27,566,286 $ 25,768,270
Book value per common share, at period end $ 32.34 $ 32.57 $ 31.94
Other Data (in millions, except share and employee data)
- --------------------------------------------------------
Margin debt balances, at period end $ 34,600 $ 42,200 $ 37,600
Margin debt balances, average for period $ 38,300 $ 37,800 $ 42,000
Customer short balances, at period end $ 53,000 $ 61,400 $ 53,800
Customer short balances, average for period $ 56,200 $ 55,500 $ 59,100
Stock borrowed, at period end $ 39,300 $ 45,900 $ 41,400
Stock borrowed, average for period $ 46,100 $ 45,400 $ 49,300
Free credit balances, at period end $ 20,300 $ 15,900 $ 17,300
Free credit balances, average for period $ 19,700 $ 17,900 $ 18,300
Assets under management, at period end $ 23,500 $ 22,600 $ 21,500
Employees, at period end 11,147 10,855 11,298
Common shares and common share equivalents outstanding,
at period end (6) 149,669,365 156,485,942 159,125,959
Weighted average common and common equivalent shares outstanding:
Basic 140,331,572 145,455,590 149,080,028
Diluted 149,056,301 154,825,604 158,617,123
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the CAP Plan and a gain on the redemption of preferred
stock. For earnings per share, the costs related to the CAP Plan (net of tax)
are added back as the shares related to the CAP Plan are included in weighted
average shares outstanding.
(2) After the cumulative effect of a change in accounting principle.
(3) Represents the ratio of income before both CAP Plan costs and provision for
income taxes to revenues, net of interest expense.
(4) Represents the ratio of income before provision for income taxes to
revenues, net of interest expense.
(5) Represents the ratio of net income to revenues, net of interest expense.
(6) Represents shares used to calculate book value per common share.
-13-