EXHIBITS 99.4
CREDIT SUISSE FIRST BOSTON (USA), INC.
INDEX TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
PAGE NUMBER
-----------
Introduction..................................................................................... 37
Pro Forma Combined Condensed Financial Statements - Credit Suisse First Boston
(USA), Inc.
Pro Forma Combined Condensed Statement of Financial Condition as of June 30,
2000 (Unaudited).......................................................................... 39
Pro Forma Combined Condensed Statement of Income for the six months ended
June 30, 2000 (Unaudited)................................................................. 41
Pro Forma Combined Condensed Statement of Income for the year ended December
31, 1999 (Unaudited)...................................................................... 42
Notes to Pro Forma Combined Condensed Financial Statements (Unaudited)...................... 43
CREDIT SUISSE FIRST BOSTON (USA), INC.
Pro Forma Combined Condensed Financial Statements (UNAUDITED)
INTRODUCTION
On November 3, 2000, Credit Suisse First Boston (USA), Inc., formerly known
as Donaldson, Lufkin & Jenrette, Inc. (the "Company"), became an indirect
wholly owned subsidiary of Credit Suisse Group ("CSG"), a corporation
organized under the laws of Switzerland, upon completion of a number of
related transactions (such transactions, collectively, the "Transaction").
In conjunction with the closing of the Transaction, also on November 3, 2000,
Credit Suisse First Boston, Inc. ("CSFBI"), a wholly owned subsidiary of CSG,
transferred all of the outstanding shares of Credit Suisse First Boston
Corporation ("CSFB Corp."), a U.S. registered broker dealer that is a wholly
owned subsidiary of CSFBI, to the Company in exchange for newly issued Shares
of the Company. This was the final step in a series of transfers
(collectively, the "Transfer") that was initiated by CSG and the Company on
October 6, 2000 with a view to integrating their respective businesses. As a
result of the Transfer, CSFB Corp. became a direct wholly owned subsidiary of
the Company. Since the Transfer is a transfer of assets and liabilities
between entities under common control it will be accounted for at historical
cost in a manner similar to a pooling of interests. Certain U.S., and all
non-U.S., operations of the Credit Suisse First Boston Business Unit are not
conducted through CSFB Corp. and, as a result, the financial positions and
results of such operations are not included in the combined businesses of the
Company resulting from the Transfer.
The following unaudited pro forma combined condensed financial statements of the
Company have been prepared in connection with the Transfer, and are intended to
illustrate the possible scope of the change in the Company's historical
financial position and results of operations caused by the Transfer. The pro
forma financial statements are not intended to illustrate any possible effects
on the Company that are not associated with the Transfer. In particular, the pro
forma financial statements are not intended to illustrate any possible effects
on the Company that are associated with or incidental to the Transaction through
which the Company has been acquired by CSG. However, certain preliminary
information with respect to the expected accounting treatment of the Transaction
and its possible effects on the Company's financial statements is set forth
below under "Certain Information Regarding the Acquisition of the Company by
Credit Suisse Group."
The unaudited pro forma combined condensed financial statements are based on
the Company's historical consolidated financial statements adjusted to give
effect to the Transfer. The unaudited pro forma combined condensed statements
of income of the Company for the year ended December 31, 1999 and for the six
month period ended June 30, 2000 present results for the Company as if the
Transfer had occurred as of January 1, 1999. The unaudited pro forma combined
condensed statement of financial condition as of June 30, 2000 gives effect
to the Transfer as if it had occurred as of June 30, 2000. This information
is presented for illustrative purposes only. The Company's financial
statements will reflect the effects of the Transfer only from November 3,
2000, the date on which it was actually completed. In addition, the results
of operations for the first six months ended June 30, 2000 may not be
indicative of results of operations for the year ended December 31, 2000 due
to the effects of the Transaction and market and other conditions in the
second half of the year ended December 31, 2000.
The unaudited pro forma combined condensed financial information does not
purport to represent what the Company's financial position or results of
operations actually would have been had the Transfer in fact occurred on the
dates indicated, or to project the Company's financial position or results of
operations for any future date or period. The Company's actual financial
position and results of operations will differ, perhaps significantly, from the
pro forma amounts reflected herein because of a variety of factors, including
those described below under "Certain Information Regarding the Acquisition of
the Company by CSG."
The pro forma adjustments are based on currently available information and
certain assumptions that the Company currently believes are reasonable in the
circumstances. The unaudited pro forma combined condensed financial
information should be read in conjunction with the audited consolidated
financial statements of the Company and notes thereto as filed on Form 10-K
as of and for the year ended December 31, 1999, and the unaudited
consolidated financial statements and accompanying notes thereto of the
Company as filed on Form 10-Q as of and for the six-month period ended June
30, 2000, both of which are hereby incorporated by reference; and the audited
consolidated financial statements of CSFB Corp. as of December 31, 1999 and
1998 and for the three-year period ended December 31, 1999, and the unaudited
condensed consolidated financial statements of CSFB Corp. as of June 30, 2000
and for the six-month periods ended June 30, 2000 and 1999, both of which are
included elsewhere herein.
1
CREDIT SUISSE FIRST BOSTON (USA), INC.
Pro Forma Combined Condensed Financial Statements (UNAUDITED)
CERTAIN INFORMATION REGARDING THE ACQUISITION OF THE COMPANY BY CREDIT SUISSE
GROUP
The unaudited pro forma combined condensed financial statements are intended
to illustrate only certain possible effects of the Transfer through which the
Company acquired CSFB Corp.; they are not intended to illustrate any of the
possible effects of the Transaction through which CSG acquired the Company.
As a result, the pro forma financial statements and the notes thereto do not
reflect or describe a number of factors associated with the Transaction that
could affect the Company's actual results of operations and financial
position such as those described herein.
Set forth below is certain preliminary information with respect to the expected
effects of the Transaction on the Company's results of operations and financial
position. This description is based on currently available information and
reflects certain important assumptions. The actual effect of the Transaction on
the Company's results of operations and financial position has not yet been
determined and could differ in significant respects from the description below.
Moreover, the information set forth below is not intended to be exhaustive.
Other factors associated with the Transaction that are not described below may
affect the Company's results of operations and financial position, and such
effects could be significant.
o ACCOUNTING TREATMENT OF THE TRANSACTION. CSG will account for the
acquisition of the Company through the Transaction using the purchase
method of accounting. However, because the Company will continue to
have significant preferred stock and public debt outstanding, no
adjustments of the historical carrying values of the Company's assets
and liabilities to reflect the Transaction will be recorded in the
Company's historical financial statements. Similarly, although the
Transaction will give rise to significant goodwill, none of this
goodwill will be "pushed down" to the Company and thus goodwill
associated with the Transaction will not be recorded in the Company's
financial statements.
o EFFECT OF THE TRANSACTION ON OUTSTANDING SECURITIES OF THE COMPANY.
Through the Transaction, CSG and its subsidiaries acquired 100% of the
voting shares of the Company (that is, the common stock of the Company
of the series designated Donaldson, Lufkin & Jenrette, Inc. - DLJ
Common Stock, par value $.10 per share) (the "Shares"). The Company's
DLJdirect tracking stock (that is, the common stock of the Company of
the series designated Donaldson, Lufkin & Jenrette, Inc. - DLJdirect
Common Stock, par value $.10 per share) and all other securities of the
Company outstanding prior to the completion of the Transaction were not
directly affected by the Transaction and remain outstanding, other than
the Shares and certain debt securities that were redeemed in connection
with the Transfer as reflected in the pro forma financial statements.
Options to acquire Shares were converted in the Transaction into
options to acquire CSG shares.
o RESTRUCTURING CHARGES TO BE RECORDED BY THE COMPANY. The Company
currently anticipates that it will record restructuring charges,
on a pre-tax basis, in connection with the Transaction of between
$900 million and $1.2 billion. This is a preliminary estimate, and it
is possible that the final restructuring charge may be outside the
range. The expected restructuring charges are primarily associated
with severance payments to employees, elimination of redundant office
facilities and write-off of related assets.
o RETENTION PLAN AND OTHER RETENTION CHARGES TO BE RECORDED BY THE
COMPANY. In connection with the Transaction, a retention plan has been
put in place for certain of the Company's employees. The retention plan
provides for grants of CSG shares for future services above current
compensation levels. The CSG shares granted for future services vest
over a three-year period, and the total expense associated with these
grants is expected to be approximately $1.2 billion, which will be
expensed over the vesting period. This amount will be recorded as
compensation expense in the Company's statements of income for the
corresponding future periods.
o RELATED PARTY TRANSACTION. In conjunction with the Transaction, CSG and
its subsidiaries obtained a $3.1 billion loan from the Company that
matures on November 1, 2001 and bears interest at a spread above
six-month LIBOR. On this aggregate loan amount, $1.9 billion was
applied in connection with the Transaction to the purchase of Shares
held by AXA, S.A., formerly the Company's ultimate parent, and certain
of its affiliates (the "AXA Entities") pursuant to a Stock Purchase
Agreement dated as of August 30, 2000, as amended. The remaining $1.2
billion was applied to the purchase by CSFBI from the AXA Entities on
November 6, 2000 of certain shares of Credit Suisse Group, also
pursuant to this Stock Purchase Agreement, which shares will be used
by CSFBI in connection with the retention plan that has been put in
place in connection with the Transaction.
2
CREDIT SUISSE FIRST BOSTON (USA), INC.
Pro Forma Combined Condensed Statement of Financial Condition (UNAUDITED)
June 30, 2000
(IN MILLIONS, EXCEPT FOR SHARE and PER SHARE DATA)
Credit Suisse
Credit Suisse First Boston
First Boston (USA), Inc.
(USA), Inc. CSFB Corp. Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- --------
ASSETS
Cash and cash equivalents................................. $ 1,794 $ 275 $ (245) (D) $ 1,823
(1) (C)
Cash and securities segregated for regulatory
purposes or deposited with clearing organizations...... 154 3,586 3,740
Collateralized short-term agreements:
Securities purchased under agreements to resell........ 28,282 28,346 (1,762) (A) 54,866
Securities borrowed.................................... 34,892 62,707 (743) (A) 96,856
Securities pledged as collateral.......................... -- 2,253 2,253
Receivables:
Customers.............................................. 10,743 804 11,547
Brokers, dealers and other............................. 10,228 6,171 (3) (A) 16,367
(29) (C)
Financial instruments owned, at value:
U.S. government and agencies........................... 13,920 8,071 (5) (C) 21,986
Corporate debt......................................... 5,863 8,612 14,475
Non-U.S. government securities......................... 2,141 207 2,348
Mortgage whole loans................................... 3,072 -- 3,072
Equities and other..................................... 2,402 12,001 (1) (C) 14,402
Long-term corporate development investments............ 1,493 -- (21) (C) 1,472
Office facilities, at cost (net of accumulated
depreciation and amortization)......................... 663 217 880
Goodwill (net of amortization)............................ 57 279 336
Other assets and deferred amounts......................... 2,309 567 (15) (C) 2,867
6 (D)
--------- --------- --------- ---------
Total Assets.............................................. $ 118,013 $ 134,096 $ (2,819) $ 249,290
========= ========= ========= =========
See accompanying notes to pro forma combined condensed financial statements.
3
CREDIT SUISSE FIRST BOSTON (USA), INC.
Pro Forma Combined Condensed Statement of Financial Condition (UNAUDITED)
June 30, 2000
(IN MILLIONS, EXCEPT FOR SHARE AND PER SHARE DATA)
Credit Suisse
Credit Suisse First Boston
First Boston (USA), Inc.
(USA), Inc. CSFB Corp. Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Commercial paper and short-term borrowings ..................... $ 1,048 $ 8,535 $ $ 9,583
Collateralized short-term financings:
Securities sold under agreements to repurchase ............. 52,086 46,106 (1,762)(A) 96,430
Securities loaned .......................................... 14,151 37,800 (743)(A) 51,208
Obligation to return pledged securities ........................ -- 1,394 1,394
Payables:
Customers .................................................. 7,480 4,281 11,761
Brokers, dealers and other ................................. 9,615 7,276 (3)(A) 16,888
Financial instruments sold not yet purchased, at value:
U.S. government and agencies ............................... 11,039 15,650 26,689
Non-U.S. government securities ............................. -- 249 249
Corporate debt ............................................. 835 2,337 3,172
Equities and other ......................................... 6,061 2,057 8,118
Accounts payable and accrued expenses .......................... 2,616 2,039 (3)(D) 4,628
(24)(C)
Other liabilities .............................................. 1,206 -- (14)(C) 1,192
Long-term borrowings ........................................... 6,098 -- (225)(D) 5,873
Subordinated borrowings ........................................ 1,261 4,150 5,411
Company-obligated mandatorily redeemable trust securities of
subsidiary trust holding solely debentures of the Company .. 200 -- 200
Stockholders' 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 -- 200
Series B Preferred Stock, at $50.00 per share liquidation
preference (3,500,000 shares issued and outstanding) . 175 -- 175
Common Stock, 1,500,000,000 shares authorized:
CSFB(USA), Inc. Common Stock ............................ 13 -- 13
DLJdirect Common Stock ................................. 2 -- 2
Restricted stock units (10,358,294 units authorized;
51,430 and 1,099,955 units issued and outstanding,
respectively) ......................................... 1 -- 1
Paid-in capital ............................................ 1,339 2,025 197 (B) 3,559
(2)(C)
Retained earnings .......................................... 2,586 197 (197)(B) 2,543
(11)(D)
(32)(C)
Accumulated other comprehensive income ..................... 1 -- 1
Employee deferred compensation stock trust ................. 14 -- 14
Common stock issued to employee deferred compensation
trust ................................................. (14) -- (14)
--------- --------- --------- ---------
Total stockholders' equity ............................ 4,317 2,222 (45) 6,494
--------- --------- --------- ---------
Total Liabilities and Stockholders' Equity ..................... $ 118,013 $ 134,096 $ (2,819) $ 249,290
========= ========= ========= =========
See accompanying notes to pro forma combined condensed financial statements.
4
CREDIT SUISSE FIRST BOSTON (USA), INC.
Pro Forma Combined Condensed Statement of Income (UNAUDITED)
Six Months Ended June 30, 2000
(IN MILLIONS, EXCEPT FOR SHARE AND PER SHARE DATA)
Credit Suisse
Credit Suisse First Boston
First Boston (USA), Inc.
(USA), Inc. CSFB Corp. Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- --------
Revenues:
Commissions ................................ $ 841 $ 363 $ (1)(C) $ 1,203
Underwritings .............................. 442 678 1,120
Fees ....................................... 937 522 (62)(C) 1,397
Net interest income (expense) .............. 414 (10) 404
Principal transactions-net:
Trading .................................. 599 520 1,119
Investment ............................... 149 -- (3)(C) 146
Other ...................................... 59 14 (1)(C) 72
-------- -------- -------- --------
Total revenues .......................... 3,441 2,087 (67) 5,461
-------- -------- -------- --------
Costs and Expenses:
Compensation and benefits .................. 1,914 1,597 (24)(C) 3,487
Communications and technology .............. 250 91 (3)(C) 338
Brokerage, clearing, exchange fees and
other.................................... 193 74 (20)(C) 247
Occupancy and related costs ................ 102 82 (3)(C) 181
Other operating expenses ................... 336 181 (6)(C) 511
-------- -------- -------- --------
Total costs and expenses ................ 2,795 2,025 (56)(C) 4,764
-------- -------- -------- --------
Income before provision (benefit) for income
taxes ........................................ 646 62 (11) 697
-------- -------- -------- --------
Provision for income taxes ..................... 239 14 (5) 248
-------- -------- -------- --------
Net income ..................................... $ 407 $ 48 $ (6) $ 449
======== ======== ======== ========
Dividends on preferred stock ................... $ 10 $ 10
======== ========
Earnings applicable to common shares ........... $ 397 N/M
======== ========
Earnings applicable to common shares:
CSFB(USA), Inc ............................. $ 396 N/M
DLJdirect .................................. $ 1 $ 1
======== ========
Earnings per common share:
CSFB(USA), Inc .............................
Basic ................................... $ 3.10 N/M
Diluted ................................. $ 2.87 N/M
======== ========
DLJdirect
Basic ................................... $ 0.07 $ 0.07
Diluted ................................. $ 0.07 $ 0.07
======== ========
Weighted average common shares:
CSFB(USA), Inc .............................
Basic ................................... 127,418,000 N/M
Diluted ................................. 137,836,000 N/M
============ ========
DLJdirect
Basic ................................... 18,400,000 18,400,000
Diluted ................................. 18,401,000 18,401,000
============ ============
See accompanying notes to pro forma combined condensed financial statements.
5
CREDIT SUISSE FIRST BOSTON (USA), INC.
Pro Forma Combined Condensed Statement of Income (UNAUDITED)
Year Ended December 31, 1999
(IN MILLIONS, EXCEPT FOR SHARE AND PER SHARE DATA)
Credit Suisse
Credit Suisse First Boston
First Boston (USA), Inc.
(USA), Inc. CSFB Corp. Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- --------
Revenues:
Commissions ................................ $ 1,201 $ 516 $ (2)(C) $ 1,715
Underwritings .............................. 1,246 909 2,155
Fees ....................................... 1,612 747 (95)(C) 2,264
Net interest income ........................ 585 5 (1)(C) 591
Principal transactions-net:
Trading .................................. 719 755 1,474
Investment ............................... 107 -- (3)(C) 104
Other ...................................... 86 14 100
--------- --------- --------- ---------
Total revenues .......................... 5,556 2,946 (99) 8,403
--------- --------- --------- ---------
Costs and Expenses:
Compensation and benefits .................. 3,105 2,222 (36)(C) 5,291
Communications and technology .............. 445 147 (4)(C) 588
Brokerage, clearing, exchange fees and
other..................................... 314 127 (26)(C) 415
Occupancy and related costs ................ 179 155 (5)(C) 329
Other operating expenses ................... 559 314 (9)(C) 864
--------- --------- --------- ---------
Total costs and expenses ................ 4,602 2,965 (80) 7,487
--------- --------- --------- ---------
Income (loss) before provision (benefit) for
income taxes................................. 954 (19) (19) 916
--------- --------- --------- ---------
Provision (benefit) for income taxes ........... 353 (35) (9) 309
--------- --------- --------- ---------
Net income ..................................... $ 601 $ 16 $ (10) $ 607
========= ========= ========= =========
Dividends on preferred stock ................... $ 21 $ 21
========= =========
Earnings applicable to common shares ........... $ 580 N/M
========= =========
Earnings (loss) applicable to common shares:
CSFB(USA), Inc. ............................ $ 581 N/M
DLJdirect .................................. $ (1) $ (1)
========= =========
Earnings (loss) per common share:
CSFB(USA), Inc. ............................
Basic ................................... $ 4.63 N/M
Diluted ................................. $ 4.18 N/M
========= =========
DLJdirect
Basic ................................... $ (0.05) $ (0.05)
Diluted ................................. $ (0.05) $ (0.05)
========= =========
Weighted average common shares:
CSFB(USA), Inc.
Basic ................................... 125,433,000 N/M
Diluted ................................. 138,868,000 N/M
============= =========
DLJdirect
Basic ................................... 18,400,000 18,400,000
Diluted ................................. 18,400,000 18,400,000
============= =============
See accompanying notes to pro forma combined condensed financial statements.
6
CREDIT SUISSE FIRST BOSTON (USA), INC.
Notes to Pro Forma Combined Condensed Financial Statements (UNAUDITED)
1. DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION
On November 3, 2000, Credit Suisse First Boston (USA), Inc., formerly known as
Donaldson, Lufkin & Jenrette, Inc. (the "Company"), became an indirect wholly
owned subsidiary of Credit Suisse Group, a corporation organized under the laws
of Switzerland ("CSG"), upon completion of a number of related transactions
(such transactions, collectively, the "Transaction").
In conjunction with the closing of the Transaction, also on November 3, 2000,
Credit Suisse First Boston, Inc., a wholly owned subsidiary of CSG ("CSFBI"),
transferred all of the outstanding shares of Credit Suisse First Boston
Corporation, a U.S. registered broker dealer that is a wholly owned subsidiary
of CSFBI ("CSFB Corp."), to the Company in exchange for newly issued Shares
(as defined in Note 5) of the Company. This was the final step in a series of
transfers (collectively, the "Transfer") that was initiated by CSG and the
Company on October 6, 2000 with a view to integrating their respective
businesses. As a result of the Transfer, CSFB Corp. became a direct wholly
owned subsidiary of the Company. Certain U.S., and all non-U.S., operations
of the Credit Suisses First Boston Business Unit are not conducted through
CSFB Corp. and, as a result, the financial positions and resuts of such
operations are not included in the combined businesses of the Company
resulting from the Transfer.
These unaudited pro forma combined condensed financial statements have been
prepared in connection with the Transfer, and are intended to illustrate the
possible scope of the change in the Company's historical financial position and
results of operations caused by the Transfer. These pro forma financial
statements are not intended to illustrate any possible effects on the Company
that are not associated with the Transfer. In particular, these pro forma
financial statements are not intended to illustrate any possible effects on the
Company that are associated with or incidental to the Transaction through which
the Company has been acquired by CSG. See "Introduction--Certain Information
Regarding the Acquisition of the Company by Credit Suisse Group".
2. PRO FORMA ADJUSTMENTS
The following pro forma adjustments are included in the accompanying pro forma
combined condensed statement of financial condition and pro forma combined
condensed statements of income:
(A) Eliminate intercompany balances.
(B) Reflects the Transfer of CSFB Corp. to the Company at CSFB Inc.'s
historical book value and to reflect the resulting adjustment to
paid-in-capital.
(C) To record the transfer of DLJ Asset Management Group, Inc. to Credit
Suisse Asset Management LLC.
(D) Reflects the retirement of $225.0 million of 9 5/8% Senior Subordinated
Notes of the Company in connection with the Transfer for a total
consideration of $245.4 million, which includes accrued interest and a
premium.
3. RESTRUCTURING CHARGES
Although not associated with the Transfer (and thus not reflected in the
accompanying pro forma combined condensed financial statements), the Company
currently anticipates that it will record restructuring charges, on a pre-tax
basis, in connection with the Transaction of between $900 million and $1.2
billion. This is a preliminary estimate, and it is possible that the final
restructuring charge may be outside of the range. The expected restructuring
charges are primarily associated with severance payments to employees,
elimination of redundant office facilities and write-off of related assets.
4. RETENTION PLAN AND OTHER RETENTION CHARGES
Although not associated with the Transfer (and thus not reflected in the
accompanying pro forma combined condensed financial statements), a retention
plan has been put in place for certain of the Company's employees in
connection with the Transaction. The retention plan provides for grants of
CSG shares for future services above current compensation levels. The CSG
shares granted for future services vest over a three-year period, and the
total expense associated with these grants is expected to be approximately
$1.2 billion, which will be expensed over the vesting period.
7
CREDIT SUISSE FIRST BOSTON (USA), INC.
Notes to Pro Forma Combined Condensed Financial Statements (UNAUDITED)
5. EARNINGS PER SHARE
Through the Transaction, CSG and its subsidiaries acquired 100% of the voting
shares of the Company (that is, the common stock of the Company of the series
designated Donaldson, Lufkin & Jenrette, Inc. - DLJ Common Stock, par value
$.10 per share) (the "Shares"). Accordingly, pro forma earnings per share
data with respect to these Shares would not be meaningful, and is therefore
not presented.
The Company's DLJdirect tracking stock (that is, the common stock of the Company
of the series designated Donaldson, Lufkin & Jenrette, Inc. - DLJdirect Common
Stock, par value $.10 per share) was not directly affected by the Transaction
and remains outstanding. Accordingly, both historical and pro forma earnings per
share data is set forth with respect to the DLJdirect tracking stock.
6. REGULATION
The Company's broker dealer subsidiaries, including CSFB Corp., are registered
with the Securities and Exchange Commission and are members of, and subject to
regulation by, a number of securities industry self-regulatory organizations
including the New York Stock Exchange and/or National Association of Securities
Dealers. 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
June 30, 2000 and December 31, 1999, all of the aforementioned broker dealers
were in compliance with all applicable regulatory capital adequacy requirements.
8