SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 14, 1998
THE BEAR STEARNS COMPANIES INC.
Exact name of registrant as specified in its charter
DELAWARE File No. 1-8989 13-3286161
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
245 Park Avenue, New York, New York 10167
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (212) 272-2000
Not Applicable
(former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
Filed herewith is a copy of The Bear Stearns Companies Inc. ( the "Company")
Press Release, dated October 14, 1998, announcing its earnings for the quarter
ended September 25, 1998 which includes the Unaudited Consolidated Statements of
Income for the three months ended September 25, 1998 and September 26, 1997, and
the three months ended June 30, 1998. All normal recurring adjustments that are,
in the opinion of management, necessary for a fair presentation of the results
of operations for the periods presented have been included. The nature of the
Company's business is such that the results for any interim period are not
necessarily indicative of the results for a full year.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of business acquired:
Not applicable.
(b) Pro Forma financial information:
Not applicable.
(c) Exhibit:
(99) Press Release, dated October 14, 1998.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BEAR STEARNS COMPANIES INC.
By: /s/ Marshall Levinson
Marshall Levinson
Controller
Dated: October 14, 1998
<PAGE>
THE BEAR STEARNS COMPANIES INC.
FORM 8-K
CURRENT REPORT
EXHIBIT INDEX
Exhibit No. Description
(99) Press Release, dated October 14, 1998
Contact: Hannah Burns (212) 272-2395
Maura Gaenzle (212) 272-4445
Ellen Glickman (212) 272-8188
THE BEAR STEARNS COMPANIES INC.
REPORTS FIRST QUARTER RESULTS;
ANNOUNCES ANNUAL MEETING
NEW YORK, October 14, 1998 -- The Bear Stearns Companies Inc. (NYSE:BSC) today
announced earnings for the company's first fiscal quarter ended September 25,
1998.
Revenues, net of interest expense, for the quarter ended September 25,
1998 were $740.9 million, a 25.6% decrease from $996.1 million for the
comparable quarter a year ago. Net income for the first quarter of fiscal year
1999 was $64.1 million, or 40 cents per share, down 60.3% from $161.6 million,
or $1.11 per share, for the comparable quarter last year. The company's
annualized after-tax return on common equity for the trailing 12-month period
ended September 25, 1998 was 17.6% and for the three-month period ended
September 25, 1998 was 6.7%.
Commenting on the results for the quarter, James E. Cayne, president
and chief executive officer, said, "The impact of volatile market conditions on
the company's trading and investment banking businesses was partially offset by
a solid contribution from our correspondent clearing business, which has been a
consistently stable and substantial component of our earnings base. During the
quarter, our risk monitoring and credit procedures and controls worked
effectively."
"Throughout our 75-year history, the safety and soundness of Bear
Stearns has been, and continues to be, a priority. Bear Stearns' ability to
generate solid results in all operating environments has been a function of our
ability to manage the market, credit and funding risks inherent in our business.
Managing risk begins first and foremost with the expertise, experience and
judgment of senior managers in the trading departments. We would like to
recognize all of the loyal and dedicated employees at Bear Stearns whose
performance during this difficult environment has been exceptionally
gratifying."
The cornerstone of Bear Stearns' risk management practice is constant
communication between trading departments and senior management concerning
inventory positions and market risk profile. Quantitative models are utilized as
a supplement to the firm's other risk management tools, as the firm believes
that these models alone do not sufficiently monitor and control risk.
Mr. Cayne added, "Recent events in the securities markets have created
an operating environment that continues to be a tremendous challenge for our
industry. Our comprehensive risk management process, in addition to a diverse
portfolio of businesses, has enabled us to reduce the negative impact of
volatile and adverse market conditions."
"While the results for the quarter declined from last year, exposures
and losses relating to emerging markets, including Russia, were not significant.
Our trading areas were negatively affected as credit spreads widened and
volatility in the equity and fixed income markets increased in reaction to the
global turmoil. Yet, despite this difficult climate, our trading revenues were
positive for each month of the quarter. Investor and issuer concerns arising
from the tumultuous market conditions worldwide dampened our financial advisory
and underwriting activities during the quarter, with transaction volume at lower
levels than the past two years."
Bear Stearns has cleared for professional traders, including hedge
funds, for 25 years and is a recognized leader in this business. The company has
always acknowledged the risks of this activity and, therefore, has historically
maintained margin requirements and resisted lowering or eliminating them in
exchange for short-term gains. The extension of margin debt is determined by the
systematic analysis of the securities held and trading strategy being utilized
by a customer. Based on our experience from the market dislocation in October
1987, clients are now allowed maximum leverage only if their portfolios satisfy
the firm's internal risk parameters. Portfolios are analyzed and evaluated daily
through extensive simulation analysis designed to estimate market-related risk.
A brief summary of revenues and compensation as a percentage of net revenues
reported for the first quarter of fiscal year 1999 compared to the prior year
period follows: Commission revenues rose 12.8% to $240.8 million. Investment
banking revenues were $121.8 million, down 44.5%. Principal transactions
revenues fell 49.7% to $197.0 million. Net interest revenues were $165.1
million, an increase of 11.8%. Compensation as a percentage of net revenues was
54.8% versus 50.1%.
Annual Meeting
The Bear Stearns Companies Inc. 1998 Annual Meeting of
Stockholders will be held on Thursday, October 29, 1998, at 5:00 p.m. in the
fifth floor auditorium at the company's headquarters located at 245 Park Avenue
in New York City. The Bear Stearns Companies Inc. is the parent company of Bear,
Stearns & Co. Inc., a leading investment banking and securities trading and
brokerage firm serving 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, private
client services, derivatives, foreign exchange and futures sales and trading,
asset management and custody services. Through Bear, Stearns Securities Corp.,
it offers professional and correspondent clearing, including securities lending.
Headquartered in New York City, the company has approximately 9,400 employees
located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles and
San Francisco; and an international presence in Beijing, Buenos Aires, Dublin,
Hong Kong, London, Lugano, Paris, Sao Paulo, Shanghai, Singapore and Tokyo. As
of September 25, 1998 total capital, including stockholders' equity and
long-term borrowings, was $18.4 billion. Book value as of September 25, 1998 was
$24.11 per share, based on 151,639,932 shares outstanding.
***
Financial Statements Attached
For a discussion of the risks and uncertainties that may affect the company's
future results, please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the company's 1998 Annual Report to
Shareholders and its Form 10K, and in the company's Quarterly Reports on Form
10-Q for fiscal 1998.
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<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
-------------------------------------
September 25, September 26,
1998 1997
--------------- -----------------
(In thousands, except per share data)
<S> <C> <C>
Revenues
Commissions $ 240,800 $ 213,444
Principal transactions 197,049 391,514
Investment banking 121,776 219,328
Interest and dividends 1,147,839 964,571
Other income 16,140 24,148
------------------ -----------------
Total Revenues 1,723,604 1,813,005
Interest expense 982,703 816,915
------------------ -----------------
Revenues, net of interest expense 740,901 996,090
------------------ -----------------
Expenses
Employee compensation and benefits 405,881 499,197
Floor brokerage, exchange
and clearance fees 42,064 39,585
Communications 33,095 28,133
Depreciation and amortization 32,394 26,017
Occupancy 25,888 23,546
Advertising and market development 23,038 15,954
Data processing and equipment 10,985 12,234
Other expenses 74,247 84,286
------------------ -----------------
Total expenses 647,592 728,952
------------------ -----------------
Income before provision for
income taxes 93,309 267,138
Provision for income taxes 29,206 105,520
------------------ -----------------
Net income $ 64,103 $ 161,618
================== =================
Net income applicable to
common shares $ 54,008 $ 155,693
================== =================
Earnings per share $ 0.40 $ 1.11
================== =================
Weighted average common and
common equivalent shares
outstanding 152,084,654 152,011,423
================== =================
Cash dividends declared
per common share $ 0.15 $ 0.15
================== =================
</TABLE>
<PAGE>
<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
-----------------------------------------
September 25, June 30,
1998 1998
------------------ --------------------
(In thousands, except per share data)
<S> <C> <C>
Revenues
Commissions $ 240,800 $ 232,685
Principal transactions 197,049 492,214
Investment banking 121,776 305,875
Interest and dividends 1,147,839 1,202,524
Other income 16,140 12,945
----------------------------------------
Total Revenues 1,723,604 2,246,243
Interest expense 982,703 1,024,902
-----------------------------------------
Revenues, net of interest expense 740,901 1,221,341
-----------------------------------------
Expenses
Employee compensation and benefits 405,881 563,497
Floor brokerage, exchange
and clearance fees 42,064 42,651
Communications 33,095 34,118
Depreciation and amortization 32,394 32,322
Occupancy 25,888 25,664
Advertising and market development 23,038 23,808
Data processing and equipment 10,985 11,172
Other expenses 74,247 217,083
-----------------------------------------
Total expenses 647,592 950,315
-----------------------------------------
Income before provision for
income taxes 93,309 271,026
Provision for income taxes 29,206 98,756
-----------------------------------------
Net income $ 64,103 $ 172,270
=========================================
Net income applicable to
common shares $ 54,008 $ 162,232
=========================================
Earnings per share $ 0.40 $ 1.23
=========================================
Weighted average common and
common equivalent shares
outstanding 152,084,654 148,355,621
=========================================
Cash dividends declared
per common share $ 0.15 $ 0.15
=========================================
</TABLE>
