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) July 21, 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)
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Item 5. Other Events.
Filed herewith is a copy of The Bear Stearns Companies Inc. ( the "Company")
Press Release, dated July 21, 1998, announcing its earnings for the quarter and
fiscal year ended June 30, 1998 which includes the Unaudited Consolidated
Statements of Income for the Company for the quarters and fiscal years ended
June 30, 1998 and June 30, 1997, and the three months ended March 27, 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 July 21, 1998.
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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/ Michael J. Abatemarco
Michael J. Abatemarco
Controller
Dated: July 21, 1998
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THE BEAR STEARNS COMPANIES INC.
FORM 8-K
CURRENT REPORT
EXHIBIT INDEX
Exhibit No. Description
(99) Press Release, dated July 21, 1998
For Immediate Release
Contact: Hannah Burns (212) 272-2395
Maura Gaenzle (212) 272-4445
Ellen Glickman (212) 272-8188
THE BEAR STEARNS COMPANIES INC.
REPORTS RECORD RESULTS FOR FISCAL YEAR 1998
4th Quarter Earnings from Operations up 46.9%
to Record $1.67 before Special Charge; ROE at 29.6%
New York, New York -- July 21, 1998 -- The Bear Stearns Companies Inc.
(NYSE:BSC) today announced record earnings for the company's fourth quarter and
fiscal year 1998.
Revenues, net of interest expense, for the fourth quarter of fiscal
year 1998 were $1.2 billion, an increase of 26.9% over the $962.6 million
reported for the fourth quarter a year ago. Revenues, net of interest expense,
for the fiscal year ended June 30, 1998 were $4.3 billion, up 23.1% from last
year's net revenues of $3.5 billion.
Net income for the fourth quarter ended June 30, 1998 was $172.3
million, an increase of 5.8% from $162.9 million reported for the comparable
quarter last year. Earnings per share for the fourth quarter increased 7.0% to
$1.23 from $1.15 for the prior year's quarter. These results are net of a
special charge of $108.0 million, or $0.44 per share, attributable to an
increase in litigation reserves. Excluding the special charge, net income from
operations was a record $239.3 million for the fourth fiscal quarter, up 46.9%,
or $1.67 per share.
The fourth quarter results reflect a special charge of $108.0 million to
increase litigation reserves in light of the recent jury verdict in the
Daisy/Cadnetix case. The company believes the verdict was inappropriate and has
filed post-trial motions seeking to set aside the verdict or, in the
alternative, to substantially reduce the damages awarded. The company is
considering all of its options, including an appeal if necessary.
Net income for the fiscal year ended June 30, 1998 increased 7.7% to
$660.4 million, from $613.3 million for the 12 months ended June 30, 1997.
Earnings per share for fiscal year 1998 increased 9.5% to $4.60 from $4.20 for
fiscal year 1997. Excluding the special charge, net income from operations for
the fiscal year was also a record $727.5 million, up 18.6% from fiscal year
1997, or $5.04 per share.
The annualized return on common stockholders' equity was 21.8% for the
fourth quarter and 21.7% for the 1998 fiscal year. Excluding the special charge,
the annualized return on common stockholders' equity was 29.6% for the fourth
quarter and 23.8% for the 1998 fiscal year.
"Business was outstanding throughout our fourth quarter, especially
during the months of May and June," commented President and Chief Executive
Officer James E. Cayne on Bear Stearns' record earnings. "The firm excelled in
all major business segments, setting a number of new records. We were an advisor
on the largest life sciences industry merger ever -- the $35.0 billion
merger-of-equals between American Home Products Corporation and Monsanto
Company; we senior managed the largest municipal financing ever -- the $3.5
billion revenue bond issue for Long Island Power Authority; and we lead managed
three notable $1 billion-plus global debt offerings for Ford Motor Credit
Company, General Motors Corporation and Federal-Mogul Corporation."
"We enjoyed record trading volumes during our fourth fiscal quarter. Despite the
Asian economic crisis, we continued to find opportunities in the Far East,
acting as sole global coordinator for the US $267.8 million initial public
offering of Yanzhou Coal Mining Company Limited. Investor demand for equity
underwritings remained strong during the quarter and Bear Stearns lead managed a
number of offerings including an initial public offering for Young & Rubicam
Inc., and follow-on offerings for Twinlab Corporation and United Stationers
Inc."
"We attribute the record results for the quarter and the fiscal year to
strength in all of the firm's core businesses. We want to emphasize that high
quality people are key to the firm's success. As we close another record year,
we would like to recognize the employees at Bear Stearns who enabled us to
achieve these outstanding earnings."
Selected highlights from the fourth quarter and fiscal year 1998
results follow (comparisons are to prior-year periods):
Investment banking revenues set new records, up 67.4% to $305.9 million
for the fourth quarter and 51.0% to $1.0 billion for the fiscal year. These
results reflected the continued strength in mergers and acquisitions, as well as
very solid equity and high yield underwriting volumes.
Commission revenues rose 19.1% to a record $232.7 million for the
fourth quarter and 23.3% to a record $902.7 million for the fiscal year,
attributable to the increased transaction volume of our institutional, clearing
and Private Client Services customers.
Principal transactions revenues reached new levels, increasing 11.9% to
$492.2 million for the fourth quarter and 9.9% to $1.7 billion for the fiscal
year, with record trading revenues from substantially all of the firm's fixed
income and equity businesses, particularly derivatives.
Net interest revenues also set new records, up 37.4% to $177.6 million
for the fourth quarter and 27.6% to $647.1 million for the fiscal year,
primarily reflecting the higher levels of customer margin and short selling
activities.
Compensation as a percentage of net revenues for the fourth quarter was 46.1%
versus 47.9% reported for the year-ago quarter, and was 48.6% for the 1998
fiscal year versus 49.0% for the 1997 fiscal year.
Quarterly Cash Dividends Declared
The Board of Directors declared a regular quarterly cash dividend of 15
cents per share on the outstanding shares of common stock, payable August 28,
1998 to shareholders of record on August 14, 1998. The board also declared a
quarterly cash dividend of 68.75 cents per share on the outstanding shares of
adjustable rate cumulative preferred stock, payable October 15, 1998 to
shareholders of record on September 30, 1998. In addition, the board declared a
quarterly cash dividend of $3.075 per share on the outstanding shares of 6.15%
cumulative preferred stock, which is equivalent to 76.875 cents per related
depositary share, a quarterly cash dividend of $2.86 per share on the
outstanding shares of 5.72% cumulative preferred stock, which is equivalent to
71.50 cents per related depositary share, and a quarterly cash dividend of
$2.745 per share on the outstanding shares of 5.49% cumulative preferred stock,
which is equivalent to 68.625 cents per related depositary share, all payable
October 15, 1998 to shareholders of record on September 30, 1998.
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 9,200 employees
located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles and
San Francisco; and an international presence in Beijing, Buenos Aires, Dublin,
Geneva, Hong Kong, London, Lugano, Paris, Sao Paulo, Shanghai, Singapore and
Tokyo. As of June 30, 1998 total capital, including stockholders' equity and
long-term borrowings, was $18.3 billion. Book value as of June 30, 1998 was
$23.86 per share, based on 151,631,589 shares outstanding. Book value reflects a
$0.51 per share tax benefit associated with the June 30, 1998 distribution of
4.1 million shares from the Capital Accumulation Plan.
For more information on the company, please visit our site on the World Wide Web
- - --www.bearstearns.com.
Financial Statements Attached
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<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------------------- ---------------------------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
--------------- ----------------- ---------------- ----------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues
Commissions $ 232,685 $ 195,372 $ 902,692 $ 732,343
Principal transactions 492,214 439,865 1,726,982 1,571,332
Investment banking 305,875 182,711 1,001,494 663,249
Interest and dividends 1,202,524 939,900 4,285,595 3,058,452
Other income 12,945 15,446 63,173 51,902
--------------- ------------- ------------- -------------
Total Revenues 2,246,243 1,773,294 7,979,936 6,077,278
Interest expense 1,024,902 810,663 3,638,513 2,551,364
--------------- ------------- ------------- -------------
Revenues, net of interest expense 1,221,341 962,631 4,341,423 3,525,914
--------------- ------------- ------------- -------------
Expenses
Employee compensation and benefits 563,497 461,138 2,111,741 1,726,931
Floor brokerage, exchange
and clearance fees 42,651 38,611 166,733 141,211
Communications 34,118 27,507 122,973 102,926
Depreciation and amortization 32,322 25,768 115,141 89,719
Occupancy 25,664 22,470 100,559 88,419
Advertising and market development 23,808 22,436 82,499 69,765
Data processing and equipment 11,172 10,840 47,785 36,620
Special litigation provision 108,000 - 108,000 -
Other expenses 109,083 85,018 422,500 256,633
--------------- -------------- ------------- -------------
Total expenses 950,315 693,788 3,277,931 2,512,224
--------------- -------------- ------------- -------------
Income before provision for
income taxes 271,026 268,843 1,063,492 1,013,690
Provision for income taxes 98,756 105,955 403,063 400,360
--------------- -------------- ------------- -------------
Net income $ 172,270 $ 162,888 $ 660,429 $ 613,330
=============== ============== ============= =============
Net income applicable to
common shares $ 162,232 $ 156,954 $ 629,417 $ 589,497
=============== ============== ============= =============
Earnings per share $ 1.23 $ 1.15 $ 4.60 $ 4.20
=============== ============== ============= =============
Weighted average common and
common equivalent shares
outstanding 148,355,621 144,842,307 150,980,825 147,847,885
=============== ============== ============= =============
Cash dividends declared
per common share (1) $ 0.15 $ 0.15 $ 0.60 $ 0.58
=============== ============= ============= =============
(1) Adjusted for 5% stock dividend declared on January 29, 1997.
</TABLE>
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<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
-----------------------------------------
June 30, March 27,
1998 1998
------------------ --------------------
(In thousands, except per share data)
<S> <C> <C>
Revenues
Commissions $ 232,685 $ 226,067
Principal transactions 492,214 452,742
Investment banking 305,875 197,407
Interest and dividends 1,202,524 1,037,202
Other income 12,945 14,203
----------------- ---------------
Total Revenues 2,246,243 1,927,621
Interest expense 1,024,902 877,392
----------------- ---------------
Revenues, net of interest expense 1,221,341 1,050,229
----------------- ---------------
Expenses
Employee compensation and benefits 563,497 513,254
Floor brokerage, exchange
and clearance fees 42,651 40,975
Communications 34,118 31,898
Depreciation and amortization 32,322 29,375
Occupancy 25,664 25,962
Advertising and market development 23,808 22,680
Data processing and equipment 11,172 11,919
Special litigation provision 108,000 -
Other expenses 109,083 108,443
----------------- ---------------
Total expenses 950,315 784,506
----------------- ---------------
Income before provision for
income taxes 271,026 265,723
Provision for income taxes 98,756 99,404
----------------- ---------------
Net income $ 172,270 $ 166,319
================= ================
Net income applicable to
common shares $ 162,232 $ 157,193
================= ===============
Earnings per share $ 1.23 $ 1.15
================= ===============
Weighted average common and
common equivalent shares
outstanding 148,355,621 150,084,539
================= ===============
Cash dividends declared
per common share $ 0.15 $ 0.15
================= ===============
</TABLE>
