Bear Stearns Reports Record Results for Fiscal 2005; Highest Ever Quarterly Net Revenues, Net Income and EPS; Full Year Record Net Revenues, Net Income and EPS.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 -- Firm Increases Quarterly Dividend to $0.28 Per Share and Increases Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Authorization The right or permission to use a system resource; the process of granting access. See access control. to $1.5 Billion 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. ) today reported record 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 $2.90 for the fourth quarter ended November November: see month. 30, 2005, up 11% from $2.61 per share for the fourth quarter of 2004. Net income for the fourth quarter of 2005 was a record $407.0 million, up 15% from $352.6 million for the fourth quarter of 2004. Net revenues for the 2005 fourth quarter were $1.9 billion, up 3% from $1.8 billion for the 2004 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 2005 was 17.7%. For the full fiscal year ended November 30, 2005, earnings per share (diluted) were a record $10.31, up 6% from $9.76 for fiscal 2004. Net income for the full year 2005 was $1.5 billion, up 9% from the $1.3 billion earned in the twelve-month period ended November 30, 2004. Net revenues for fiscal year 2005 were $7.4 billion, an increase of 9% from $6.8 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 16.5% for fiscal 2005. "Bear Stearns continues to grow and prosper as this year marks the fourth consecutive year of record profits. All of our business segments are broader and stronger than ever before," 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. "The ability to deliver products and services that meet the comprehensive needs of our clients has allowed us to distinguish ourselves in an increasingly competitive marketplace. These results reflect the dedication we have to serving our clients well and the passion we have for building the franchise." 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. Update Bear Stearns has also announced that it has submitted an Offer of Settlement to the Securities and Exchange Commission (SEC) and the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (NYSE) to resolve the 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). investigations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc mutual fund trading. The settlement offer, which was negotiated with the staffs of the SEC and NYSE and will be recommended by them, is subject to approval by the respective regulators. Terms include a payment of $250 million and retention of independent consultants to review aspects of its mutual fund trading and global clearing operations. The company is fully reserved for this settlement. Mr. Cayne added, "As one of the leading financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. providers, we take our responsibilities to our clients very seriously. We believe that seeking to resolve this issue is in the best interests of our shareholders, clients and employees." A brief discussion of the firm's business segments follows: CAPITAL MARKETS Fourth Quarter Net revenues in Capital Markets, which includes Institutional Equities, Fixed Income and Investment Banking, were $1.4 billion for the fourth quarter of 2005, unchanged from the fourth quarter ended November 30, 2004. --Institutional Equities net revenues were $372.6 million, up 25% from $299.1 million for the fourth quarter of 2004. Institutional Equities revenues increased with record revenues in 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 and increases in revenues in both domestic and international equity sales and trading. --Fixed income net revenues were $838.6 million, up 18% from $713.0 million in the comparable prior year period. Robust activity levels in the credit derivatives Credit Derivative Privately held negotiable bilateral contracts that allow users to manage their exposure to credit risk. Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private , distressed debt distressed debt Debt with low junk status and a market price substantially below par value, often pennies on the dollar. Investors sometimes buy distressed debt on the possibility that management can renegotiate loan agreements and keep the issuer out of , leveraged finance and municipal finance areas led to the strong quarterly results. Mortgage revenues remained strong on increased commercial securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. activity. --Investment Banking net revenues were $231.2 million in the fourth quarter of 2005, down 46% from the $424.7 million in the comparable prior year period. The decrease in net revenues is predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. due to reduced merchant banking gains in 2005. The company reported $199.9 million of merchant banking net revenues in the fourth quarter of 2004 including the sale of shares in the initial public offering of New York & Company. Equity underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. net revenues increased due to higher industry activity levels and gains in market-share, partially offset by declines in fixed income underwriting. Full Year Capital Markets net revenues were a record $5.6 billion for the full fiscal year 2005, an increase of 6% over the previous $5.3 billion record net revenues reported for 2004. --Institutional Equities net revenues for the fiscal year ended November 30, 2005 were up 32% to $1.4 billion from $1.1 billion in fiscal 2004. Equity derivatives net revenues increased to record levels. Net revenues from domestic and international equity sales and trading, and more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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. results also contributed to the strong results for 2005. --Fixed Income net revenues were $3.3 billion in 2005, up 2% from the $3.2 billion recorded in 2004. The Fixed Income Division reported record results for the fifth consecutive year. Record setting results were achieved in the distressed debt, leveraged finance, credit derivative and foreign exchange areas. Continued solid performance in the mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. , interest rate derivative 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. and municipal finance areas also added to the division's strong results. --Investment Banking reported net revenues of $980.5 million for fiscal 2005, down 9% from $1.1 billion in the prior fiscal year. The decrease in net revenues is due primarily to lower merchant banking revenues for 2005 when compared with the strong 2004 results. Equity underwriting net revenues increased significantly year-over-year primarily due to market-share gains. GLOBAL CLEARING SERVICES Fourth Quarter Fourth quarter 2005 Global Clearing Services net revenues were $263.4 million, up 7% from $246.8 million in the fourth quarter of 2004. Net interest revenue increased due to higher margin debt and customer short balances. Average customer margin debt balances for the quarter ended November 30, 2005 were $60.3 billion, up from $52.0 billion in the prior year quarter. Customer short balances averaged $81.2 billion during the fourth quarter of 2005, up from $78.2 billion in prior year period. Full Year Net revenues for the 2005 fiscal year in Global Clearing Services were $1.1 billion, up 15% from $932.4 million in fiscal 2004. Net interest revenues increased due to higher levels of customer margin debt and customer short balances. Average customer margin debt balances for the year were $58.5 billion as compared with $48.0 billion for the year ended November 30, 2004. Customer short balances averaged $84.4 billion during the 2005 fiscal year, up from $76.3 billion in fiscal 2004. WEALTH MANAGEMENT Fourth Quarter In the Wealth Management segment, which includes Private Client Services and Asset Management, net revenues were $184.3 million for the quarter ended November 30, 2005, up 17% from $157.2 million in the fourth quarter of 2004. --Private Client Services revenues were $116.8 million in the fourth quarter of 2005, an increase of 7% from the $109.6 million earned in the 2004 quarter. The increase reflects growth in revenues from fee-based products, the continued expansion of the sales force, and increased individual investor activity levels. --Asset Management net revenues grew 42% to $67.5 million for the fourth quarter of 2005 from $47.6 million in the prior year quarter. The rise in revenues was due to increased performance fees from proprietary hedge fund 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" products, as well as management fees from increased 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 $678.8 million for fiscal 2005, an increase of 8% compared with $626.3 million in fiscal 2004. --Revenues from Private Client Services rose 2% to $450.2 million for the 2005 fiscal year from $441.2 million for fiscal 2004. The improvement reflects the increased contribution from fee-based assets and higher net interest revenues. --The Asset Management business reported record net revenues of $228.6 million for the 2005 fiscal year, up 24% from $185.1 million in the prior year. The main drivers of this record setting performance were growth in assets under management and a greater contribution to revenues from management and performance fees. --Assets under management rose to $41.9 billion as of November 30, 2005 from $37.8 billion as of November 30, 2004. EXPENSES Fourth Quarter --Compensation as a percentage of net revenues was 46.2% for the fourth quarter of 2005 compared with 43.8% for the quarter ended November 30, 2004. --Non-compensation expenses were $428.6 million for the quarter ended November 30, 2005, down 13% from $491.2 million in the 2004 quarter. The decrease in non-compensation expenses is primarily due to decreased legal and 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. related expenses. The 2005 fourth quarter pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profit margin was 31.1% as compared with 29.3% for the prior year quarter. Full Year --For the twelve-months ended November 30, 2005, compensation as a percentage of net revenues was 47.9% as compared with 47.8% for fiscal 2004. --Non-compensation expenses for the fiscal year 2005 were $1.65 billion, 7% higher than the $1.54 billion reported in 2004. Non-compensation expense as a percentage of net revenues for fiscal 2005 was 22.3% as compared with 22.6% in fiscal 2004. Non-compensation expenses rose due to higher communications, technology, and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal associated with increased headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. . Professional fees and legal and litigation related costs also rose. For fiscal year 2005 the pre-tax margin was 29.8% versus 29.7% in fiscal year 2004. As of November 30, 2005, 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 $54.3 billion. Book value on November 30, 2005 was $71.08 per share, based on 146.4 million shares outstanding. The company repurchased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8.5 million shares of its common stock during fiscal 2005. Share Repurchase Authorization The Board of Directors of the company approved an amendment to its share repurchase program to allow the company to purchase up to $1.5 billion in aggregate cost of common stock. This amendment supercedes the previous $1.0 billion authorization. The company acquired approximately $655.2 million of common stock under the previous program. The share repurchase program will be used primarily to acquire shares of common stock for the company's employee stock award plans. Purchases may be made in the open market or through privately negotiated transactions in 2006 or beyond. 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 28 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. 27, 2006 to stockholders of record on January 17, 2006. This represents a 12% increase over the 25 cent per share dividend declared for the fourth quarter of 2005. Quarterly Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. 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, 2006 to stockholders of record on December December: see month. 30, 2005. Founded in 1923, The Bear Stearns Companies Inc. (NYSE:BSC) is the parent company of Bear, Stearns & Co. Inc., a leading investment banking, 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 $54.3 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and 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, 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 11,500 employees worldwide. For additional information about Bear Stearns, please visit the firm's web site 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 2004 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 Thursday Thursday: see week. , December 15, 2005, 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 1-800-374-2412 (or 1-706-634-7253 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 1-800-642-1687 (or 1-706-645-9291 for international callers) at approximately 1:00 p.m. E.S.T. The pass code for the replay is 3158449. 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 , December 30, 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 30, November 30, August 31, November August
30, 31,
2005 2004 2005 2004 2005
------------ ------------ ----------- -------- -------
(In thousands)
NET REVENUES
Capital Markets
Institutional
Equities $ 372,590 $ 299,129 $ 333,620 24.6% 11.7%
Fixed Income 838,571 713,039 739,242 17.6% 13.4%
Investment
Banking 231,195 424,737 299,935 (45.6%) (22.9%)
------------ ------------ -----------
Total Capital
Markets 1,442,356 1,436,905 1,372,797 0.4% 5.1%
Global Clearing
Services 263,391 246,797 258,042 6.7% 2.1%
Wealth
Management
Private Client
Services(1) 116,772 109,575 113,897 6.6% 2.5%
Asset
Management 67,494 47,631 55,686 41.7% 21.2%
------------ ------------ -----------
Total Wealth
Management 184,266 157,206 169,583 17.2% 8.7%
Other(2) (2,711) (12,251) 11,858 77.9% nm
------------ ------------ -----------
Total net
revenues $ 1,887,302 $ 1,828,657 $1,812,280 3.2% 4.1%
============ ============ ===========
PRE-TAX INCOME
Capital Markets $ 539,950 $ 577,374 $ 492,155 (6.5%) 9.7%
Global Clearing
Services 117,899 126,011 127,486 (6.4%) (7.5%)
Wealth
Management 13,738 12,689 4,894 8.3% 180.7%
Other(2) (85,450) (180,253) (44,380) 52.6% 92.5%
------------ ------------ -----------
Total pre-
tax income $ 586,137 $ 535,821 $ 580,155 9.4% 1.0%
============ ============ ===========
(1) Private
Client Services
Detail:
Gross
Revenues,
before
transfer to
Capital
Markers
Segment $ 141,201 $ 128,145 $ 138,987
Revenue
transferred
to Capital
Markers
Segment (24,429) (18,570) (25,090)
------------ ------------ -----------
Private
Client
Services
net
revenues $ 116,772 $ 109,575 $ 113,897
============ ============ ===========
Twelve Months Ended % Change
------------------------- ---------
November 30, November 30,
2005 2004
------------ ------------
(In thousands)
NET REVENUES
Capital Markets
Institutional Equities $ 1,409,603 $ 1,071,609 31.5%
Fixed Income 3,251,333 3,186,741 2.0%
Investment Banking 980,459 1,072,770 (8.6%)
------------ ------------
Total Capital Markets 5,641,395 5,331,120 5.8%
Global Clearing Services 1,067,985 932,416 14.5%
Wealth Management
Private Client Services(1) 450,181 441,242 2.0%
Asset Management 228,643 185,085 23.5%
------------ ------------
Total Wealth Management 678,824 626,327 8.4%
Other(2) 22,590 (76,980) nm
------------ ------------
Total net revenues $ 7,410,794 $ 6,812,883 8.8%
============ ============
PRE-TAX INCOME
Capital Markets $ 1,969,564 $ 1,980,513 (0.6%)
Global Clearing Services 526,148 404,312 30.1%
Wealth Management 39,665 66,942 (40.7%)
Other(2) (328,318) (429,613) 23.6%
------------ ------------
Total pre-tax income $ 2,207,059 $ 2,022,154 9.1%
============ ============
(1) Private Client Services
Detail:
Gross Revenues, before transfer
to Capital Markers Segment $ 543,767 $ 526,122
Revenue transferred to Capital
Markers Segment (93,586) (84,880)
------------ ------------
Private Client Services net
revenues $ 450,181 $ 441,242
============ ============
(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,
2005 2004 2005
------------- ------------- -------------
(In thousands, except share and per share
data)
REVENUES
Commissions $ 298,670 $ 289,099 $ 290,799
Principal transactions 994,063 848,155 883,142
Investment banking 237,180 396,211 315,897
Interest and dividends 1,549,526 769,678 1,344,089
Asset management and
other income 101,665 79,163 91,467
------------- ------------- -------------
Total revenues 3,181,104 2,382,306 2,925,394
Interest expense 1,293,802 553,649 1,113,114
------------- ------------- -------------
Revenues, net of
interest expense 1,887,302 1,828,657 1,812,280
------------- ------------- -------------
NON-INTEREST EXPENSES
Employee compensation and
benefits 872,548 801,623 850,985
Floor brokerage, exchange
and clearance fees 51,944 57,283 55,029
Communications and
technology 104,723 94,667 97,668
Occupancy 44,121 37,690 43,354
Advertising and market
development 30,745 28,554 32,784
Professional fees 61,183 65,369 60,018
Other expenses 135,901 207,650 92,287
------------- ------------- -------------
Total non-interest
expenses 1,301,165 1,292,836 1,232,125
------------- ------------- -------------
Income before provision
for income taxes 586,137 535,821 580,155
Provision for income
taxes 179,180 183,215 201,850
------------- ------------- -------------
Net income $ 406,957 $ 352,606 $ 378,305
============= ============= =============
Net income applicable to
common shares $ 401,505 $ 345,990 $ 372,357
============= ============= =============
Adjusted net income used
for diluted earnings per
share (1) $ 421,496 $ 372,632 $ 394,919
============= ============= =============
Basic earnings per share $ 3.21 $ 2.91 $ 2.96
============= ============= =============
Diluted earnings per
share $ 2.90 $ 2.61 $ 2.69
============= ============= =============
Weighted average common
shares outstanding:
Basic 128,999,257 125,346,024 130,194,452
============= ============= =============
Diluted 145,534,789 142,672,823 147,051,538
============= ============= =============
Cash dividends declared
per common share $ 0.25 $ 0.25 $ 0.25
============= ============= =============
% Change From
-----------------------
November 30, August 31,
2004 2005
------------ ----------
REVENUES
Commissions 3.3% 2.7%
Principal transactions 17.2% 12.6%
Investment banking (40.1%) (24.9%)
Interest and dividends 101.3% 15.3%
Asset management and other income 28.4% 11.1%
Total revenues 33.5% 8.7%
Interest expense 133.7% 16.2%
Revenues, net of interest expense 3.2% 4.1%
NON-INTEREST EXPENSES
Employee compensation and benefits 8.8% 2.5%
Floor brokerage, exchange and clearance
fees (9.3%) (5.6%)
Communications and technology 10.6% 7.2%
Occupancy 17.1% 1.8%
Advertising and market development 7.7% (6.2%)
Professional fees (6.4%) 1.9%
Other expenses (34.6%) 47.3%
Total non-interest expenses 0.6% 5.6%
Income before provision for income taxes 9.4% 1.0%
Provision for income taxes (2.2%) (11.2%)
Net income 15.4% 7.6%
Net income applicable to common shares 16.0% 7.8%
Adjusted net income used for diluted
earnings per share (1) 13.1% 6.7%
Basic earnings per share 10.3% 8.4%
Diluted earnings per share 11.1% 7.8%
Weighted average common shares outstanding:
Basic
Diluted
Cash dividends declared per common share
(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.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Twelve Months Ended % Change
--------------------------- ---------
November 30, November 30,
2005 2004
------------ -------------
(In thousands, except share
and per share data)
REVENUES
Commissions $ 1,200,454 $ 1,178,074 1.9%
Principal transactions 3,836,017 3,595,595 6.7%
Investment banking 1,037,213 1,031,051 0.6%
Interest and dividends 5,107,019 2,317,315 120.4%
Asset management and other
income 371,744 299,867 24.0%
------------- -------------
Total revenues 11,552,447 8,421,902 37.2%
Interest expense 4,141,653 1,609,019 157.4%
------------- -------------
Revenues, net of interest
expense 7,410,794 6,812,883 8.8%
------------- -------------
NON-INTEREST EXPENSES
Employee compensation and
benefits 3,553,216 3,253,862 9.2%
Floor brokerage, exchange and
clearance fees 221,553 230,652 (3.9%)
Communications and technology 401,673 369,176 8.8%
Occupancy 167,825 141,916 18.3%
Advertising and market
development 126,678 113,800 11.3%
Professional fees 229,198 197,086 16.3%
Other expenses 503,592 484,237 4.0%
------------- -------------
Total non-interest
expenses 5,203,735 4,790,729 8.6%
------------- -------------
Income before provision for
income taxes 2,207,059 2,022,154 9.1%
Provision for income taxes 744,882 677,421 10.0%
------------- -------------
Net income $ 1,462,177 $ 1,344,733 8.7%
============= =============
Net income applicable to
common shares $ 1,437,856 $ 1,316,661 9.2%
============= =============
Adjusted net income used for
diluted earnings per share
(1) $ 1,520,108 $ 1,418,420 7.2%
============= =============
Basic earnings per share $ 11.42 $ 10.88 5.0%
============= =============
Diluted earnings per share $ 10.31 $ 9.76 5.6%
============= =============
Weighted average common
shares outstanding:
Basic 130,326,947 127,468,061
============= =============
Diluted 147,467,992 145,284,589
============= =============
Cash dividends declared per
common share $ 1.00 $ 0.85
============= =============
(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,
2005 2004
--------------------------
(In thousands, except
common share data and
other data)
Results
-------
Revenues, net of interest expense $7,410,794 $6,812,883
Net income $1,462,177 $1,344,733
Net income applicable to common shares $1,437,856 $1,316,661
Adjusted net income used for diluted
earnings per share (1) $1,520,108 $1,418,420
Financial Position
------------------
Stockholders' equity, at period end $10,781,416 $8,990,872
Total capital, at period end $54,270,770 $45,834,149
Common Share Data
-----------------
Basic earnings per share $11.42 $10.88
Diluted earnings per share $10.31 $9.76
Book value per common share, at period end $71.08 $59.13
Weighted average common shares outstanding:
Basic 130,326,947 127,468,061
Diluted 147,467,992 145,284,589
Common shares outstanding, at period
end (2) 146,431,767 144,484,099
Financial Ratios
----------------
Return on average common equity (annualized) 16.5% 19.1%
Adjusted pre-tax profit margin (3) 31.7% 32.3%
Pre-tax profit margin (4) 29.8% 29.7%
After-tax profit margin (5) 19.7% 19.7%
Compensation & benefits / Revenues, net of
interest expense 47.9% 47.8%
Other Data (in billions, except employees)
------------------------------------------
Margin debt balances, at period end $59.5 $57.3
Margin debt balances, average for period $58.5 $48.0
Customer short balances, at period end $79.9 $85.4
Customer short balances, average for period $84.4 $76.3
Securities borrowed, at period end $54.6 $65.2
Securities borrowed, average for period $62.8 $63.8
Free credit balances, at period end $31.0 $30.8
Free credit balances, average for period $29.7 $28.6
Assets under management, at period end $41.9 $37.8
Employees, at period end 11,843 10,961
Three Months Ended
----------------------------------------------------
November 30, August 31, May 31, February 28,
2005 2005 2005 2005
----------------------------------------------------
(In thousands, except common share data and other
data)
Results
-------
Revenues, net of
interest expense $ 1,887,302 $ 1,812,280 $ 1,873,552 $ 1,837,660
Net income $ 406,957 $ 378,305 $ 298,110 $ 378,805
Net income
applicable to
common shares $ 401,505 $ 372,357 $ 291,667 $ 372,327
Adjusted net
income used for
diluted earnings
per share (1) $ 421,496 $ 394,919 $ 309,660 $ 394,032
Financial Position
------------------
Stockholders'
equity, at period
end $ 10,781,416 $ 9,881,046 $ 9,641,514 $ 9,518,898
Total capital, at
period end $ 54,270,770 $ 52,070,689 $ 49,330,143 $ 48,491,012
Common Share Data
-----------------
Basic earnings per
share $ 3.21 $ 2.96 $ 2.32 $ 2.94
Diluted earnings
per share $ 2.90 $ 2.69 $ 2.09 $ 2.64
Book value per
common share, at
period end $ 71.08 $ 67.18 $ 64.67 $ 62.88
Weighted average
common shares
outstanding:
Basic 128,999,257 130,194,452 130,663,337 131,261,212
Diluted 145,534,789 147,051,538 148,037,979 149,193,402
Common shares
outstanding, at
period end (2) 146,431,767 146,341,980 145,928,440 146,012,775
Financial Ratios
----------------
Return on average
common equity
(annualized) 17.7% 16.9% 13.5% 17.8%
Adjusted pre-tax
profit margin
(3) 32.9% 34.2% 26.4% 33.5%
Pre-tax profit
margin (4) 31.1% 32.0% 24.7% 31.5%
After-tax profit
margin (5) 21.6% 20.9% 15.9% 20.6%
Compensation &
benefits /
Revenues, net of
interest expense 46.2% 47.0% 49.3% 49.3%
Other Data (in
billions, except
employees)
-----------------
Margin debt
balances, at
period end $ 59.5 $ 59.6 $ 53.9 $ 61.3
Margin debt
balances, average
for period $ 60.3 $ 57.2 $ 58.7 $ 58.0
Customer short
balances, at
period end $ 79.9 $ 80.6 $ 82.5 $ 93.9
Customer short
balances, average
for period $ 81.2 $ 81.3 $ 86.8 $ 88.5
Securities
borrowed, at
period end $ 54.6 $ 53.4 $ 59.7 $ 67.8
Securities
borrowed, average
for period $ 57.1 $ 59.4 $ 65.1 $ 69.6
Free credit
balances, at
period end $ 31.0 $ 29.6 $ 31.6 $ 30.2
Free credit
balances, average
for period $ 28.4 $ 28.6 $ 30.6 $ 31.1
Assets under
management, at
period end $ 41.9 $ 40.3 $ 39.8 $ 40.2
Employees, at
period end 11,843 11,498 11,141 11,019
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 capital, at
period end $ 45,834,149 $ 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 (2) 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
(3) 31.8% 31.7% 32.3% 33.3%
Pre-tax profit
margin (4) 29.3% 28.9% 29.7% 30.8%
After-tax profit
margin (5) 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
Securities
borrowed, at
period end $ 65.2 $ 58.9 $ 59.7 $ 62.0
Securities
borrowed, average
for period $ 64.1 $ 63.3 $ 65.3 $ 62.6
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 $ 37.8 $ 31.1 $ 30.2 $ 31.5
Employees, at
period end 10,961 10,715 10,469 10,431
(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.
Note: Certain reclassifications have been made to prior period amounts
to conform to the current period's presentation.
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