SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8989
The Bear Stearns Companies Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3286161
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
245 Park Avenue, New York, New York 10167
(Address of principal executive offices) (Zip Code)
(212) 272-2000
(Registrant's telephone number, including area code)
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 that 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 [ ]
As of February 4, 1994, the latest practicable date, there were
113,460,460 shares outstanding of Common Stock, $1 par value.
EXPLANATORY NOTE
This report on Form 10-Q/A amends and restates in its entirety the
following item of the Quarterly Report on Form 10-Q of The Bear
Stearns Companies Inc. (the "Company") for the quarterly period
ended December 31, 1993.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Assets
December 31, June 30,
1993 1993
(Unaudited)
(In thousands, except share data)
Cash and cash equivalents $ 394,610 $ 317,886
Cash and securities deposited with
clearing organizations or
segregated in compliance with
Federal regulations 1,661,580 2,291,992
Securities purchased under agreements
to resell 21,095,107 16,038,657
Securities borrowed 16,207,024 16,721,404
Receivables
Customers 7,621,475 4,954,404
Brokers, dealers and others 1,966,650 1,016,068
Interest and dividends 113,811 109,217
Financial instruments owned-at
market value 17,696,398 15,214,510
Property, equipment and leasehold
improvements, net of accumulated
depreciation and amortization 250,357 238,936
Other assets 377,048 536,431
Total Assets $67,384,060 $57,439,505
See Notes to Consolidated Financial Statements.
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Liabilities and Stockholders' Equity
December 31, June 30,
1993 1993
(Unaudited)
(In thousands, except share data)
Short-term borrowings $ 9,160,216 $ 6,118,894
Securities sold under agreements
to repurchase 26,765,923 22,058,354
Securities loaned 497,956 565,584
Payables
Customers 14,972,027 13,038,380
Broker, dealers and others 1,048,952 1,595,098
Interest and dividends 186,068 177,948
Financial instruments sold, but not
yet purchased - at market value 8,971,341 8,973,839
Accrued employee compensation and benefits 440,818 469,376
Other liabilities and accrued expenses 675,443 782,379
62,718,744 53,779,852
Commitments and contingencies
Long-term borrowings 2,624,897 1,883,123
Stockholders' Equity
Preferred stock, $1.00 par value;
10,000,000 shares authorized:
Adjustable Rate Cumulative Preferred
Stock, Series A - $50 liquidation
preference; 3,000,000 shares issued 150,000 150,000
Cumulative Preferred Stock, Series B-$200
liquidation preference; 937,500 shares
issued and outstanding 187,500 187,500
Cumulative Preferred Stock, Series C-$200
liquidation preference; 500,000 shares
issued and outstanding 100,000
Common stock, $1.00 par value;
200,000,000 shares authorized;
138,072,022 and 131,507,178 shares issued
at December 31, and June 30, 1993,
respectively 138,072 131,507
Paid-in capital 1,345,753 1,225,557
Retained earnings 393,740 328,414
Capital Accumulation Plan 138,331 138,331
Treasury stock, at cost -
Adjustable Rate Cumulative Preferred
Stock, Series A - 2,118,550 (85,507) (85,507)
Common Stock - 24,399,771 and 22,203,018
shares at December 31, and June 30,
1993, respectively (291,953) (263,755)
Note receivable from ESOP Trust (35,517) (35,517)
Total Stockholders' Equity 2,040,419 1,776,530
Total Liabilities and Stockholders' Equity $67,384,060 $57,439,505
See Notes to Consolidated Financial Statements.
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31, December 31, December 31,
1993 1992 1993 1992
(In thousands, except share data)
Revenues
Commissions $ 129,518 $ 105,453 $ 237,116 $ 190,339
Principal transactions 363,443 230,475 650,213 478,209
Investment banking 176,953 63,183 296,123 125,557
Interest and dividends 326,461 228,046 573,460 436,207
Other income 6,182 5,412 17,363 7,180
Total revenues 1,002,557 632,569 1,774,275 1,237,492
Interest expense 250,452 177,887 434,458 343,058
Revenues, net of
interest expense 752,105 454,682 1,339,817 894,434
Non-interest expenses
Employee compensation
and benefits 379,427 231,756 668,800 449,063
Floor brokerage, exchange
and clearance fees 24,451 21,381 47,461 38,676
Communications 18,703 14,704 34,972 29,122
Occupancy 18,154 17,364 37,098 34,463
Depreciation and
amortization 11,723 10,354 22,678 20,824
Advertising and market
development 13,616 9,253 23,872 18,038
Data processing and
equipment 7,229 5,994 13,621 14,368
Other expenses 46,888 33,023 81,409 70,483
Total non-interest
expenses 520,191 343,829 929,911 675,037
Income before provision
for income taxes 231,914 110,853 409,906 219,397
Provision for income taxes 97,101 46,559 170,790 92,147
Net income $ 134,813 $ 64,294 $ 239,116 $ 127,250
Net income applicable to
common shares $ 130,314 $ 62,830 $ 230,222 $ 130,156
Earnings per share $ 1.05 $ .52 $ 1.86 $ 1.07
Weighted average common
and common equivalent
shares outstanding 123,602,326 120,687,740 123,845,830 121,496,033
Cash dividends declared
per common share $ 0.15 $ 0.15 $ 0.30 $ 0.30
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31, December 31,
1993 1992
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 239,116 $ 127,250
Adjustments to reconcile net income to
cash used for operating activities:
Depreciation and amortization 22,678 20,824
Deferred income taxes (28,150) 13,449
Other 4,856 24,642
(Increases) decreases in operating receivables:
Securities borrowed 514,380 (2,144,229)
Brokers, dealers and others (950,852) (654,144)
Customers (2,667,071) (124,471)
Other (22,810) 99,707
Increases (decreases) in operating payables:
Securities loaned (67,628) (936,535)
Brokers, dealers and others (545,738) 285,477
Customers 1,933,647 2,246,801
Other 8,120 (76,457)
(Increases) decreases in:
Cash and securities deposited with clearing
organizations or segregated in compliance
with Federal regulations 630,412 (236,520)
Securities purchased under agreements to resell (5,056,450) (9,678,738)
Financial instruments owned (2,481,888) 381,751
Other assets 179,669 (62,809)
Increases (decreases) in:
Securities sold under agreements to repurchase 4,707,569 9,290,186
Financial instruments sold, but not
yet purchased (2,498) 195,750
Accrued employee compensation and benefits (34,504) (187,370)
Other liabilities and accrued expenses (79,777) 113,284
Cash used in operating activities (3,696,919) (1,302,152)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from short-term borrowings 3,041,322 1,156,653
Issuance of long-term borrowings 739,792 243,575
Net proceeds from issuance of Cumulative
Preferred Stock, Series C 96,788
Other common stock transactions 2,740 1,545
Note repayment from ESOP trust 4,483
Payments for:
Retirement of Subordinated Notes (500) (500)
Treasury stock purchases (30,334) (71,757)
Cash dividends paid (44,862) (31,588)
Cash provided by financing activities 3,804,946 1,302,411
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, equipment and leasehold
improvements, net (34,099) (27,326)
Purchases of investment securities and other assets (300) (575)
Proceeds from sale of investment securities and
other assets 3,096 108,601
Cash used in (provided by) investing activities (31,303) 80,700
Net increase in cash and cash equivalents 76,724 80,959
Cash and cash equivalents, beginning of period 317,886 124,088
Cash and cash equivalents, end of period $ 394,610 $ 205,047
See Notes to Consolidated Financial Statements.
THE BEAR STEARNS COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of The Bear Stearns Companies Inc. and its subsidiaries (the
"Company") and have been prepared pursuant to the Securities and Exchange
Commission's rules and regulations. The consolidated financial statements
reflect all adjustments which, in the opinion of management, are normal
and recurring and are necessary for a fair statement of the results for
the interim periods presented. All material intercompany balances and
transactions have been eliminated. The nature of the company's business
is such that the results of any interim period may not be indicative of
the results to be expected for a full fiscal year. Certain prior period
amounts have been reclassified to conform with the current period's
presentation.
2. FINANCIAL INSTRUMENTS - AT FAIR VALUE
Financial instruments owned and financial instruments sold, but not yet
purchased, consist of the Company's proprietary trading and investment
accounts, at fair value, as follows (in thousands):
December 31, June 30,
1993 1993
Financial instruments owned:
United States government and agency $ 5,926,161 $ 7,644,206
Non-U.S. government 607,569 432,008
State and municipal 235,296 234,503
Corporate equity 3,061,489 1,602,077
Corporate debt 4,253,059 3,365,013
Mortgages and mortgage-backed 3,138,823 1,663,842
Other 474,001 272,861
$ 17,696,398 $15,214,510
Financial instruments sold, but not
yet purchased:
United States government and agency $ 5,070,563 $ 5,879,085
Non-U.S. government 429,595 82,281
Corporate equity 2,521,576 2,091,996
Corporate debt 515,954 490,563
Other 433,653 429,914
$ 8,971,341 $ 8,973,839
3. COMMITMENTS AND CONTINGENCIES
At December 31, 1993, the Company is contingently liable for unsecured
letters of credit of approximately $560,722,000 and letters of credit of
approximately $53,000,000 secured by financial instruments owned by the
Company, which are principally used as deposits for securities borrowed
and to satisfy margin deposits at option and commodity exchanges.
THE BEAR STEARNS COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. COMMITMENTS AND CONTINGENCIES - (continued)
In the normal course of its business, the Company enters into transactions
in a variety of financial instruments in order to meet the financing and
hedging needs of its customers, to reduce its own exposure to market,
currency and interest rate risks and in connection with its proprietary
market-making and trading activities. These financial instruments include
forward and futures contracts, interest rate swaps and the writing of
options, including interest rate caps and floors. The settlement of these
transactions is not expected to have a material effect on the consolidated
financial condition of the Company as of December 31, 1993.
In the normal course of business, the Company has been named as a defendant
in several lawsuits which involve claims for substantial amounts. Although
the ultimate outcome of these suits cannot be ascertained at this time, it
is the opinion of management, after consultation with counsel, that the
resolution of such suits will not have a material adverse effect on the
consolidated financial condition of the Company.
4. NET CAPITAL REQUIREMENTS
The Company's principal operating subsidiary, Bear, Stearns & Co. Inc.
("Bear Stearns") and Bear Stearns' wholly-owned subsidiary, Bear, Stearns
Securities Corp. ("BSSC"), are registered broker-dealers and, accordingly,
are subject to Securities and Exchange Commission Rule 15c3-1 (the "Net
Capital Rule") and the capital rules of the New York Stock Exchange, Inc.
("NYSE") and other principal exchanges of which Bear Stearns and BSSC are
members. Bear Stearns and BSSC have consistently operated in excess of the
minimum net capital requirements imposed by the capital rules. Included in
the computation of net capital of Bear Stearns, is net capital of BSSC in
excess of 5% of aggregate debit items arising from customer transactions, as
defined. At December 31, 1993, Bear Stearns' net capital of $876,050,392,
exceeded the minimum requirement by $865,515,679.
Bear, Stearns International Limited ("BSIL") and Bear Stearns International
Trading Limited ("BSIT") wholly-owned London-based subsidiaries, are subject
to regulatory capital requirements of the Securities and Futures Authority.
BSIL and BSIT have consistently operated in excess of these requirements.
THE BEAR STEARNS COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. EARNINGS PER SHARE
Earnings per share is computed by dividing net income applicable to common
shares and the weighted average number of shares of Common Stock and common
stock equivalents outstanding during each period presented. Common stock
equivalents include the assumed distribution of shares of Common Stock
issuable under certain of the Company's deferred compensation arrangements
with appropriate adjustments made to net income for earnings accruals
related thereto. Additionally, shares of Common Stock issued or issuable
under various employee benefit plans are included as common stock
equivalents.
6. CASH FLOW INFORMATION
Cash payments for interest approximated interest expense for the six months
ended December 31, 1993 and 1992, respectively. Income taxes paid totaled
$150,467,000 and $79,945,000 for the six months ended December 31, 1993 and
1992, respectively. Noncash financing activities totaled $2,438,000 for the
six months ended December 31, 1993.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by
the undersigned thereunto duly authorized.
The Bear Stearns Companies Inc.
(Registrant)
Date : February 14, 1994 By: /s/ Samuel L. Molinaro, Jr.
Samuel L. Molinaro, Jr.
Senior Vice
President - Finance and
Chief Accounting Officer