Bear Stearns Reports 2004 Results - Record Net Income and Earnings for Third Consecutive Year; Fourth Quarter Record EPS $2.61 -- Full Year EPS $9.76.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- The Bear Stearns The Bear Stearns Companies, Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., one of the largest global investment banks and securities trading and brokerage firms in the world. Companies Inc. (NYSE NYSE See: New York Stock Exchange :BSC (Binary Synchronous Communications) See bisync. ) -- Year-Over-Year Quarterly Net Revenues Up 19.4% With Net Income Up 22.3% -- Global Clearing Services Revenues Rose by 15.6% Driven by Increased Customer Balances -- Fixed Income Revenues Still Strong with 4.1% Improvement -- Investment Banking up 83.3% on M&A and Merchant Banking The Bear Stearns Companies Inc. (NYSE:BSC) today reported earnings per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) of $2.61 for the fourth quarter ended November November: see month. 30, 2004, up 19.2% from $2.19 per share for the fourth quarter of 2003. Net income for the fourth quarter of 2004 was $352.6 million, up 22.3% from $288.3 million for the fourth quarter of 2003. Net revenues for the 2004 fourth quarter were $1.83 billion, up 19.4% from $1.53 billion for the 2003 fourth quarter. The annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on common stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. for the fourth quarter of 2004 was 19.5%. For the full fiscal year ended November 30, 2004, earnings per share (diluted) were a record $9.76, up 14.6% from $8.52 for fiscal 2003. Net income for the full year 2004 was $1.34 billion, up 16.3% from the $1.16 billion earned in the twelve-month period ended November 30, 2003. Net revenues for fiscal year 2004 were $6.81 billion, an increase of 13.7% from $5.99 billion in the prior fiscal year. The after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. return on common stockholders' equity was 19.1% for 2004. "We are pleased to report our third consecutive year of record net income and earnings. This success is a product of our collective drive to serve our clients with excellence; our ability to anticipate and meet client needs; an ability to attract and retain top talent; and the depth and diversity built into the franchise", said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. E. Cayne, chairman and chief executive officer of Bear Stearns. "Consistency Consistency can refer to:
adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d cost control have again provided part of a winning formula for our shareholders. As a firm, and within our businesses, we are well positioned for coming market trends and poised for future success." A brief discussion of the firm's business segments follows: CAPITAL MARKETS Fourth Quarter Capital Markets net revenues for the fourth quarter of 2004 were a record $1.43 billion, up 22.6% from $1.17 billion for the fourth quarter ended November 30, 2003. --Institutional Equities net revenues were $295.3 million, up 10.9% from $266.3 million for the fourth quarter of 2003. Institutional Equities revenues increased on market-share gains in U.S. listed securities Listed Security Securities that have been accepted for trading purposes by a recognized and regulated exchange. Notes: Listed securities have the advantage of higher liquidity within a regulated environment. and greater risk arbitrage The purchase of stock in a corporation that appears to be the target of an imminent takeover in the hope of making large profits if the takeover occurs. Risk arbitrage is practiced by investors called risk arbitrageurs. activity. In addition, the consolidation in the first quarter of 2004 of Bear Wagner Specialists, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , our majority owned NYSE specialist firm, resulted in net revenues increasing by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $40 million over the comparable 2003 period. Partially offsetting these increases were reduced convertible arbitrage Convertible Arbitrage An investing strategy that involves the long position on a convertible security and a short position in its converting common stock. Notes: and equity derivatives In finance, an equity derivative is a class of financial instruments whose value is at least partly derived from one or more underlying equity securities. Market participants trade equity derivatives in order to transfer or transform certain risks associated with the revenues reflecting lower market volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the levels. --Fixed income net revenues were $675.2 million, up 4.1% from $648.9 million in the comparable prior year period. Mortgage revenues rose reflecting market share gains in the agency CMO CMO See: Collateralized mortgage obligation CMO See collateralized mortgage obligation (CMO). sector and significantly increased origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real volume of adjustable rate mortgages This article is about the US mortgage type. For an international perspective, see Variable rate mortgage. An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. . Active customer order flow served to increase net revenues from secondary activities. In addition interest rate derivatives An interest rate derivative is a derivative where the underlying asset is the right to pay or receive a (usually notional) amount of money at a given interest rate. The interest rate derivatives market is the largest derivatives market in the world. increased reflecting continued growth in market share and customer activity. --Investment Banking net revenues were $458.7 million in the fourth quarter of 2004, up 83.3% from the $250.3 million in the comparable prior year period. Merchant Banking net revenues totaled $199.9 million in the 2004 fourth quarter including $160 million in realized and unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. from merchant banking investments including the initial public offering of New York & Company (NYSE:NWY NWY Never Without You ). The fourth quarter of 2003 included a $33.7 million realized gain Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. from the sale of a merchant banking investment in Aeropostale, Inc. (NYSE:ARO). Excluding these gains on investments, Investment Banking net revenues increased 37.9% over the fourth quarter of 2003 due to significantly higher advisory, merger and acquisition and merchant banking net revenues. Full Year Net revenues in Capital Markets, which include Institutional Equities, Fixed Income and Investment Banking, were a record $5.35 billion for the fiscal year ended November 30, 2004, an increase of 11.1% over the record $4.82 billion revenue reported for fiscal 2003. --Institutional Equities net revenues for fiscal year 2004 were up 16.2% to $1.08 billion from $932.6 million in fiscal 2003. Increased net revenues from domestic and international equity sales and trading, stronger risk arbitrage results and the consolidation of the specialist business offset difficult market conditions in the equity derivatives and convertible arbitrage areas. --Fixed Income net revenues were $3.09 billion, up 5.8% from the $2.93 billion recorded in 2003. The Fixed Income Division reported record results for the fourth consecutive year, once again highlighting the strength and diversity of that franchise. Solid growth in the mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. , leveraged finance, foreign exchange and interest rate derivative areas drove increased revenues. --Investment Banking also reported record net revenues of $1.18 billion for 2004, up 22.3% from $961.3 million in the prior fiscal year. The record net revenue performance was driven by higher advisory, merger and acquisition and merchant banking net revenues. GLOBAL CLEARING SERVICES Fourth Quarter Fourth quarter 2004 Global Clearing Services net revenues were $254.4 million, up 15.6% from $220.0 million in the fourth quarter of 2003, reflecting increased net interest revenues. Net interest revenue increased due to higher margin debt and customer short balances and improved net interest margins. Average customer margin debt balances for the quarter ended November 30, 2004 were $52.0 billion, up from $42.2 billion in the prior year quarter. Customer short balances averaged $78.2 billion during the fourth quarter of 2004 up from $70.1 billion in prior year period. Full Year Net revenues in Global Clearing Services were $910.1 million, up 16.1% from $784.1 million in fiscal 2003. Net interest revenues increased due to higher levels of customer margin debt, free credit, stock borrow Borrow To obtain or receive money on loan with the promise or understanding that it will be repaid. and customer short balances. Average customer margin debt balances for the year were $48.0 billion, versus $40.3 billion for the year ended November 30, 2003. Customer short balances averaged $76.3 billion during the 2004 year up from $64.3 billion in fiscal 2003. WEALTH MANAGEMENT Fourth Quarter Net revenues in Wealth Management, which include Private Client Services and Asset Management, were $157.2 million for the quarter ended November 30, 2004, up 8.4% from $145.0 million in the fourth quarter of 2003. --Private Client Service revenues were $109.6 million in the fourth quarter of 2004, an increase of 4.3% from $105.1 million in the 2003 quarter reflecting improved customer activity and increased revenues from fee based products. --Asset Management net revenues grew 19.4% to $47.6 million for the fourth quarter of 2004 from $39.9 million in the prior year quarter due to increased management and performance fees resulting from the growth in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. . Full Year Wealth Management net revenues were $626.3 million for fiscal 2004, up 22.5% versus $511.3 million in fiscal 2003. --Revenues from the Private Client Service area rose 16.5% to $441.2 million for the fiscal year from $378.8 million for fiscal 2003. The improvement reflects an increase in commissions and net interest, and the growing contribution from fee based assets. --The Asset Management business reported record net revenues of $185.1 million for the full fiscal year 2004 up 39.7% from $132.5 million in the prior year due to the growth in assets under management, higher management and performance fees and a one time gain on the sale of mutual fund assets Fund assets The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. to The Dreyfus Corporation Dreyfus Corporation is a leading mutual fund financial firm founded in 1951. It is an industry leader having been the first to advertise to consumers, and create a high yield fund. Though it has its main office in New York City, it is a subsidiary of Pittsburgh based Mellon Financial. of approximately $21.5 million. --Assets under management rose to $34.9 billion as of November 30, 2004 from $27.1 billion as of November 30, 2003. The significant increase in assets under management is due in part to the acquisition in the fourth quarter of 2004 of the fixed income assets of TimesSquare Capital Management, Inc. EXPENSES Fourth Quarter --Compensation as a percentage of net revenues was 43.8% in the fourth quarter of 2004 compared with 48.9% for the quarter ended November 30, 2003. --Non-compensation expenses were $491.2 million for the quarter ended November 30, 2004, up 42.1% from $345.6 million in the 2003 quarter. The increase in non-compensation expenses is due to the impact of the consolidation of Bear Wagner, higher professional fees and litigation-related costs. Non-compensation expenses as a percentage of net revenues increased to 26.9% for the 2004 fourth quarter from 22.6% for the fourth quarter of 2003. Professional fees increased 66.6% to $65.4 million from $39.2 million due to an increase in employment agency fees, consulting fees and professional legal fees. Other expenses were $207.7 million for the fourth quarter, an increase of 88.9% from $109.9 million in the same 2003 quarter, due primarily to an increase in the company's litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. reserves. --As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , The Bear Stearns Companies Inc. and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. its subsidiaries have received requests for information and subpoenas from a number of regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and law enforcement agencies A law enforcement agency (LEA) is a term used to describe any agency which enforces the law. This may be a local or state police, federal agencies such as the Federal Bureau of Investigation (FBI) or the Drug Enforcement Administration (DEA). in connection with mutual fund trading investigations. During the 2004 fourth quarter, the company increased its litigation reserves to reflect management's current assessment of the appropriate reserve level for previously disclosed matters, including the investigations into mutual fund trading. It is possible that the ultimate outcome of these matters may differ from the company's current assessment. The company and its subsidiaries are continuing to cooperate with all regulatory and law enforcement agencies in connection with these matters. Full Year --For the twelve-months ended November 30, 2004, compensation as a percentage of net revenues was 47.8% as compared with 48.1% for fiscal 2003. --Non-compensation expenses for the fiscal year 2004 were $1.54 billion, 14.6% higher than the $1.34 billion reported in 2003. Non-compensation expense as a percentage of net revenues for fiscal 2004 increased to 22.6% from 22.4% in fiscal 2003. Non-compensation expenses increased due to the impact of the consolidation of Bear Wagner, higher professional fees and increased legal and litigation related costs. As of November 30, 2004, total capital, including stockholders' equity and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. borrowings, was $46.1 billion. Book value as of November 30, 2004 was $59.13 per share, based on 144.5 million shares outstanding. The company repurchased approximately 9.2 million shares of its common stock during fiscal 2004 pursuant to its share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and . Quarterly Common Stock Cash Dividend Declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. The Board of Directors of The Bear Stearns Companies Inc. declared a regular quarterly cash dividend of 25 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. on the outstanding shares of common stock payable January January: see month. 28, 2005 to stockholders of record on January 14, 2005. Quarterly Preferred Cash Dividends Declared The Board of Directors of The Bear Stearns Companies Inc. declared the following regular quarterly dividends: (i) a cash dividend of $3.075 per share on the outstanding shares of 6.15% Cumulative Preferred Stock Cumulative preferred stock Preferred stock whose dividends accrue, should the issuer not make timely dividend payments. Related: Non-cumulative preferred stock. , Series E (which is equivalent to 76.875 cents per related depositary DEPOSITARY, contracts. He with whom a deposit is confided or made. 2. It is, the essence of the contract of deposits that it should be gratuitous on the part 'of the depositary. 9 M. R. 470. share); (ii) a cash dividend of $2.86 per share on the outstanding shares of 5.72% Cumulative Preferred Stock, Series F (which is equivalent to 71.50 cents per related depositary share); and (iii) a cash dividend of $2.745 per share on the outstanding shares of 5.49% Cumulative Preferred Stock, Series G (which is equivalent to 68.625 cents per related depositary share); all payable January 15, 2005 to stockholders of record on December December: see month. 31, 2004. Founded in 1923, The Bear Stearns Companies Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., a leading investment banking and securities trading securities trading, financial activity involving transactions of property such as stocks, bonds, commodities, and currency (see securities). Although the trading of stocks and bonds dates back several centuries in many Western nations, the development of the and brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. firm. With approximately $46.1 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance, mergers and acquisitions, institutional equities and fixed income sales and trading, securities research, private client services, derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , foreign exchange and futures sales and trading, asset management and custody The care, possession, and control of a thing or person. The retention, inspection, guarding, maintenance, or security of a thing within the immediate care and control of the person to whom it is committed. The detention of a person by lawful authority or process. services. Through Bear, Stearns Securities Corp., it offers financing, securities lending Securities Lending When a brokerage lends securities owned by its clients to short sellers. Notes: This allows brokers to create additional revenue (commissions) on the short sale transaction. , clearing and technology solutions to hedge funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" , broker-dealers and investment advisors Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission. 2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and . Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , the company has approximately 11,000 employees worldwide. For additional information about Bear Stearns, please visit the firm's website at http://www.bearstearns.com. Financial Tables Attached Certain statements contained in this discussion are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those discussed in the forward-looking statements. For a discussion of the risks and uncertainties that may affect the company's future results, please see "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" and "Risk Management" in the company's 2003 Annual Report to Stockholders and similar sections in the company's quarterly reports on Form 10-Q Form 10-Q See 10-Q. which have been filed with the Securities and Exchange Commission. A conference call to discuss the company's results will be held on Tuesday Tuesday: see week. , December 21 2004, at 10:00 a.m., E.S.T. The call will be open to the public. Those wishing to listen to the conference call should dial 1-800-813-BEAR (or 1-212-931-9782 for international callers) at least 15 minutes prior to the commencement of the call to ensure connection. The conference call will also be accessible through our website at http://www.bearstearns.com. For those unable to listen to the live broadcast of the call, a replay will be available on our website or by dialing 1-877-297-4505 (or 1-973-935-8901 for international callers) at approximately 1:00 p.m. E.S.T. The pass code for the replay is 1114943. The replay will be available until midnight on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , January 7, 2005. If you have any questions on how to obtain access to the conference call, please contact Joanne Joanne is a common given name for females, being a variant of Joanna, the feminine form of John and is derived from the Latin name Johanna and has a hebrew meaning of "God is Gracious" People with the given name Joanne:
THE BEAR STEARNS COMPANIES INC.
-------------------------------
SEGMENT DATA
------------
(UNAUDITED)
-----------
Three Months Ended % Change From
----------------------------------- ------------------
November November August November August
30, 2004 30, 2003 31, 2004 30, 2003 31, 2004
-------- -------- -------- -------- --------
(In thousands)
NET REVENUES
Capital Markets
Institutional
Equities $295,348 $266,254 $239,321 10.9% 23.4%
Fixed Income 675,239 648,948 751,805 4.1% (10.2%)
Investment
Banking 458,737 250,322 208,865 83.3% 119.6%
-------- -------- --------
Total Capital
Markets 1,429,324 1,165,524 1,199,991 22.6% 19.1%
Global Clearing
Services 254,378 219,960 214,394 15.6% 18.6%
Wealth
Management
Private Client
Services (1) 109,575 105,082 103,498 4.3% 5.9%
Asset
Management 47,631 39,884 36,320 19.4% 31.1%
-------- -------- --------
Total Wealth
Management 157,206 144,966 139,818 8.4% 12.4%
Other (2) (12,251) 827 (19,438) nm 37.0%
-------- -------- --------
Total net
revenues $1,828,657 $1,531,277 $1,534,765 19.4% 19.1%
======== ======== ========
PRE-TAX INCOME
Capital Markets $569,793 $433,239 $425,703 31.5% 33.8%
Global Clearing
Services 133,592 87,127 83,159 53.3% 60.6%
Wealth
Management 12,689 (1,301) 7,667 nm 65.5%
Other (2) (180,253) (82,302) (72,650)(119.0%) (148.1%)
-------- -------- --------
Total pre-tax
income $535,821 $436,763 $443,879 22.7% 20.7%
======== ======== ========
Twelve Months Ended % Change
------------------------------------ --------
November 30, 2004 November 30, 2003
----------------- -----------------
(In thousands)
NET REVENUES
Capital Markets
Institutional Equities $1,084,073 $932,567 16.2%
Fixed Income 3,093,748 2,925,483 5.8%
Investment Banking 1,175,653 961,267 22.3%
----------------- -----------------
Total Capital Markets 5,353,474 4,819,317 11.1%
Global Clearing Services 910,062 784,072 16.1%
Wealth Management
Private Client Services
(1) 441,242 378,787 16.5%
Asset Management 185,085 132,520 39.7%
----------------- -----------------
Total Wealth
Management 626,327 511,307 22.5%
Other (2) (76,980) (120,205) 36.0%
----------------- -----------------
Total net revenues $6,812,883 $5,994,491 13.7%
================= =================
PRE-TAX INCOME
Capital Markets $2,002,867 $1,924,071 4.1%
Global Clearing Services 381,958 245,531 55.6%
Wealth Management 66,942 19,217 248.3%
Other (2) (429,613) (416,550) (3.1%)
----------------- -----------------
Total pre-tax income $2,022,154 $1,772,269 14.1%
================= =================
Three Months Ended % Change From
----------------------------------- ------------------
November November August November August
30, 2004 30, 2003 31, 2004 30, 2003 31, 2004
-------- -------- -------- -------- --------
(In thousands)
(1) Private
Client Services
Detail:
Gross Revenues,
before transfer
to Capital
Markets Segment $128,145 $128,979 $121,082
Revenue
transferred to
Capital Markets
segment (18,570) (23,897) (17,584)
-------- -------- --------
Private Client
Services net
revenues $109,575 $105,082 $103,498
======== ======== ========
Twelve Months Ended % Change
------------------------------------ --------
November 30, 2004 November 30, 2003
----------------- -----------------
(In thousands)
(1) Private Client
Services Detail:
Gross Revenues, before
transfer to Capital
Markets Segment $526,122 $477,227
Revenue transferred to
Capital Markets segment (84,880) (98,440)
----------------- -----------------
Private Client Services
net revenues $441,242 $378,787
================= =================
(2) 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").
nm - not meaningful
THE BEAR STEARNS COMPANIES INC.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Three Months Ended
--------------------------------------------
November 30, November 30, August 31,
2004 2003 2004
-------------- -------------- --------------
(In thousands, except share and per share
data)
REVENUES
Commissions $ 289,099 $ 288,441 $ 273,722
Principal transactions 824,057 790,486 848,982
Investment banking 435,984 225,763 190,692
Interest and dividends 769,678 495,514 528,704
Other income 63,488 64,842 52,253
-------------- -------------- --------------
Total revenues 2,382,306 1,865,046 1,894,353
Interest expense 553,649 333,769 359,588
-------------- -------------- --------------
Revenues, net of
interest expense 1,828,657 1,531,277 1,534,765
-------------- -------------- --------------
NON-INTEREST EXPENSES
Employee compensation and
benefits 801,623 748,880 743,038
Floor brokerage, exchange
and clearance fees 57,283 43,498 56,822
Communications and
technology 94,667 88,786 92,360
Occupancy 37,690 34,959 35,843
Advertising and market
development 28,554 29,239 30,030
Professional fees 65,369 39,248 47,547
Other expenses 207,650 109,904 85,246
-------------- -------------- --------------
Total non-interest
expenses 1,292,836 1,094,514 1,090,886
-------------- -------------- --------------
Income before provision
for income taxes 535,821 436,763 443,879
Provision for income
taxes 183,215 148,436 160,620
-------------- -------------- --------------
Net income $ 352,606 $ 288,327 $ 283,259
============== ============== ==============
Net income applicable to
common shares $ 345,990 $ 280,533 $ 276,416
============== ============== ==============
Adjusted net income used
for diluted earnings per
share (1) $ 372,632 $ 308,521 $ 300,984
============== ============== ==============
Basic earnings per share $ 2.91 $ 2.43 $ 2.31
============== ============== ==============
Diluted earnings per
share $ 2.61 $ 2.19 $ 2.09
============== ============== ==============
Weighted average common
shares outstanding:
Basic 125,346,024 124,090,961 127,014,483
============== ============== ==============
Diluted 142,672,823 140,876,365 144,201,755
============== ============== ==============
Cash dividends declared
per common share $ 0.25 $ 0.20 $ 0.20
============== ============== ==============
% Change From
-----------------------------
November 30, August 31,
2003 2004
-------------- --------------
REVENUES
Commissions 0.2% 5.6%
Principal transactions 4.2% (2.9%)
Investment banking 93.1% 128.6%
Interest and dividends 55.3% 45.6%
Other income (2.1%) 21.5%
Total revenues 27.7% 25.8%
Interest expense 65.9% 54.0%
Revenues, net of interest expense 19.4% 19.1%
NON-INTEREST EXPENSES
Employee compensation and benefits 7.0% 7.9%
Floor brokerage, exchange and clearance
fees 31.7% 0.8%
Communications and technology 6.6% 2.5%
Occupancy 7.8% 5.2%
Advertising and market development (2.3%) (4.9%)
Professional fees 66.6% 37.5%
Other expenses 88.9% 143.6%
Total non-interest expenses 18.1% 18.5%
Income before provision for income taxes 22.7% 20.7%
Provision for income taxes 23.4% 14.1%
Net income 22.3% 24.5%
Net income applicable to common shares 23.3% 25.2%
Adjusted net income used for diluted
earnings per share (1) 20.8% 23.8%
Basic earnings per share 19.8% 26.0%
Diluted earnings per share 19.2% 24.9%
(1) Represents net income reduced for preferred stock dividends and
per common share 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.
THE BEAR STEARNS COMPANIES INC.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Twelve Months Ended % Change
-------------------------- --------
November 30, November 30,
2004 2003
------------ ------------
(In thousands, except
share and per share data)
REVENUES
Commissions $1,178,074 $1,077,926 9.3%
Principal transactions 3,535,370 3,292,888 7.4%
Investment banking 1,148,650 904,612 27.0%
Interest and dividends 2,317,315 1,955,373 18.5%
Other income 242,493 164,645 47.3%
------------ ------------
Total revenues 8,421,902 7,395,444 13.9%
Interest expense 1,609,019 1,400,953 14.9%
------------ ------------
Revenues, net of interest
expense 6,812,883 5,994,491 13.7%
------------ ------------
NON-INTEREST EXPENSES
Employee compensation and benefits 3,253,862 2,880,695 13.0%
Floor brokerage, exchange and
clearance fees 230,652 180,548 27.8%
Communications and technology 369,176 365,317 1.1%
Occupancy 141,916 137,778 3.0%
Advertising and market development 113,800 106,506 6.8%
Professional fees 197,086 133,304 47.8%
Other expenses 484,237 418,074 15.8%
------------ ------------
Total non-interest expenses 4,790,729 4,222,222 13.5%
------------ ------------
Income before provision for income
taxes 2,022,154 1,772,269 14.1%
Provision for income taxes 677,421 615,863 10.0%
------------ ------------
Net income $1,344,733 $1,156,406 16.3%
============ ============
Net income applicable to common
shares $1,316,661 $1,125,031 17.0%
============ ============
Adjusted net income used for
diluted earnings per share (1) $1,418,421 $1,235,991 14.8%
============ ============
Basic earnings per share $ 10.88 $ 9.44 15.3%
============ ============
Diluted earnings per share $ 9.76 $ 8.52 14.6%
============ ============
Weighted average common shares
outstanding:
Basic 127,468,061 127,819,514
============ ============
Diluted 145,284,589 145,027,266
============ ============
Cash dividends declared per common
share $ 0.85 $ 0.74
============ ============
(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.
THE BEAR STEARNS COMPANIES INC.
-------------------------------
SELECTED FINANCIAL INFORMATION
------------------------------
(UNAUDITED)
-----------
Twelve Months Ended
-------------------------
November 30, November 30,
2004 2003
-------------------------
(In thousands, except common
share data and other data)
Results
-------
Revenues, net of interest expense $6,812,883 $5,994,491
Net income $1,344,733 $1,156,406
Net income applicable to common shares $1,316,661 $1,125,031
Adjusted net income used for diluted
earnings per share (1) $1,418,421 $1,235,991
Financial Position
------------------
Stockholders' equity, at period end $8,990,872 $7,470,088
Total stockholders' equity and trust
issued preferred securities, at period
end (2) $8,990,872 $8,032,588
Total capital, at period end $46,068,806 $37,463,053
Common Share Data
-----------------
Basic earnings per share $10.88 $9.44
Diluted earnings per share $9.76 $8.52
Book value per common share, at period end $59.13 $48.69
Weighted average common shares
outstanding:
Basic 127,468,061 127,819,514
Diluted 145,284,589 145,027,266
Common shares outstanding, at period end
(3) 144,484,099 142,369,836
Financial Ratios
----------------
Return on average common equity
(annualized) 19.1% 20.2%
Adjusted pre-tax profit margin (4) 32.3% 32.8%
Pre-tax profit margin (5) 29.7% 29.6%
After-tax profit margin (6) 19.7% 19.3%
Compensation & benefits/Revenues, net of
interest expense 47.8% 48.1%
Other Data (in billions, except employees)
------------------------------------------
Margin debt balances, at period end $57.3 $45.7
Margin debt balances, average for period $48.0 $40.3
Customer short balances, at period end $85.4 $72.6
Customer short balances, average for
period $76.3 $64.3
Stock borrowed, at period end $55.7 $54.3
Stock borrowed, average for period $57.7 $51.2
Free credit balances, at period end $30.8 $24.9
Free credit balances, average for period $28.6 $20.6
Assets under management, at period end $34.9 $27.1
Employees, at period end 10,961 10,532
Three Months Ended
-------------------------------------------------
November 30, August 31, May 31, February 29,
2004 2004 2004 2004
-------------------------------------------------
(In thousands, except common share data and other
data)
Results
-------
Revenues, net of
interest expense $1,828,657 $1,534,765 $1,723,538 $1,725,923
Net income $352,606 $283,259 $347,803 $361,065
Net income applicable
to common shares $345,990 $276,416 $340,609 $353,646
Adjusted net income
used for diluted
earnings per share
(1) $372,632 $300,984 $366,027 $378,778
Financial Position
------------------
Stockholders' equity,
at period end $8,990,872 $8,067,519 $8,006,834 $7,817,777
Total stockholders'
equity and trust
issued preferred
securities, at
period end (2) $8,990,872 $8,067,519 $8,006,834 $7,817,777
Total capital, at
period end $46,068,806 $41,567,718 $39,973,413 $39,970,906
Common Share Data
-----------------
Basic earnings per
share $2.91 $2.31 $2.77 $2.88
Diluted earnings per
share $2.61 $2.09 $2.49 $2.57
Book value per common
share, at period end $59.13 $55.13 $53.38 $51.19
Weighted average
common shares
outstanding:
Basic 125,346,024 127,014,483 129,071,295 129,118,964
Diluted 142,672,823 144,201,755 146,921,897 147,108,483
Common shares
outstanding, at
period end (3) 144,484,099 144,052,137 144,285,667 144,320,701
Financial Ratios
----------------
Return on average
common equity
(annualized) 19.5% 15.9% 19.6% 21.3%
Adjusted pre-tax
profit margin (4) 31.8% 31.7% 32.3% 33.3%
Pre-tax profit margin
(5) 29.3% 28.9% 29.7% 30.8%
After-tax profit
margin (6) 19.3% 18.5% 20.2% 20.9%
Compensation &
benefits/Revenues,
net of interest
expense 43.8% 48.4% 49.9% 49.2%
Other Data (in
billions, except
employees)
-----------------
Margin debt balances,
at period end $57.3 $49.6 $44.4 $47.9
Margin debt balances,
average for period $52.0 $46.6 $46.7 $46.6
Customer short
balances, at period
end $85.4 $73.7 $74.9 $77.0
Customer short
balances, average
for period $78.2 $75.6 $77.2 $74.3
Stock borrowed, at
period end $55.7 $53.5 $53.6 $57.0
Stock borrowed,
average for period $57.1 $56.7 $58.7 $58.5
Free credit balances,
at period end $30.8 $29.3 $28.8 $26.1
Free credit balances,
average for period $28.8 $30.8 $28.1 $26.5
Assets under
management, at
period end $34.9 $28.1 $27.3 $29.1
Employees, at period
end 10,961 10,715 10,469 10,431
Three Months Ended
-------------------------------------------------
November 30, August 31, May 31, February 28,
2003 2003 2003 2003
-------------------------------------------------
(In thousands, except common share data and other
data)
Results
-------
Revenues, net of
interest expense $1,531,277 $1,485,060 $1,462,720 $1,515,434
Net income $288,327 $313,415 $280,411 $274,253
Net income applicable
to common shares $280,533 $305,621 $272,616 $266,261
Adjusted net income
used for diluted
earnings per share
(1) $308,521 $334,180 $299,533 $293,756
Financial Position
------------------
Stockholders' equity,
at period end $7,470,088 $6,875,668 $6,714,397 $6,529,628
Total stockholders'
equity and trust
issued preferred
securities, at
period end (2) $8,032,588 $7,438,168 $7,276,897 $7,092,128
Total capital, at
period end $37,463,053 $34,438,022 $33,520,967 $31,987,917
Common Share Data
-----------------
Basic earnings per
share $2.43 $2.54 $2.27 $2.21
Diluted earnings per
share $2.19 $2.30 $2.05 $2.00
Book value per common
share, at period end $48.69 $45.46 $43.52 $41.64
Weighted average
common shares
outstanding:
Basic 124,090,961 128,681,694 128,711,363 129,773,603
Diluted 140,876,365 145,599,540 146,062,838 147,029,224
Common shares
outstanding, at
period end (3) 142,369,836 146,662,752 146,915,258 146,659,224
Financial Ratios
----------------
Return on average
common equity
(annualized) 19.6% 21.3% 19.7% 19.9%
Adjusted pre-tax
profit margin (4) 31.7% 35.8% 32.4% 31.2%
Pre-tax profit margin
(5) 28.5% 32.5% 29.3% 28.1%
After-tax profit
margin (6) 18.8% 21.1% 19.2% 18.1%
Compensation &
benefits/Revenues,
net of interest
expense 48.9% 45.9% 47.3% 50.0%
Other Data (in
billions, except
employees)
-----------------
Margin debt balances,
at period end $45.7 $41.6 $44.1 $38.1
Margin debt balances,
average for period $42.2 $43.3 $39.5 $36.3
Customer short
balances, at period
end $72.6 $66.3 $66.2 $56.5
Customer short
balances, average
for period $70.1 $68.0 $62.0 $57.0
Stock borrowed, at
period end $54.3 $52.1 $48.6 $41.7
Stock borrowed,
average for period $57.4 $54.2 $47.9 $45.1
Free credit balances,
at period end $24.9 $22.0 $20.4 $18.7
Free credit balances,
average for period $22.9 $21.2 $19.3 $18.9
Assets under
management, at
period end $27.1 $25.7 $24.4 $23.3
Employees, at period
end 10,532 10,515 10,472 10,506
(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) In accordance with FASB Interpretation ("FIN") No. 46 (R), a
revision of FIN No. 46, "Consolidation of Variable Interest
Entities - an Interpretation of ARB No. 51," the company has
deconsolidated Bear Stearns Capital Trust III effective beginning
with the quarter ended February 29, 2004. As a result, the junior
subordinated deferrable interest debentures issued by the company
to Bear Stearns Capital Trust III are included within long-term
borrowings. The $262.5 million of Guaranteed Preferred Beneficial
Interests in Company Subordinated Debt Securities ("Preferred
Securities") issued by Bear Stearns Capital Trust III is still
outstanding, providing the funding for such junior subordinated
deferrable interest debentures. The Preferred Securities issued by
Bear Stearns Capital Trust III will no longer be included in the
company's Condensed Consolidated Statements of Financial
Condition.
(3) 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.
(4) Represents the ratio of income before both CAP Plan costs and
provision for income taxes to revenues, net of interest expense.
(5) Represents the ratio of income before provision for income taxes
to revenues, net of interest expense.
(6) Represents the ratio of net income to revenues, net of interest
expense.
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