THE BEAR STEARNS COMPANIES INC.
-------------------------------
SEGMENT DATA
------------
(UNAUDITED)
-----------
Three Months Ended % Change From Six Months Ended % Change
------------------------------------- --------------------- -------------------------- --------
May 31, May 31, February 28, May 31, February 28, May 31, May 31,
2003 2002 2003 2002 2003 2003 2002
----------- ----------- ----------- -------- --------- ----------- -----------
(In thousands) (In thousands)
NET REVENUES
Capital Markets
Institutional Equities $ 189,346 $ 301,256 $ 276,461 (37.1%) (31.5%) $ 465,807 $ 546,742 (14.8%)
Fixed Income 765,190 518,610 791,217 47.5% (3.3%) 1,556,407 1,066,804 45.9%
Investment Banking 223,439 483,075 187,764 (53.7%) 19.0% 411,203 626,825 (34.4%)
----------- ----------- ----------- ----------- -----------
Total Capital Markets 1,177,975 1,302,941 1,255,442 (9.6%) (6.2%) 2,433,417 2,240,371 8.6%
Global Clearing Services 187,405 201,377 175,778 (6.9%) 6.6% 363,183 406,288 (10.6%)
Wealth Management 124,405 126,701 115,585 (1.8%) 7.6% 239,990 249,912 (4.0%)
Other (1) (27,065) (23,353) (31,371) (15.9%) 13.7% (58,436) (49,727) (17.5%)
----------- ----------- ----------- ----------- -----------
Total net revenues $ 1,462,720 $ 1,607,666 $ 1,515,434 (9.0%) (3.5%) $ 2,978,154 $ 2,846,844 4.6%
=========== =========== =========== =========== ===========
PRE-TAX INCOME
Capital Markets $ 483,971 $ 561,143 $ 465,919 (13.8%) 3.9% $ 949,890 $ 834,736 13.8%
Global Clearing Services 37,798 65,868 52,150 (42.6%) (27.5%) 89,948 143,100 (37.1%)
Wealth Management 4,948 8,681 5,719 (43.0%) (13.5%) 10,667 10,461 2.0%
Other (1) (98,587) (116,240) (98,589) 15.2% 0.0% (197,176) (195,318) (1.0%)
----------- ----------- ----------- ----------- -----------
Total pre-tax income $ 428,130 $ 519,452 $ 425,199 (17.6%) 0.7% $ 853,329 $ 792,979 7.6%
=========== =========== =========== =========== ===========
(1)Includes consolidation and elimination entries, unallocated revenues
(predominantly interest) and certain corporate administrative functions,
including certain legal costs and costs related to the Capital Accumulation Plan
for Senior Managing Directors ("CAP Plan").
Note: Certain reclassifications have been made to prior period amounts to
conform to the current period's presentation.
11
THE BEAR STEARNS COMPANIES INC.
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CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Three Months Ended % Change From
---------------------------------------------- ---------------------------
May 31, May 31, February 28, May 31, February 28,
2003 2002 2003 2002 2003
------------ ------------ ------------ ----------- -----------
(In thousands, except share and per share data)
REVENUES
Commissions $ 267,682 $ 273,078 $ 241,915 (2.0%) 10.7%
Principal transactions 809,915 705,791 968,464 14.8% (16.4%)
Investment banking 212,550 463,818 167,583 (54.2%) 26.8%
Interest and dividends 522,565 584,522 434,159 (10.6%) 20.4%
Other income 37,500 43,195 25,794 (13.2%) 45.4%
------------ ------------ ------------
Total revenues 1,850,212 2,070,404 1,837,915 (10.6%) 0.7%
Interest expense 387,492 462,738 322,481 (16.3%) 20.2%
------------ ------------ ------------
Revenues, net of interest expense 1,462,720 1,607,666 1,515,434 (9.0%) (3.5%)
------------ ------------ ------------
NON-INTEREST EXPENSES
Employee compensation and benefits 692,181 713,569 757,889 (3.0%) (8.7%)
Floor brokerage, exchange and clearance fees 47,540 48,438 44,680 (1.9%) 6.4%
Communications and technology 90,744 93,419 92,740 (2.9%) (2.2%)
Occupancy 33,088 37,229 34,943 (11.1%) (5.3%)
Advertising and market development 27,507 30,199 25,210 (8.9%) 9.1%
Professional fees 28,995 31,771 28,453 (8.7%) 1.9%
Other expenses 114,535 133,589 106,320 (14.3%) 7.7%
------------ ------------ ------------
Total non-interest expenses 1,034,590 1,088,214 1,090,235 (4.9%) (5.1%)
------------ ------------ ------------
Income before provision for income taxes 428,130 519,452 425,199 (17.6%) 0.7%
Provision for income taxes 147,719 176,600 150,946 (16.4%) (2.1%)
------------ ------------ ------------
Net income $ 280,411 $ 342,852 $ 274,253 (18.2%) 2.2%
============ ============ ============
Net income applicable to common shares $ 272,616 $ 333,538 $ 266,261 (18.3%) 2.4%
============ ============ ============
Adjusted net income used for diluted earnings
per share (1) $ 299,533 $ 381,533 $ 293,756 (21.5%) 2.0%
============ ============ ============
Basic earnings per share $ 2.27 $ 2.80 $ 2.21 (18.9%) 2.7%
============ ============ ============
Diluted earnings per share $ 2.05 $ 2.59 $ 2.00 (20.8%) 2.5%
============ ============ ============
Weighted average common shares outstanding:
Basic 128,711,363 133,772,110 129,773,603
============ ============ ============
Diluted 146,062,838 147,592,256 147,029,224
============ ============ ============
Cash dividends declared per common share $ 0.17 $ 0.15 $ 0.17
============ ============ ============
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the CAP Plan and 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
common shares outstanding.
12
THE BEAR STEARNS COMPANIES INC.
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CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Six Months Ended % Change
----------------------------- -----------
May 31, May 31,
2003 2002
------------ ------------
(In thousands, except share and per share data)
REVENUES
Commissions $ 509,597 $ 537,735 (5.2%)
Principal transactions 1,778,379 1,366,541 30.1%
Investment banking 380,133 615,712 (38.3%)
Interest and dividends 956,724 1,183,155 (19.1%)
Other income 63,294 85,405 (25.9%)
------------ ------------
Total revenues 3,688,127 3,788,548 (2.7%)
Interest expense 709,973 941,704 (24.6%)
------------ ------------
Revenues, net of interest expense 2,978,154 2,846,844 4.6%
------------ ------------
NON-INTEREST EXPENSES
Employee compensation and benefits 1,450,070 1,347,211 7.6%
Floor brokerage, exchange and clearance fees 92,220 88,187 4.6%
Communications and technology 183,484 198,092 (7.4%)
Occupancy 68,031 81,435 (16.5%)
Advertising and market development 52,717 53,723 (1.9%)
Professional fees 57,448 65,595 (12.4%)
Other expenses 220,855 219,622 0.6%
------------ ------------
Total non-interest expenses 2,124,825 2,053,865 3.5%
------------ ------------
Income before provision for income taxes 853,329 792,979 7.6%
Provision for income taxes 298,665 269,601 10.8%
------------ ------------
Net income $ 554,664 $ 523,378 6.0%
============ ============
Net income applicable to common shares $ 538,878 $ 504,286 6.9%
============ ============
Adjusted net income used for diluted earnings per share (1) $ 593,290 $ 572,272 3.7%
============ ============
Basic earnings per share $ 4.48 $ 4.18 7.2%
============ ============
Diluted earnings per share $ 4.05 $ 3.87 4.7%
============ ============
Weighted average common shares outstanding:
Basic 129,240,413 134,280,242
============ ============
Diluted 146,608,993 148,011,523
============ ============
Cash dividends declared per common share $ 0.34 $ 0.30
============ ============
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the CAP Plan and 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
common shares outstanding.
13
THE BEAR STEARNS COMPANIES INC.
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SELECTED FINANCIAL INFORMATION
------------------------------
(UNAUDITED)
-----------
Three Months Ended
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May 31, February 28, November 30,
2003 2003 2002
----------------------------------- ----------------
(In thousands, except common share data and other data)
Operating Results
- -----------------
Revenues, net of interest expense $ 1,462,720 $ 1,515,434 $ 1,127,008
Net income $ 280,411 $ 274,253 $ 190,549
Net income applicable to common shares $ 272,616 $ 266,261 $ 182,359
Adjusted net income used for diluted earnings per share (1) $ 299,533 $ 293,756 $ 195,268
Financial Position
- ------------------
Stockholders' equity, at period end $ 6,714,397 $ 6,529,628 $ 6,382,083
Total stockholders' equity and trust issued preferred securities,
at period end $ 7,276,897 $ 7,092,128 $ 6,944,583
Total capital, at period end $ 33,520,967 $ 31,987,917 $ 30,625,982
Common Share Data
- -----------------
Basic earnings per share $ 2.27 $ 2.21 $ 1.48
Diluted earnings per share $ 2.05 $ 2.00 $ 1.36
Book value per common share, at period end $ 43.52 $ 41.64 $ 39.94
Weighted average common shares outstanding:
Basic 128,711,363 129,773,603 130,133,459
Diluted 146,062,838 147,029,224 143,798,762
Common shares outstanding, at period end (2) 146,915,258 146,659,224 145,591,496
Financial Ratios
- ----------------
Return on average common equity (annualized) 19.7% 19.9% 14.5%
Adjusted pre-tax profit margin (3) 32.4% 31.2% 26.2%
Pre-tax profit margin (4) 29.3% 28.1% 24.2%
After-tax profit margin (5) 19.2% 18.1% 16.9%
Compensation & benefits/Revenues, net of interest expense 47.3% 50.0% 50.2%
Other Data (in billions, except employees)
- ------------------------------------------
Margin debt balances, at period end $ 43.4 $ 37.3 $ 36.7
Margin debt balances, average for period $ 39.0 $ 35.9 $ 31.7
Customer short balances, at period end $ 65.5 $ 55.9 $ 58.8
Customer short balances, average for period $ 61.4 $ 56.3 $ 53.5
Stock borrowed, at period end $ 49.8 $ 41.6 $ 46.2
Stock borrowed, average for period $ 48.5 $ 45.0 $ 43.4
Free credit balances, at period end $ 18.6 $ 16.7 $ 17.1
Free credit balances, average for period $ 18.8 $ 18.4 $ 19.8
Assets under management, at period end $ 24.4 $ 23.3 $ 24.0
Employees, at period end 10,472 10,506 10,574
Three Months Ended
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August 31, May 31, February 28,
2002 2002 2002
-------------------------------------------------------
(In thousands, except common share data and other data)
Operating Results
- -----------------
Revenues, net of interest expense $ 1,154,384 $ 1,607,666 $ 1,239,178
Net income $ 164,418 $ 342,852 $ 180,526
Net income applicable to common shares $ 156,094 $ 333,538 $ 170,748
Adjusted net income used for diluted earnings per share (1) $ 178,994 $ 381,533 $ 190,739
Financial Position
- ------------------
Stockholders' equity, at period end $ 5,954,431 $ 5,963,258 $ 5,760,905
Total stockholders' equity and trust issued preferred securities,
at period end $ 6,516,931 $ 6,525,758 $ 6,323,405
Total capital, at period end $ 29,567,725 $ 31,038,949 $ 31,063,625
Common Share Data
- -----------------
Basic earnings per share $ 1.32 $ 2.80 $ 1.39
Diluted earnings per share $ 1.23 $ 2.59 $ 1.29
Book value per common share, at period end $ 38.10 $ 37.16 $ 34.95
Weighted average common shares outstanding:
Basic 132,436,184 133,772,110 134,793,949
Diluted 145,895,494 147,592,256 148,115,050
Common shares outstanding, at period end (2) 146,478,611 146,873,990 147,040,102
Financial Ratios
- ----------------
Return on average common equity (annualized) 13.3% 29.5% 15.2%
Adjusted pre-tax profit margin (3) 24.0% 36.3% 24.9%
Pre-tax profit margin (4) 21.2% 32.3% 22.1%
After-tax profit margin (5) 14.2% 21.3% 14.6%
Compensation & benefits/Revenues, net of interest expense 51.6% 44.4% 51.1%
Other Data (in billions, except employees)
- ------------------------------------------
Margin debt balances, at period end $ 32.5 $ 36.7 $ 34.6
Margin debt balances, average for period $ 33.7 $ 35.9 $ 35.1
Customer short balances, at period end $ 52.6 $ 55.8 $ 54.5
Customer short balances, average for period $ 52.1 $ 56.9 $ 55.9
Stock borrowed, at period end $ 40.6 $ 43.3 $ 39.8
Stock borrowed, average for period $ 41.9 $ 45.4 $ 45.6
Free credit balances, at period end $ 18.3 $ 16.6 $ 17.9
Free credit balances, average for period $ 19.4 $ 18.5 $ 19.6
Assets under management, at period end $ 23.2 $ 24.8 $ 25.8
Employees, at period end 10,493 10,426 10,341
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the CAP Plan and 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
common shares outstanding.
(2) Represents shares used to calculate book value per common share. Common
shares outstanding include units issued under certain stock compensation plans
which will be distributed as shares of common stock.
(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.
14